Missouri Revised Statutes

Chapter 375
Provisions Applicable to All Insurance Companies

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Definitions.

375.001. 1. As used in this chapter, unless otherwise clearly indicated by the context, the following words mean:

(1) "Department", the department of insurance, financial institutions and professional registration;

(2) "Director", the director of the department of insurance, financial institutions and professional registration.

2. As used in sections 375.001 to 375.008 the following words and terms mean:

(1) "Insurer", all insurance companies, reciprocals, or interinsurance exchanges transacting the business of insurance in this state;

(2) "Nonpayment of premium", failure of the named insured to discharge when due any of his obligations in connection with the payment of premiums on the policy, or any installment of the premium, whether the premium is payable directly to the insurer or its agent or indirectly under any premium finance plan or extension of credit;

(3) "Nonrenewal", the determination of an insurer not to issue or deliver a policy replacing at the end of the policy period a policy previously issued and delivered by the same insurer or a certificate or notice extending the term of a policy beyond its policy period or term;

(4) "Policy", a contract of insurance providing fire and extended coverage insurance, whether separately or in combination with other coverages, on owner-occupied habitational property not exceeding two families. "Policy" does not include any insurance contracts issued under a property insurance inspection and placement program ("FAIR" plan) or an assigned risk plan, or any insurance contracts insuring property not used predominantly for habitational purposes, or an insurance contract insuring a mobile home;

(5) "Renewal" or "to renew", the issuance and delivery by an insurer of a policy replacing at the end of the policy period a policy previously issued and delivered by the same insurer, or the issuance and delivery of a certificate or notice extending the term of the policy beyond its policy period or term. Any policy with a policy period or term of less than six months shall for the purposes of sections 375.001 to 375.008 be considered as if written for a policy period or term of six months. Any policy written for a term longer than one year or any policy with no fixed expiration date shall, for the purpose of sections 375.001 to 375.008, be considered as if written for successive policy periods or terms of one year, and the policy may be terminated at the expiration of any annual period upon giving thirty days' notice of cancellation prior to the anniversary date, and the cancellation shall not be subject to any other provisions of sections 375.001 to 375.008.

(L. 1977 S.B. 300 § 1, A.L. 2008 S.B. 788)

Grounds for cancellation.

375.002. 1. A notice of cancellation of a policy shall be effective only if it is based on one or more of the following reasons:

(1) Nonpayment of premium; or

(2) Fraud or material misrepresentation affecting the policy or in the presentation of a claim thereunder, or violation of any of the terms or conditions of the policy; or

(3) The named insured or any occupant of the property has been convicted of a crime arising out of acts increasing the hazard insured against; or

(4) Physical changes in the property insured which increase the hazards originally insured.

2. This section shall not apply to any policy or coverage which has been in effect less than sixty days at the time notice of cancellation is mailed or delivered by the insurer unless it is a renewal policy.

3. This section shall not apply to nonrenewal.

(L. 1977 S.B. 300 § 2)

Notice of cancellation, how given--reinstatement, when.

375.003. 1. Except as provided in subsection 2 of this section, no notice of cancellation of a policy to which section 375.002 applies shall be effective unless mailed or delivered by the insurer to the named insured at least thirty days prior to the effective date of cancellation.

2. Where cancellation is for nonpayment of premium at least ten days' notice of cancellation shall be given and such notice shall contain the following notice or notice substantially similar in bold conspicuous type: "THIS POLICY IS CANCELLED EFFECTIVE AT THE DATE AND TIME INDICATED IN THIS NOTICE. THIS IS THE FINAL NOTICE OF CANCELLATION WE WILL SEND PRIOR TO THE EFFECTIVE DATE AND TIME OF CANCELLATION INDICATED IN THIS NOTICE.".

3. The notice shall state the insurer's actual reason for proposing the action, the statement of reason to be sufficiently clear and specific so that a person of average intelligence can identify the basis for the insurer's decision without further inquiry. Generalized terms such as "personal habits", "living conditions", or "poor morals" shall not suffice to meet the requirements of this subsection. The notice shall also state that the insured may be eligible for insurance through the Missouri basic property insurance inspection and placement program.

4. Issuance of a notice of cancellation under subsection 1 or 2 of this section constitutes a present and unequivocal act of cancellation of the policy.

5. An insurer may reinstate a policy cancelled under subsection 1 or 2 of this section at any time after the notice of cancellation is issued if the reason for the cancellation is remedied. An insurer may send communications to the insured, including but not limited to billing notices for past due premium, offers to reinstate the policy if past due premium is paid, notices confirming cancellation of the policy, or billing notices for payment of earned but unpaid premium. The fact that a policy may be so reinstated or any such communication may be made does not invalidate or void any cancellation effectuated under subsection 1 or 2 of this section or defeat the present and unequivocal nature of acts of cancellation as described under subsection 4 of this section.

6. This section shall not apply to nonrenewal.

(L. 1977 S.B. 300 § 3, A.L. 2014 S.B. 691)

Refusal to renew, when authorized--exemption, when.

375.004. 1. No insurer shall refuse to renew a policy unless the insurer or its agent mails or delivers to the named insured, at the address shown in the policy, at least thirty days' advance notice of its intention not to renew. The notice shall state the insurer's actual reason for proposing the action, the statement of reason to be sufficiently clear and specific so that a person of average intelligence can identify the basis for the insurer's decision without further inquiry. Generalized terms such as "personal habits", "living conditions", or "poor morals" shall not suffice to meet the requirements of this subsection. The notice shall also state that the insured may be eligible for insurance through the Missouri basic property insurance inspection and placement program. This section shall not apply:

(1) If the insurer has manifested its willingness to renew; or

(2) In case of nonpayment of premium; or

(3) If the named insured has indicated he does not wish to have the policy renewed; or

(4) If the insured fails to pay any advance premium required by the insurer for renewal.

2. Renewal of a policy shall not constitute a waiver or estoppel with respect to grounds for cancellation which existed before the effective date of the renewal.

3. An insurer shall be exempt from the requirements of this section regarding notice of nonrenewal if:

(1) The insurer assigns or transfers the insured's policy to an affiliate or subsidiary within the same insurance holding company system;

(2) The assignment or transfer is effective upon the expiration of the existing policy; and

(3) Prior to providing coverage for a subsequent policy term, an insurer accepting an assignment or transfer of the policy shall provide notice of such assignment or transfer to the named insured.

However, if the assignment or transfer of a policy does not result in coverage substantially equivalent to the coverage that was contained in the policy being assigned or transferred, the insurer shall, in lieu of providing the notice in subdivision (3) of this subsection, at least fifteen days in advance of the effective date of the assignment or transfer, notify the policyholder that some coverage provisions will change due to the assignment or transfer, advise the policyholder to refer to the new policy for coverage details, and provide a copy of or access to the replacement policy form or the executed replacement policy.

(L. 1977 S.B. 300 § 4, A.L. 2016 H.B. 2194)

Proof of notice, how made.

375.005. Proof of mailing notice of cancellation, or of intention not to renew or of reasons for cancellation, to the named insured at the address shown in the policy, shall be sufficient proof of notice.

(L. 1977 S.B. 300 § 5)

Immunity from liability granted, when, to whom.

375.006. There shall be no liability on the part of, and no cause of action of any nature shall arise against, the director of the department of insurance, financial institutions and professional registration or against any insurer, its authorized representative, its agents, its employees, or any firm, person or corporation furnishing to the insurer information as to reasons for cancellation or nonrenewal, for any statement made by any of them in any written notice of cancellation or nonrenewal, or in any other communication, oral or written, specifying the reasons for cancellation or nonrenewal, or the providing of information pertaining thereto, or for statements made or evidence submitted at any hearings conducted in connection therewith.

(L. 1977 S.B. 300 § 6)

Cancellation or refusal to issue policy on certain groundsprohibited, exceptions.

375.007. No insurer shall cancel or refuse to write or refuse to renew a policy solely because of the age, place of residence, race, sex, color, creed, national origin, ancestry or lawful occupation, including the military service, of anyone who is or seeks to become insured or solely because another insurer has refused to write a policy, or has cancelled or has refused to renew an existing policy in which that person was the named insured, nor shall any insurance company or its agent or representative require any applicant or policyholder to divulge in a written application or otherwise whether any insurer has cancelled or refused to renew or issue to the applicant or policyholder a policy of insurance. The provisions of this section do not apply to those instances where the hazard insured against under a policy is increased because of exposure to loss attributable solely to the place of residence or lawful occupation of anyone who is or seeks to be insured.

(L. 1977 S.B. 300 § 7)

Certain insurers exempt.

375.008. Sections 375.001 to 375.008 do not apply to any insurer ordered by the director to restrict its writings of business under the provisions of section 375.535.

(L. 1977 S.B. 300 § 8)

Notice of cancellation, nonrenewal, renewal, or refusal to write,may be sent, how.

375.011. Any notice required regarding cancellation, nonrenewal, renewal, or refusal to write, insure or renew any person or property may be sent by a higher class of United States Postal Service mail service than required by law.

(L. 1992 S.B. 831 §§ A, 2)

Effective 1-1-93

Definitions.

375.012. 1. Sections 375.012 to 375.146 may be cited as the "Insurance Producers Act".

2. As used in sections 375.012 to 375.158, the following words mean:

(1) "Business entity", a corporation, association, partnership, limited liability company, limited liability partnership or other legal entity;

(2) "Director", the director of the department of insurance, financial institutions and professional registration;

(3) "Home state", the District of Columbia and any state or territory of the United States in which the insurance producer maintains his or her principal place of residence or principal place of business and is licensed to act as an insurance producer;

(4) "Insurance", any line of authority, including life, accident and health or sickness, property, casualty, variable life and variable annuity products, personal, credit and any other line of authority permitted by state law or regulation;

(5) "Insurance company" or "insurer", any person, reciprocal exchange, interinsurer, Lloyds insurer, fraternal benefit society, and any other legal entity engaged in the business of insurance, including health services corporations, health maintenance organizations, prepaid limited health care service plans, dental, optometric and other similar health service plans, unless their exclusion from this definition can be clearly ascertained from the context of the particular statutory section under consideration. Insurer shall also include all companies organized, incorporated or doing business pursuant to the provisions of chapters 375, 376, 377, 378, 379, 381 and 384. Trusteed pension plans and profit-sharing plans qualified pursuant to the United States Internal Revenue Code as now or hereafter amended shall not be considered to be insurance companies or insurers within the definition of this section;

(6) "Insurance producer" or "producer", a person required to be licensed pursuant to the laws of this state to sell, solicit or negotiate insurance;

(7) "License", a document issued by the director authorizing a person to act as an insurance producer for the lines of authority specified in the document. The license itself shall not create any authority, actual, apparent or inherent, in the holder to represent or commit an insurance company;

(8) "Limited line credit insurance", credit life, credit disability, credit property, credit unemployment, involuntary unemployment, mortgage life, mortgage guaranty, mortgage disability, guaranteed automobile protection (GAP) insurance, and any other form of insurance offered in connection with an extension of credit that is limited to partially or wholly extinguishing that credit obligation that the director determines should be designated a form of limited line credit insurance;

(9) "Limited line credit insurance producer", a person who sells, solicits or negotiates one or more forms of limited line credit insurance coverage through a master, corporate, group or individual policy;

(10) "Limited lines insurance", insurance involved in credit transactions, insurance contracts issued primarily for covering the risk of travel or any other line of insurance that the director deems necessary to recognize for the purposes of complying with subsection 5 of section 375.017;

(11) "Limited lines producer", a person authorized by the director to sell, solicit or negotiate limited lines insurance;

(12) "Negotiate", the act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits, terms or conditions of the contract, provided that the person engaged in that act either sells insurance or obtains insurance from insurers for purchasers;

(13) "Person", an individual or any business entity;

(14) "Personal lines insurance", property and casualty insurance coverage sold to individuals and families for primarily noncommercial purposes;

(15) "Sell", to exchange a contract of insurance by any means, for money or its equivalent, on behalf of an insurance company;

(16) "Solicit", attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular company;

(17) "Terminate", the cancellation of the relationship between an insurance producer and the insurer or the termination of the authority of the producer to transact the business of insurance;

(18) "Uniform business entity application", the current version of the National Association of Insurance Commissioners uniform business entity application for resident and nonresident business entities seeking an insurance producer license;

(19) "Uniform application", the current version of the National Association of Insurance Commissioners uniform application for resident and nonresident producer licensing.

3. All statutory references to insurance agent or insurance broker shall mean insurance producer, as that term is defined pursuant to subsection 1 of this section.

(L. 1961 p. 504 § 1, L. 1965 p. 569, A.L. 1967 p. 516, A.L. 1981 S.B. 10, A.L. 1993 H.B. 709, A.L. 1997 S.B. 150, A.L. 2001 S.B. 193, A.L. 2007 S.B. 66)

Promulgation of rules, generally, this chapter.

375.013. The director may promulgate rules pursuant to the provisions of this section and chapter 536 to implement the requirements of this chapter. No rule or portion of a rule promulgated under the authority of this chapter shall become effective unless it has been promulgated pursuant to the provisions of section 536.024.

(L. 1993 S.B. 52 § 375.009, A.L. 1995 S.B. 3)

Insurance producers, license required--insurance producer license notrequired, when.

375.014. 1. No person shall sell, solicit or negotiate insurance in this state for any class or classes of insurance unless he or she is licensed for that line of authority as provided in this chapter.

2. Nothing in this chapter shall be construed to require an insurer to obtain an insurance producer license. In this section, the term "insurer" shall not include the officers, directors, employees, subsidiaries or affiliates of the insurer.

3. A license as an insurance producer shall not be required of the following:

(1) An officer, director or employee of an insurer or of an insurance producer, provided that the officer, director or employee does not receive any commission on policies written or sold to insure risks residing, located or to be performed in this state; and

(a) The activities of the officer, director or employee are executive, administrative, managerial, clerical or a combination of these activities, and are only indirectly related to the sale, solicitation or negotiation of insurance; or

(b) The function of the officer, director or employee relates to underwriting, loss control, inspection or the processing, adjusting, investigating or settling of a claim on a contract of insurance; or

(c) The officer, director or employee is acting in the capacity of a special agent or agency supervisor assisting insurance producers where the activities are limited to providing technical advice and assistance to licensed insurance producers and do not include the sale, solicitation or negotiation of insurance;

(2) A person who secures and furnishes information for the purpose of group life insurance, group property and casualty insurance, group annuities, group or blanket accident and health insurance, or for the purpose of enrolling individuals under plans, issuing certificates under plans or otherwise assisting in administering plans or who performs administrative services related to mass-marketed property and casualty insurance, when no commission is paid to the person for the service;

(3) An employer or association or its officers, directors, employees, or the trustees of an employee trust plan, to the extent that the employers, officers, employees, directors or trustees are engaged in the administration or operation of a program of employee benefits for the employees of the employer or association or the employees of its subsidiaries or affiliates, which program involves the use of insurance issued by an insurer, as long as the employers, associations, officers, directors, employees or trustees are not in any manner compensated, directly or indirectly, by the company issuing the contracts;

(4) Employees of insurers or organizations employed by insurers who are engaging in the inspection, rating or classification of risks, or in the supervision of the training of insurance producers and who are not individually engaged in the sale, solicitation or negotiation of insurance and who do not accompany insurance producer trainees on presentations to prospective insurance applicants;

(5) A person whose activities in this state are limited to advertising without the intent to solicit insurance in this state through communications in printed publications or other forms of electronic mass media whose distribution is not limited to residents of the state, provided that the person does not sell, solicit or negotiate insurance that would insure risks residing, located or to be performed in this state;

(6) A person who is not a resident of this state who sells, solicits or negotiates a contract of insurance for commercial property and casualty risks to an insured with risks located in more than one state insured under that contract, provided that the person is otherwise licensed as an insurance producer to sell, solicit or negotiate that insurance in the state where the insured maintains its principal place of business and the contract of insurance insures risks located in that state;

(7) A salaried full-time employee who counsels or advises his or her employer relative to the insurance interests of the employer or of the subsidiaries or business affiliates of the employer provided that the employee does not sell or solicit insurance or receive a commission; or

(8) A licensed attorney providing probate or other court-required bonds on behalf of a client or client represented by the firm or office of the attorney.

4. Those individuals and business entities licensed as of January 1, 2003, shall be issued an individual insurance producer or a business entity insurance producer license as the licenses renew on or after January 1, 2003. The licenses held by individuals and business entities on the effective date of this act* shall be deemed valid and accrue the rights, privileges and responsibilities of an insurance producer license until an insurance producer license is issued on renewal.

(L. 1965 p. 569, A.L. 1967 p. 516, A.L. 2001 S.B. 193)

Effective 1-01-03

*"This act" (S.B. 193, 2001) contained two effective dates. This section had an effective date of January 1, 2003.

Application for licensure, insurance producers.

375.015. 1. An individual applying for a resident insurance producer license shall make application to the director on the uniform application and declare under penalty of refusal, suspension or revocation of the license that the statements made in the application are true, correct and complete to the best of the knowledge and belief of the applicant. Before approving the application, the director shall find that the individual:

(1) Is at least eighteen years of age;

(2) Has not committed any act that is a ground for denial, suspension or revocation set forth in section 375.141;

(3) Has paid a license fee in the sum of one hundred dollars; and

(4) Has successfully passed the examinations for the lines of authority for which the person has applied.

2. A business entity acting as an insurance producer is required to obtain an insurance producer license. Application shall be made using the uniform business entity application. Before approving the application, the director shall find that:

(1) The business entity has paid a license fee in the sum of one hundred dollars;

(2) The business entity has designated a licensed individual insurance producer to be responsible for compliance with the insurance laws, rules and regulations of this state by the business entity; and

(3) Neither the business entity nor any of its officers, directors or owners has committed any act that is a ground for denial, suspension or revocation set forth in section 375.141.

3. The director may require any documents reasonably necessary to verify the information contained in an application.

4. In addition to designating a licensed individual insurance producer to be responsible for compliance with the insurance laws, rules and regulations of this state, the application shall contain a list of all insurance producers employed by or acting in behalf of or through the business entity and to whom the business entity pays any salary or commission for the solicitation, negotiation or procurement of any insurance contract.

5. Within twenty working days after the change of any information submitted on the application or upon termination of any insurance producer, the business entity shall notify the director of the change or termination. No fee shall be charged for any such change or termination.

6. If the director has taken no action within twenty-five working days of receipt of an application, the application shall be deemed approved and the applicant may act as a licensed insurance producer, unless the applicant has indicated a conviction for a felony or a crime involving moral turpitude.

(L. 2001 S.B. 193)

Effective 1-01-03

Examination required for insurance producer's license.

375.016. 1. A resident individual applying for an insurance producer license shall pass a written examination unless exempt pursuant to subsection 5, 6 or 7 of this section. The examination shall test the knowledge of the individual concerning the lines of authority for which application is made, the duties and responsibilities of an insurance producer and the insurance laws and regulations of this state. Examinations required by this section shall be developed and conducted pursuant to the rules and regulations prescribed by the director.

2. The director may make arrangements, including contracting with an outside testing service, for administering examinations.

3. Each individual applying for an examination shall remit a nonrefundable fee as prescribed by the director.

4. An individual who fails to appear for the examination as scheduled or fails to pass the examination may reapply for an examination and shall remit all required fees and forms before being rescheduled for another examination.

5. An individual who applies for an insurance producer license in this state who was previously licensed for the same lines of authority in another state shall not be required to complete any examination. This exemption is only available if the person is currently licensed in that state or if the application is received within ninety days of the cancellation of the previous license and if the prior state issues a certification that, at the time of cancellation, the applicant was in good standing in that state. The director may also verify that the applicant is or was licensed in good standing for the lines of authority requested through the producer database records, maintained by the National Association of Insurance Commissioners, its affiliates or subsidiaries, or any other method the director deems appropriate.

6. An individual licensed as an insurance producer in another state who moves to this state shall make application within ninety days of establishing legal residence to become a resident insurance producer pursuant to subsection 1 of this section. No examination shall be required of that person to obtain any line of authority previously held in the prior state except where the director determines otherwise by regulation.

7. Individuals applying for limited lines producer licenses shall be exempt from examination.

(L. 1965 p. 569, A.L. 1967 p. 516, A.L. 1981 S.B. 10, A.L. 2001 S.B. 193)

Effective 1-01-03

Nonresident producer's license.

375.017. 1. Unless denied licensure pursuant to section 375.141, a nonresident person shall receive a nonresident producer license if:

(1) The person is currently licensed as a resident and in good standing in his or her home state;

(2) The person has submitted the proper request for licensure and has paid the fees prescribed by the director;

(3) The person has submitted or transmitted to the director the application for licensure that the person submitted to his or her home state, or in lieu of the same, a completed uniform application or the uniform business entity application; and

(4) The home state of the person awards nonresident producer licenses to residents of this state on the same basis.

2. The director may verify the licensing status of the nonresident producer through the producer database maintained by the National Association of Insurance Commissioners, its affiliates or subsidiaries or through any other method the director deems appropriate.

3. A nonresident producer who moves from one state to another state or a resident producer who moves from this state to another state shall file a change of address within thirty days of the change of legal residence.

4. Notwithstanding any other provision of this chapter, a person licensed as a surplus lines licensee or producer in his or her home state shall receive a nonresident surplus lines license pursuant to subsection 1 of this section. Except as provided in subsection 1 of this section, nothing in this section otherwise amends or supercedes any provision of chapter 384.

5. Notwithstanding any other provision of this chapter, a person licensed as a limited line credit insurance producer or other type of limited lines producer in his or her home state shall receive a nonresident limited lines producer license, pursuant to subsection 1 of this section, granting the same scope of authority as granted under the license issued by the home state of the producer. For the purposes of this subsection, limited line insurance is any authority granted by the home state which restricts the authority of the license to less than the total authority prescribed in the associated major lines pursuant to subdivisions (1) to (6) of subsection 1 of section 375.018.

6. A satisfaction by the nonresident producer of the continuing education requirements of his or her home state for licensed insurance producers shall constitute satisfaction of the continuing education requirements of this state if the home state of the nonresident producer recognizes the satisfaction of its continuing education requirements imposed upon producers from this state on the same basis. This subsection shall also apply to surplus lines licensees licensed pursuant to chapter 384.

7. The director shall not assess a greater fee for an insurance producer license or related service to a person not residing in the state solely on the fact that the person does not reside in this state. The director shall waive any license application requirements for a nonresident license applicant with a valid license from his or her home state, except the requirements imposed by subsection 1 of this section, if the applicant's home state awards nonresident licenses to residents of this state on the same basis.

(L. 1967 p. 516, A.L. 1981 S.B. 10, A.L. 2000 S.B. 896, A.L. 2001 S.B. 193)

Effective 1-01-03

Issuance of producer's license, duration--lines of authority--biennialrenewal fee for agents, due when--reinstatement of license,when--failure to comply, effect.

375.018. 1. Unless denied licensure pursuant to section 375.141, persons who have met the requirements of sections 375.014, 375.015 and 375.016 shall be issued an insurance producer license for a term of two years. An insurance producer may qualify for a license in one or more of the following lines of authority:

(1) Life insurance coverage on human lives including benefits of endowment and annuities, and may include benefits in the event of death or dismemberment by accident and benefits for disability income;

(2) Accident and health or sickness insurance coverage for sickness, bodily injury or accidental death and may include benefits for disability income;

(3) Property insurance coverage for the direct or consequential loss or damage to property of every kind;

(4) Casualty insurance coverage against legal liability, including that for death, injury or disability or damage to real or personal property;

(5) Variable life and variable annuity products insurance coverage provided under variable life insurance contracts and variable annuities;

(6) Personal lines property and casualty insurance coverage sold to individuals and families for primarily noncommercial purposes;

(7) Credit-limited line credit insurance;

(8) Any other line of insurance permitted under state laws or regulations.

2. Any insurance producer who is certified by the Federal Crop Insurance Corporation on September 28, 1995, to write federal crop insurance shall not be required to have a property license for the purpose of writing federal crop insurance.

3. The biennial renewal fee for a producer's license is one hundred dollars for each license. A producer's license shall be renewed biennially on the anniversary date of issuance and continue in effect until refused, revoked or suspended by the director in accordance with section 375.141.

4. An individual insurance producer who allows his or her license to expire may, within twelve months from the due date of the renewal fee, reinstate the same license without the necessity of passing a written examination. The insurance producer seeking relicensing pursuant to this subsection shall provide proof that the continuing education requirements have been met and shall pay a penalty of twenty-five dollars per month that the license was expired in addition to the requisite renewal fees that would have been paid had the license been renewed in a timely manner. Nothing in this subsection shall require the director to relicense any insurance producer determined to have violated the provisions of section 375.141.

5. A business entity insurance producer that allows the license to expire may, within twelve months of the due date of the renewal, reinstate the license by paying the license fee that would have been paid had the license been renewed in a timely manner plus a penalty of twenty-five dollars per month that the license was expired.

6. The license shall contain the name, address, identification number of the insurance producer, the date of issuance, the lines of authority, the expiration date and any other information the director deems necessary.

7. Insurance producers shall inform the director by any means acceptable to the director of a change of address within thirty days of the change. Failure to timely inform the director of a change in legal name or address may result in a forfeiture not to exceed the sum of ten dollars per month.

8. In order to assist the director in the performance of his or her duties, the director may contract with nongovernmental entities, including the National Association of Insurance Commissioners or any affiliates or subsidiaries that the organization oversees or through any other method the director deems appropriate, to perform any ministerial functions, including the collection of fees, related to producer licensing that the director may deem appropriate.

9. Any bank or trust company in the sale or issuance of insurance products or services shall be subject to the insurance laws of this state and rules adopted by the department of insurance, financial institutions and professional registration.

10. A licensed insurance producer who is unable to comply with license renewal procedures due to military service or some other extenuating circumstance, such as a long-term medical disability, may request a waiver of those procedures. The producer may also request a waiver of any other fine or sanction imposed for failure to comply with renewal procedures.

(L. 1965 p. 569, A.L. 1967 p. 516, A.L. 1981 S.B. 10, A.L. 1984 S.B. 570, A.L. 1985 H.B. 545, A.L. 1990 H.B. 1739, A.L. 1991 H.B. 575, A.L. 1992 S.B. 796, A.L. 1993 H.B. 709, A.L. 2001 S.B. 193, A.L. 2002 S.B. 895)

Effective 1-01-03

Advisory board on licensing and examination of insuranceproducers--qualifications--terms--meetings--duties.

375.019. To assist the director to carry out the provisions of section 375.016, there shall be an "Advisory Board on Licensing and Examination of Insurance Producers" consisting of nine insurance producers duly licensed by the state of Missouri. An insurance producer to be eligible for service on the state board on examinations shall be a citizen of the United States and a licensed resident insurance producer. Members of the board shall be appointed by the director. The director shall appoint four members for two-year terms and five members for three-year terms. Membership on the board shall terminate for failure to meet any of the qualifications for eligibility, death, disability, inability to serve or resignation, absence from two consecutive regular meetings without acceptable excuse filed in writing to the board, or removal by the director. The board shall meet regularly at a place designated by the director within the state of Missouri at least annually and whenever deemed necessary by the director. At the regular meeting the board shall elect officers and transact any other such business as may properly come before the board. Five members shall constitute a quorum. The officers of the board shall consist of a chairman and vice chairman elected for a term of one year. The chairman, or in the event of his inability to serve, the vice chairman, shall preside at all meetings of the board, appoint committees, and perform the usual duties of such office. The board shall appoint a secretary who shall be a member of the board. The secretary shall keep correct minutes of all meetings of the board, furnishing a copy to each member and the director, mail notices of all meetings no less than ten days in advance thereof, and otherwise perform the usual duties of such office. The board shall make recommendations, including, but not limited to, the approval of any educational or trade organizations and insurance companies, and any other matter that pertains to the insurance producer continuing education requirements. The board shall seek at all times to maintain and increase the effectiveness of examinations for insurance producer licenses and shall advise and consult with the director with respect to the preparation and the conduct of insurance producer examinations. The board shall recommend such changes as may expedite or improve any phase of the examination procedure or the method of conducting examinations. The board shall receive suggestions regarding the examination for consideration and discussion. The board shall make rules and determine procedure, with the approval of the director, in reference to other matters which may properly come before a board on examinations. Each member of the board on beginning his or her term of office shall file with the director a written pledge of faithful and honorable performance. The members of the board shall receive no compensation or expenses in connection with the performance of their duties.

(L. 1967 p. 576 § 1, A.L. 1981 S.B. 10, A.L. 1984 S.B. 570, A.L. 2001 S.B. 193)

Effective 1-01-03

Continuing education for producers, required,exceptions--procedures--director to promulgate rules andregulations--fees, how determined, deposit of.

375.020. 1. Beginning January 1, 2008, each insurance producer, unless exempt pursuant to section 375.016, licensed to sell insurance in this state shall successfully complete courses of study as required by this section. Any person licensed to act as an insurance producer shall, during each two years, attend courses or programs of instruction or attend seminars equivalent to a minimum of sixteen hours of instruction. Of the sixteen hours' training required in this subsection, the hours need not be divided equally among the lines of authority in which the producer has qualified. The courses or programs attended by the producer during each two-year period shall include instruction on Missouri law, products offered in any line of authority in which the producer is qualified, producers' duties and obligations to the department, and business ethics, including sales suitability. Course credit shall be given to members of the general assembly as determined by the department.

2. Subject to approval by the director, the courses or programs of instruction which shall be deemed to meet the director's standards for continuing educational requirements shall include, but not be limited to, the following:

(1) American College Courses (CLU, ChFC);

(2) Life Underwriters Training Council (LUTC);

(3) Certified Insurance Counselor (CIC);

(4) Chartered Property and Casualty Underwriter (CPCU);

(5) Insurance Institute of America (IIA);

(6) Any other professional financial designation approved by the director by rule;

(7) An insurance-related course taught by an accredited college or university or qualified instructor who has taught a course of insurance law at such institution;

(8) A course or program of instruction or seminar developed or sponsored by any authorized insurer, recognized producer association or insurance trade association, or any other entity engaged in the business of providing education courses to producers. A local producer group may also be approved if the instructor receives no compensation for services.

3. A person teaching any approved course of instruction or lecturing at any approved seminar shall qualify for the same number of classroom hours as would be granted to a person taking and successfully completing such course, seminar or program.

4. Excess hours accumulated during any two-year period may be carried forward to the two-year period immediately following the two-year period in which the course, program or seminar was held.

5. For good cause shown, the director may grant an extension of time during which the educational requirements imposed by this section may be completed, but such extension of time shall not exceed the period of one calendar year. The director may grant an individual waiver of the mandatory continuing education requirement upon a showing by the licensee that it is not feasible for the licensee to satisfy the requirements prior to the renewal date. Waivers may be granted for reasons including, but not limited to:

(1) Serious physical injury or illness;

(2) Active duty in the armed services for an extended period of time;

(3) Residence outside the United States; or

(4) The licensee is at least seventy years of age.

6. Every person subject to the provisions of this section shall furnish in a form satisfactory to the director, written certification as to the courses, programs or seminars of instruction taken and successfully completed by such person. Every provider of continuing education courses authorized in this state shall, within thirty working days of a licensed producer completing its approved course, provide certification to the director of the completion in a format prescribed by the director.

7. The provisions of this section shall not apply to those natural persons holding licenses for any kind or kinds of insurance for which an examination is not required by the law of this state, nor shall they apply to any limited lines insurance producer license or restricted license as the director may exempt.

8. The provisions of this section shall not apply to a life insurance producer who is limited by the terms of a written agreement with the insurer to transact only specific life insurance policies having an initial face amount of fifteen thousand dollars or less, or annuities having an initial face amount of fifteen thousand dollars or less, that are designated by the purchaser for the payment of funeral or burial expenses. The director may require the insurer entering into the written agreements with the insurance producers pursuant to this subsection to certify as to the representations of the insurance producers.

9. Rules and regulations necessary to implement and administer this section shall be promulgated by the director, including, but not limited to, rules and regulations regarding the following:

(1) Course content and hour credits: the insurance advisory board established by section 375.019 shall be utilized by the director to assist him in determining acceptable content of courses, programs and seminars to include classroom equivalency;

(2) Filing fees for course approval: every applicant seeking approval by the director of a continuing education course under this section shall pay to the director a filing fee of fifty dollars per course. Fees shall be waived for state and local insurance producer groups. Such fee shall accompany any application form required by the director. Courses shall be approved for a period of no more than one year. Applicants holding courses intended to be offered for a longer period must reapply for approval. Courses approved by the director prior to August 28, 1993, for which continuous certification is sought should be resubmitted for approval sixty days before the anniversary date of the previous approval.

10. All funds received pursuant to the provisions of this section shall be transmitted by the director to the department of revenue for deposit in the state treasury to the credit of the insurance dedicated fund. All expenditures necessitated by this section shall be paid from funds appropriated from the insurance dedicated fund by the legislature.

(L. 1988 S.B. 430, A.L. 1990 H.B. 1739, A.L. 1991 H.B. 575, A.L. 1993 H.B. 709, A.L. 2001 S.B. 193, A.L. 2007 S.B. 66, A.L. 2009 H.B. 577, A.L. 2014 S.B. 794)

Registry of insurance producers maintained by insurer--terminationof producer, insurer to notify director.

375.022. 1. An insurer authorized to transact the business of insurance in this state shall maintain a register of appointed insurance producers who are authorized to sell, solicit or negotiate contracts of insurance on behalf of the insurer. Within thirty days of an insurer authorizing an insurance producer to transact the business of insurance on its behalf, the insurer shall enter the name and license number of the insurance producer in the company register of appointed insurance producers. No fee shall be charged for adding a producer to or terminating a producer from the register.

2. An insurance producer shall not act on behalf of an insurer unless the insurance producer is listed on the company register of appointed insurance producers authorized to sell, solicit or negotiate contracts of insurance on behalf of the insurer.

3. The company register of appointed insurance producers shall be open to inspection and examination by the director during regular business hours of the insurer.

4. The company register of appointed insurance producers may be maintained electronically.

5. An insurer that terminates the appointment, employment, contract or other insurance business relationship with an insurance producer for one of the reasons set forth in section 375.141 shall, within thirty days following the effective date of the termination, notify the director of the reason for termination. The insurer shall also update its company register of appointed insurance producers by entering the effective date of the termination within thirty days after the termination.

6. An insurer that terminates the appointment, employment, contract or other insurance business relationship with an insurance producer for any reason not set forth in section 375.141 shall update its company register of appointed insurance producers by entering the effective date of the termination within thirty days after the termination.

7. The insurer shall promptly notify the director if, upon further review or investigation, the insurer discovers additional information that would have been reportable to the director in accordance with subsection 1 of this section had the insurer then known of its existence.

8. Any information filed by an insurance company or obtained by the director pursuant to this section and any document, record or statement required by the director pursuant to the provisions of this section shall be deemed confidential and absolutely privileged. There shall be no liability on the part of, and no cause of action shall arise against, any insurer, its producers or its authorized investigative sources or the director or the director's authorized representatives in connection with any written notice required by the section made by them in good faith. The director shall, upon written request by the producer, furnish to the producer a copy of all information obtained pursuant to this section.

9. The director is authorized to use the documents, materials or other information in the furtherance of any regulatory or legal action brought as a part of the duties of the director.

10. Neither the director nor any person who received documents, materials or other information while acting under the authority of the director shall be permitted or required to testify in any private civil action concerning any confidential documents, materials, or information subject to subsection 1 of this section.

11. In order to assist in the performance of the duties of the director pursuant to this section, the director:

(1) May share documents, materials or other information, including the confidential and privileged documents, materials or information subject to subsection 5 of this section, with other state, federal, and international regulatory agencies, with the National Association of Insurance Commissioners, its affiliates or subsidiaries, and with state, federal, and international law enforcement authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material or other information; and

(2) May receive documents, materials or information, including otherwise confidential and privileged documents, materials or information, from the National Association of Insurance Commissioners, its affiliates or subsidiaries and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information.

12. No waiver of any applicable privilege or claim of confidentiality in the documents, materials, or information shall occur as a result of disclosure to the director pursuant to this section or as a result of sharing as authorized in subsection 7 of this section.

13. Nothing in this chapter shall prohibit the director from releasing final, adjudicated actions including for cause terminations that are open to public inspection pursuant to chapter 610 to a database or other clearinghouse service maintained by the National Association of Insurance Commissioners, its affiliates or subsidiaries of the National Association of Insurance Commissioners or any other like database or clearinghouse as deemed appropriate by the director.

14. If the director suspends, revokes, or refuses to issue or renew a license pursuant to section 375.141, he or she shall provide public notice.

(L. 1967 p. 516, A.L. 1981 S.B. 10, A.L. 1991 H.B. 575, A.L. 1998 H.B. 1601, et al., A.L. 2000 S.B. 896, A.L. 2001 S.B. 193)

Effective 1-01-03

Life insurance producer examinations, review of--collection ofdata--annual report--rulemaking authority.

375.024. 1. The provisions of this section shall only apply to life insurance producer examinations.

2. The director or, at the director's discretion, a vendor under contract with the department, shall review license producer examinations subject to the provisions of this section if, during any twelve-month period beginning on September first of a year, the examinations exhibit an overall pass rate of less than seventy percent for first-time examinees.

3. In conformance with appropriate law relating to privacy, the department shall collect demographic information, including, race, gender, and national origin, from an individual taking a license examination subject to the provisions of this section.

4. The department shall compile an annual report based on the review required under subsection 2 of this section. The report shall indicate whether there was any disparity in the examination pass rate based on demographic information.

5. The director by rule may establish procedures as necessary to:

(1) Collect demographic information necessary to implement the provisions of this section; and

(2) Ensure that a review required under subsection 2 of this section is conducted and the resulting report is prepared.

Any rule or portion of a rule, as that term is defined in section 536.010, that is created under the authority delegated in this section shall become effective only if it complies with and is subject to all of the provisions of chapter 536, and, if applicable, section 536.028. This section and chapter 536 are nonseverable and if any of the powers vested with the general assembly pursuant to chapter 536 to review, to delay the effective date, or to disapprove and annul a rule are subsequently held unconstitutional, then the grant of rulemaking authority and any rule proposed or adopted after August 28, 2010, shall be invalid and void.

6. The director shall deliver the report prepared under this section to the governor, the lieutenant governor, the president pro tem of the senate, and the speaker of the house of representatives not later than December first of each year.

7. The first twelve-month period for which a license examination review may be required under this section shall begin September 1, 2010.

8. The director shall deliver the initial report required under this section, not later than December 1, 2011.

(L. 2010 S.B. 583)

Temporary license--to whom issued.

375.025. 1. The director may issue a temporary insurance producer license for a period not to exceed ninety days without requiring an examination if the director deems the temporary license is necessary for the servicing of an insurance business in the following circumstances:

(1) To the surviving spouse or court-appointed personal representative of a licensed insurance producer who dies or becomes mentally or physically disabled to allow adequate time for the sale of the insurance business owned by the producer or to provide for the training and licensing of new personnel to operate the business of the producer;

(2) To a member or employee of a business entity licensed as an insurance producer, upon the death or disability of an individual designated in the business entity application or the license;

(3) To the designee of a licensed insurance producer entering active service in the Armed Forces of the United States; or

(4) In any other circumstance in which the director deems that the public interest will best be served by the issuance of the license.

2. The director may by order limit the authority of any temporary licensee in any way deemed necessary to protect insureds and the public. The director may require the temporary licensee to have a suitable sponsor who is a licensed producer or insurer and who assumes responsibility for all acts of the temporary licensee and may impose other similar requirements designed to protect insureds and the public. The director may revoke a temporary license if the interests of insureds or the public are endangered. A temporary license may not continue after the owner or the personal representative disposes of the business.

(L. 1965 p. 569, A.L. 1983 S.B. 44 & 45, A.L. 2001 S.B. 193)

Effective 1-01-03

Continuing education, programs approved for another profession.

375.030. Any course or program of instruction approved for use to meet professional continuing education in another Missouri profession, as required by law, that relates to the topic of insurance shall meet the continuing education requirements pursuant to section 375.020.

(L. 1996 S.B. 664 § 17)

Definitions.

375.031. As used in sections 375.031 to 375.039, the following words and terms mean:

(1) "Director", the director of the department of insurance, financial institutions and professional registration;

(2) "Exclusive insurance producer", any licensed insurance producer whose contract with an insurer requires the insurance producer to act as an agent only for that insurer or a group of insurers under common ownership or control or other insurers authorized by that insurer;

(3) "Independent insurance producer", any licensed insurance producer representing an insurance company as an independent contractor and not as an employee, or any individual, partnership or corporation transacting business with the public or insurance companies as an agent is an independent insurance producer, but shall not include an exclusive insurance producer;

(4) "Insurer", any property and casualty insurance company doing business in the state of Missouri.

(L. 1979 H.B. 506 § 1, A.L. 1985 S.B. 329, A.L. 1986 S.B. 701 merged with H.B. 1554 Revision, A.L. 2001 S.B. 193)

Effective 1-01-03

(1991) Where statute defining "insurer" is ambiguous and legislative intent was to protect independent agents from termination without notice by insurance companies that write either property or casualty insurance, definition of term "insurer" for purposes of sections 375.031 to 375.039 includes companies which write either property or casualty insurance, as well as those who write both types of insurance. Risk Control Associates, Inc. v. Melahn, 822 S.W.2d 531 (Mo.App.).

Termination of contract, notice--agent not to do business.

375.033. 1. All contracts between an insurer and an independent insurance producer in effect in the state of Missouri on or after September 28, 1979, shall not be terminated or cancelled by the insurer except by mutual agreement or unless ninety days' written notice in advance has been given to the independent insurance producer and the director of the department of insurance, financial institutions and professional registration.

2. During the ninety days' notice period the independent insurance producer shall not write or bind any new business on behalf of the insurer without specific written approval.

(L. 1979 H.B. 506 § 2, A.L. 1986 S.B. 701, A.L. 1987 H.B. 384 Revision, A.L. 2001 S.B. 193)

Effective 1-01-03

Renewal after termination of producer's contract.

375.035. 1. Any insurer in this state shall, upon termination or cancellation of an independent insurance producer's contract, permit the renewal of all contracts of insurance written by the independent insurance producer for a period of one year from the date of termination, as determined by the underwriting requirements of the insurer. If any insured fails to meet the current underwriting requirements of the insurer, the insurer shall give the terminated independent insurance producer and the insured thirty days' notice of its intention not to renew the contract of insurance.

2. Any insurer renewing contracts of insurance in accordance with this section shall pay commissions for the renewals to the terminated or cancelled independent insurance producer in the same amount and manner as paid to the independent insurance producer under the terminated or cancelled contract.

3. When the insurer renews a contract of insurance pursuant to this section, the renewal shall be for a time period equal to the greater of one year or one additional term of the term specified in the original contract.

(L. 1979 H.B. 506 § 3, A.L. 2001 S.B. 193)

Effective 1-01-03

Director's investigation--appeal.

375.037. 1. The director of the department of insurance, financial institutions and professional registration, on the written complaint of any person, or when the director deems it necessary without a complaint, shall determine whether there has been a violation of sections 375.031 to 375.037. After such determination, the director shall notify all parties concerned by certified mail and shall prescribe a method of cancellation to be followed by the concerned parties. Any party who is aggrieved by the decision of the director of the department of insurance, financial institutions and professional registration shall be entitled to judicial review thereof, as provided in sections 536.100 to 536.140.

2. Sections 375.031 to 375.037 shall not apply if the director determines nonrenewal is necessary to preserve an insurer's solvency or to protect the insured's interest. Nor shall sections 375.031 to 375.037 apply in the case of fraud, failure to properly remit premiums, or whenever the director determines the license of the insurance producer could be revoked or not renewed pursuant to the provisions of section 375.141.

3. If any provision of sections 375.031 to 375.037 or the application thereof to any person or circumstances is held invalid, the validity of the remainder of sections 375.031 to 375.037 and of the application of such provision to other persons and circumstances shall not be affected thereby.

(L. 1979 H.B. 506 § 4, A.L. 2001 S.B. 193)

Effective 1-01-03

Commercial risks, certain class, cancellation, written notice toagent required, when.

375.039. 1. No insurer may cancel, terminate or otherwise withdraw coverage for a certain class of commercial risk, unless written notice of such cancellation, termination, or withdrawal is given to the insurer's independent insurance producer authorized to sell such insurance coverage at least sixty days prior to such cancellation, termination or withdrawal.

2. The provisions of subsection 1 of this section shall not apply if the cancellation, termination or withdrawal of coverage by an insurer is by reason of reinsurance requirements, adverse loss experience, or by the requirement of the Missouri department of insurance, financial institutions and professional registration. In these circumstances, the notice described in subsection 1 of this section shall be given at least thirty days prior to such cancellation, termination or withdrawal.

(L. 1985 S.B. 329, A.L. 2001 S.B. 193)

Effective 1-01-03

Annual statement convention blank to be filed with NAIC,exception--dissemination of data not to create civilliability--failure to file, effect.

375.041. 1. The provisions of this section shall apply to all domestic, foreign and alien insurers who are authorized to transact business in this state, and shall also apply to those companies organized and authorized to transact business in this state pursuant to the provisions of chapter 354, 377, 378 or 381.

2. Each domestic, foreign and alien insurer who is authorized to transact insurance in this state, and each company organized and authorized to transact business in this state pursuant to the provisions of chapter 354, 377, 378 or 381, shall annually, on or before March first of each year, file with the National Association of Insurance Commissioners a copy of its annual statement convention blank, along with such additional filings as prescribed by the director of the department of insurance, financial institutions and professional registration for the preceding year. The information filed with the National Association of Insurance Commissioners shall be in the same format and scope as that required by the director of the department of insurance, financial institutions and professional registration and shall include the signed jurat page and the actuarial certification. Any amendments and addendums to the annual statement filing subsequently filed with the director of the department of insurance, financial institutions and professional registration shall also be filed with the National Association of Insurance Commissioners. Foreign insurers that are domiciled in a state which has a law substantially similar to this subsection shall be deemed in compliance with this subsection.

3. In the absence of actual malice, or gross negligence, members of the National Association of Insurance Commissioners, their duly authorized committees, subcommittees and task forces, their delegates, National Association of Insurance Commissioners' employees, and all others charged with the responsibility of collecting, reviewing, analyzing and disseminating the information developed from the filing of the annual statement convention blanks shall be acting as agents of the director of the department of insurance, financial institutions and professional registration under the authority of this section and shall not be subject to civil liability for libel, slander or any other cause of action by virtue of their collection, review and analysis or dissemination of the data and information collected from the filings required under this section.

4. The director of the department of insurance, financial institutions and professional registration may suspend, revoke or refuse to renew the certificate of authority of any insurer failing to file its annual statement when due or within any extension of time which the director, for good cause, may have granted.

(L. 1985 S.B. 329, A.L. 1992 H.B. 1574)

Who deemed agent of unauthorized company.

375.046. Any person or persons in this state who shall receipt for any money on account of or for any contract of insurance made by such person or persons for any insurance company or association not at the time authorized to do business in this state, or who shall receive or receipt for any money from other persons, to be transmitted to any such insurance company or association, either in or out of this state, for a policy or policies of insurance issued by the company or association, or for any renewal thereof, although the same may not be required by such person or persons as insurance producers, or who shall make or cause to be made, directly or indirectly, any contract of insurance for the company or association, shall be deemed to all intents and purposes a producer of the company or association, and shall be subject to all the provisions and regulations and liable to all the penalties provided and fixed by sections 375.010 to 375.920.

(RSMo 1939 § 6018, A.L. 1967 p. 516, A.L. 2001 S.B. 193)

Effective 1-01-03

Producer held as trustee of money collected.

375.051. 1. Any insurance producer who shall be appointed or who shall act on behalf of any insurance company within this state, or who shall, on behalf of any insurance company, solicit applications, deliver policies or renewal receipts and collect premiums thereon, or who shall receive or collect moneys from any source or on any account whatsoever, on behalf of any insurance company doing business in this state, shall be held responsible in a trust or fiduciary capacity to the company for any money so collected or received by him or her for the insurance company.

2. Any insurance producer who shall act on behalf of any applicant for insurance or insured within this state, or who shall, on behalf of any applicant for insurance or insured, seek to place insurance coverage, deliver policies or renewal receipts and collect premiums thereon, or who shall receive or collect moneys from any source or on any account whatsoever, shall be held responsible in a trust or fiduciary capacity to the applicant for insurance or insured for any money so collected or received by him or her.

3. Nothing in this section shall be construed to require any insurance producer to maintain a separate bank account or deposit for the funds of each payor, as long as the funds so held are reasonably ascertainable from the books of account and records of the insurance producer.

(RSMo 1939 § 6018, A.L. 1955 p. 241, A.L. 1967 p. 516, A.L. 2001 S.B. 193)

Effective 1-01-03

Additional incidental fees--disclosure to applicant or insured.

375.052. An insurer or insurance producer may charge additional incidental fees for premium installments, late payments, policy reinstatements, or other similar services specifically provided for by law or regulation. Such fees shall be disclosed to the applicant or insured in writing.

(L. 2001 S.B. 193)

CROSS REFERENCE:

Incidental fees, additional, may be charged, when, disclosure to insured, 379.356

Credit insurance producer license--organizational credit entitylicense--application--fee--rules.

375.065. 1. Notwithstanding any other provision of this chapter, the director may license credit insurance producers by issuing individual licenses to each credit insurance producer or by issuing an organizational credit entity license to a resident or nonresident applicant who has complied with the requirements of subsections 1 to 7 of this section. An organizational credit entity license authorizes the employees of the licensee who are at least eighteen years of age, acting on behalf of and supervised by the licensee and whose compensation is not primarily paid on a commission basis to act as insurance producers for the following types of insurance:

(1) Credit life insurance;

(2) Credit accident and health insurance;

(3) Credit property insurance;

(4) Credit mortgage life insurance;

(5) Credit mortgage disability insurance;

(6) Credit involuntary unemployment insurance;

(7) Any other form of credit or credit-related insurance approved by the director.

2. To obtain an organizational credit entity license, an applicant shall submit to the director the uniform business entity application along with a fee of one hundred dollars. All applications shall include the following information:

(1) The name of the business entity, the business address or addresses of the business entity and the type of ownership of the business entity. If a business entity is a partnership or unincorporated association, the application shall contain the name and address of every person or corporation having a financial interest in or owning any part of the business entity. If the business entity is a corporation, the application shall contain the names and addresses of all officers and directors of the corporation. If the business entity is a limited liability company, the application shall contain the names and addresses of all members and officers of the limited liability company;

(2) A list of all persons employed by the business entity and to whom it pays any salary or commission for the sale, solicitation, negotiation or procurement of any contracts of credit life, credit accident and health, credit involuntary unemployment, credit leave of absence, credit property, credit mortgage life, credit mortgage disability or any other form of credit or credit-related insurance approved by the director. Any changes in the list of employees of the business entity due to hiring or termination or any other reason shall be submitted to the director within ten days of the change.

3. All persons included on the list referenced in subdivision (2) of subsection 2 of this section shall be deemed insurance producers pursuant to the provisions of subsection 1 of section 375.014 for the authorized lines of credit insurance, and shall be deemed licensed insurance producers for the purposes of section 375.141, notwithstanding the fact that individual licenses are not issued to those persons included on the business entity application list.

4. Upon receipt of a completed application and payment of the requisite fees, the director, if satisfied that an applicant has complied with all license requirements contained in subsections 1 to 7 of this section, shall issue the applicant an organizational credit business entity license which shall remain in effect for one year or until suspended or revoked by the director, or until the organizational credit business entity ceases to operate as a legal entity in this state. Each organizational credit business entity shall renew its license annually, on or before the anniversary date of the original issuance of the license, by:

(1) Paying a renewal fee of fifty dollars;

(2) Providing the director a list of all employees selling, soliciting, negotiating and procuring credit insurance, and paying a fee of eighteen dollars per each employee.

5. Licenses of organizational credit business entities which are not timely renewed shall expire on the anniversary date of the original issuance. An organizational credit business entity that allows the license to expire may, within twelve months of the due date of the renewal, reinstate the license by paying the license fee that would have been paid had the license been renewed in a timely manner plus a penalty of twenty-five dollars per month that the license was expired.

6. Notwithstanding any other provision of law to the contrary, subsections 1 to 7 of this section shall not be construed to prohibit an insurance company from paying a commission or providing another form of remuneration to a duly licensed organizational credit business entity.

7. The director shall have the power to promulgate such rules and regulations as are necessary to implement the provisions of subsections 1 to 7 of this section. No rule or portion of a rule promulgated pursuant to the authority of subsections 1 to 7 of this section shall become effective unless it has been promulgated pursuant to the provisions of chapter 536.

(L. 2000 S.B. 896, A.L. 2001 S.B. 193, A.L. 2002 S.B. 895, A.L. 2007 S.B. 613 Revision)

Centralized producer license registry, participation in.

375.071. 1. The director may participate in a centralized producer license registry, in whole or in part, with any entity the director deems appropriate, including but not limited to the National Association of Insurance Commissioners, or any affiliates or subsidiaries such organization oversees, in which insurance producer licenses may be centrally or simultaneously effected for all states that require an insurance producer license and that participate in the centralized producer license registry.

2. If the director finds that participation in the centralized producer license registry is in the public interest, the director may adopt by rule any uniform standards and procedures consistent with this chapter as are necessary to participate in the registry, including the central collection of all fees for licenses that are processed through the registry.

(L. 1961 p. 504 § 2, A.L. 1967 p. 516, A.L. 1984 S.B. 570, A.L. 2001 S.B. 193)

Effective 1-01-03

No consideration for unlicensed persons.

375.076. 1. An insurance company or insurance producer shall not pay a commission, service fee, brokerage or other valuable consideration to a person for selling, soliciting or negotiating insurance in this state if that person is required to be licensed and is not so licensed.

2. A person shall not accept a commission, service fee, brokerage or other valuable consideration for selling, soliciting or negotiating insurance in this state if that person is required to be licensed and is not so licensed.

3. Renewal or other deferred commissions may be paid to a person for selling, soliciting or negotiating insurance in this state if the person was required to be licensed at the time of the sale, solicitation or negotiation and was so licensed at that time.

4. An insurer or insurance producer may pay or assign commissions, service fees, brokerages or other valuable consideration to a business entity licensed as an insurance producer or to persons who do not sell, solicit or negotiate insurance in this state, unless the payment would violate subdivision (9) of section 375.936 or section 379.356. Under no circumstances may an insurer or insurance producer pay or assign commissions, service fees, brokerages or other valuable consideration to a person whose license is under suspension or revocation.

(L. 1961 p. 504 §§ 3, 4, 5, 14, A.L. 1967 p. 516, A.L. 1981 S.B. 10, A.L. 1990 H.B. 1739, A.L. 2001 S.B. 193)

Effective 1-01-03

Insurance producers, limitations on negotiated contracts.

375.106. Insurance producers acting on behalf of an applicant for insurance or insured shall negotiate contracts of insurance only with authorized domestic insurance companies, licensed insurance * producers, foreign insurance companies duly admitted to do business in this state, or with a duly licensed surplus lines broker.

(L. 1961 p. 504 § 10, A.L. 1967 p. 516, A.L. 1981 S.B. 10, A.L. 2001 S.B. 193)

Effective 1-01-03

*Word "insurance" appears in original rolls.

Compensation of producer, regulations--not to receive pay frominsured, exception.

375.116. 1. An insurance company or insurance producer may pay money, commissions or brokerage, or give or allow anything of value, for or on account of negotiating contracts of insurance, or placing or soliciting or effecting contracts of insurance, to a duly licensed insurance producer.

2. Nothing in this chapter shall abridge or restrict the freedom of contract of insurance companies or insurance producers with reference to the amount of commissions or fees to be paid to the insurance producers and the payments are expressly authorized.

3. No insurance producer shall have any right to compensation other than commissions deductible from premiums on insurance policies or contracts from any applicant for insurance or insured for or on account of the negotiation or procurement of, or other service in connection with, any contract of insurance made or negotiated in this state or for any other services on account of insurance policies or contracts, including adjustment of claims arising therefrom, unless the right to compensation is based upon a written agreement between the insurance producer and the insured specifying or clearly defining the amount or extent of the compensation. Nothing contained in this section shall affect the right of any insurance producer to recover from the insured the amount of any premium or premiums for insurance effectuated by or through the insurance producer.

4. No insurance producer shall, in connection with the negotiation, procurement, issuance, delivery or transfer in this state of any contract of insurance made or negotiated in this state, directly or indirectly, charge or receive from the applicant for insurance or insured therein any greater sum than the rate of premium fixed therefor and shown on the policy by the insurance company, unless the insurance producer has a right to compensation for services created in the manner specified in subsection 3 of this section.

(L. 1961 p. 504 § 12, A.L. 1967 p. 516, A.L. 2001 S.B. 193)

Effective 1-01-03

Producer placing business with a nonadmitted company or nonresident issubject to chapter 384.

375.136. Any insurance producer placing business with a nonresident agent or producer of a nonadmitted insurance company or direct with a nonadmitted insurance company or nonresident broker or insurance producer shall be subject to the provisions of chapter 384.

(L. 1967 p. 516, A.L. 1977 S.B. 274, A.L. 2001 S.B. 193)

Effective 1-01-03

Suspension, revocation, refusal of license--grounds--procedure.

375.141. 1. The director may suspend, revoke, refuse to issue or refuse to renew an insurance producer license for any one or more of the following causes:

(1) Intentionally providing materially incorrect, misleading, incomplete or untrue information in the license application;

(2) Violating any insurance laws, or violating any regulation, subpoena or order of the director or of another insurance commissioner in any other state;

(3) Obtaining or attempting to obtain a license through material misrepresentation or fraud;

(4) Improperly withholding, misappropriating or converting any moneys or properties received in the course of doing insurance business;

(5) Intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance;

(6) Having been convicted of a felony or crime involving moral turpitude;

(7) Having admitted or been found to have committed any insurance unfair trade practice or fraud;

(8) Using fraudulent, coercive, or dishonest practices, or demonstrating incompetence, untrustworthiness or financial irresponsibility in the conduct of business in this state or elsewhere;

(9) Having an insurance producer license, or its equivalent, denied, suspended or revoked in any other state, province, district or territory;

(10) Signing the name of another to an application for insurance or to any document related to an insurance transaction without authorization;

(11) Improperly using notes or any other reference material to complete an examination for an insurance license;

(12) Knowingly acting as an insurance producer when not licensed or accepting insurance business from an individual knowing that person is not licensed;

(13) Failing to comply with an administrative or court order imposing a child support obligation; or

(14) Failing to comply with any administrative or court order directing payment of state or federal income tax.

2. In the event that the action by the director is not to renew or to deny an application for a license, the director shall notify the applicant or licensee in writing and advise the applicant or licensee of the reason for the denial or nonrenewal. Appeal of the nonrenewal or denial of the application for a license shall be made pursuant to the provisions of chapter 621.

3. The license of a business entity licensed as an insurance producer may be suspended, revoked, renewal refused or an application may be refused if the director finds that a violation by an individual insurance producer was known or should have been known by one or more of the partners, officers or managers acting on behalf of the business entity and the violation was neither reported to the director nor corrective action taken.

4. The director may also revoke or suspend pursuant to subsection 1 of this section any license issued by the director where the licensee has failed to renew or has surrendered such license.

5. Every insurance producer licensed in this state shall notify the director of any change of address, on forms prescribed by the director, within thirty days of the change. If the failure to notify the director of the change of address results in an inability to serve the insurance producer with a complaint as provided by sections 621.045 to 621.198, then the director may immediately revoke the license of the insurance producer until such time as service may be obtained.

6. An insurance producer shall report to the director any administrative action taken against the producer in another jurisdiction or by another governmental agency in this state within thirty days of the final disposition of the matter. This report shall include a copy of the order, consent order or other relevant legal documents.

7. Within thirty days of the initial pretrial hearing date, a producer shall report to the director any criminal prosecution for a felony or a crime involving moral turpitude of the producer taken in any jurisdiction. The report shall include a copy of the indictment or information filed, the order resulting from the hearing and any other relevant legal documents.

(L. 1961 p. 504 § 11, L. 1965 p. 569 § 375.028, A.L. 1967 p. 516, A.L. 1981 S.B. 10, A.L. 1984 S.B. 570, A.L. 1989 H.B. 615 & 563, A.L. 1993 H.B. 709, A.L. 2001 S.B. 193)

Effective 1-01-03

Rulemaking authority.

375.143. In order to effectuate and aid in the interpretation of section 375.141, the director, under section 374.045, may adopt rules and regulations codifying professional standards of producer competency and trustworthiness in the handling of applications, premium funds, conflicts of interest, record keeping, supervision of others, and customer suitability.

(L. 2007 S.B. 66)

Prohibited acts in connection with the offer, sale, solicitation,or negotiation of insurance.

375.144. It is unlawful for any person, in connection with the offer, sale, solicitation or negotiation of insurance, directly or indirectly, to:

(1) Employ any deception, device, scheme, or artifice to defraud;

(2) As to any material fact, make or use any misrepresentation, concealment, or suppression;

(3) Engage in any pattern or practice of making any false statement of material fact; or

(4) Engage in any act, practice, or course of business which operates as a fraud or deceit upon any person.

(L. 2005 H.B. 866)

Violations, penalties.

375.145. 1. If the director determines that a person has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of sections 375.012 to 375.144 or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business constituting a violation of sections 375.012 to 375.144, or a rule adopted or order issued pursuant thereto, the director may issue such administrative orders as authorized under section 374.046. A violation of sections 375.012 to 375.142 is a level two violation under section 374.049. A violation of section 375.144 is a level four violation under 374.049.

2. If the director believes that a person has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, the director may maintain a civil action for relief authorized under section 374.048. A violation of any of sections 375.012 to 375.142 is a level two violation under section 374.049. A violation of section 375.144 is a level four violation under 374.049.

(L. 2007 S.B. 66)

Violation, penalty.

375.146. 1. Any person who knowingly employs, uses or engages in any act, scheme, device or practice in violation of section 375.144 with the purpose to defraud shall upon conviction be fined not more than one hundred thousand dollars and imprisoned not more than ten years, or both. In addition to any fine, imprisonment, or fine and imprisonment imposed, the court may order restitution to the victim in an amount equal to twice the losses due to such offense. If the offender holds a license under these sections, the court imposing sentence shall order the department of insurance, financial institutions and professional registration to revoke such license.

2. Any person willfully violating any of the provisions of sections 375.012 to 375.141 is guilty of a class A misdemeanor and on conviction thereof, if the offender holds a license under these sections, the court imposing sentence shall order the department of insurance, financial institutions and professional registration to revoke the license.

3. The director may refer such evidence as is available concerning violations of this chapter to the proper prosecuting attorney or circuit attorney who may, with or without reference, initiate the appropriate criminal proceedings.

4. Nothing in this section shall limit the power of the state to punish any person for any conduct that constitutes a crime in any other state statute.

(L. 1961 p. 504 § 17, A.L. 1967 p. 516, A.L. 1981 S.B. 10, A.L. 2005 H.B. 866)

Managing general agents (MGA)--citation of law--definitions--laweffective, when.

375.147. 1. Sections 375.147 to 375.153 may be cited as the "Managing General Agents Act".

2. Sections 375.147 to 375.153 shall take effect on July 1, 1991. No insurer may continue to utilize the services of a managing general agent after June 30, 1991, unless such utilization is in compliance with sections 375.147 to 375.153.

3. As used in sections 375.147 to 375.153, the following words and phrases shall mean:

(1) "Actuary", a person who is a member in good standing of the American Academy of Actuaries;

(2) "Director", the director of the department of insurance, financial institutions and professional registration;

(3) "Insurer", any person, firm, association or corporation duly licensed in this state as an insurance company pursuant to section 375.161 or 375.791;

(4) "Managing general agent" or "MGA", any person, firm, association or corporation who manages all or part of the insurance business of an insurer, including the management of a separate division, department or underwriting office, and acts as an agent for such insurer whether known as a managing general agent, manager or other similar term, who, with or without the authority, either separately or together with affiliates, produces, directly or indirectly, and underwrites an amount of gross direct written premiums equal to or more than five percent of the policyholder surplus as reported in the last annual statement of the insurer in any one quarter or year together with one or more of the following:

(a) Adjusts or pays claims in excess of an amount determined by the director. The threshold amount set by the director pursuant to this paragraph shall be applied equally to both domestic and foreign insurers; or

(b) Negotiates reinsurance on behalf of the insurer. Notwithstanding the above, the following persons shall not be considered as managing general agents for the purposes of sections 375.147 to 375.153:

a. An employee of the insurer;

b. A manager of the United States branch of an alien insurer;

c. An underwriting manager which, pursuant to contract, manages all the insurance operation of the insurer, is under common ownership or control with the insurer, subject to the provisions of chapter 382;

d. A person holding a valid certificate of registration as an administrator and acting solely as an "administrator" as defined in section 376.1075; or

e. The attorney authorized by and acting for the subscribers of a reciprocal insurer or interinsurance exchange under powers of attorney;

(5) "Underwrite", the authority to accept or reject risk on behalf of the insurer.

(L. 1990 H.B. 1739 §§ 5, 6, B, A.L. 1992 H.B. 1574, A.L. 1993 H.B. 709, A.L. 1999 H.B. 478)

Managing general agents must be licensed producers--risks locatedoutside state--requirements--bond may be required, also errors andomissions policy.

375.148. 1. No person, firm, association or corporation shall act in the capacity of a managing general agent with respect to risks located in this state for an insurer licensed in this state unless such person is a licensed producer in this state.

2. No person, firm, association or corporation shall act in the capacity of a managing general agent representing an insurer domiciled in this state with respect to risks located outside this state unless such person is licensed as a producer in this state pursuant to the provisions of sections 375.147 to 375.153. Such license may be a nonresident license.

3. The director may require a bond in an amount acceptable to him for the protection of the insurer.

4. The director may require the managing general agent to maintain an appropriate errors and omissions policy for the protection of any person, firm, association or corporation which may be affected by the activities of the managing general agent.

(L. 1990 H.B. 1739 § 7)

Effective 7-1-91

Written contract required for placing business with insurer,content--termination of contract for cause--prohibited acts bymanaging general agents.

375.149. No person, firm, association or corporation acting in the capacity of a managing general agent shall place business with an insurer unless there is in force a written contract between the insurer and the managing general agent which sets forth the responsibilities of each party and where both parties share responsibility for a particular function, specifies the division of such responsibilities, which has been approved by the director prior to its becoming effective as being in compliance with the managing general agents act and which contains the following minimum provisions:

(1) The insurer may terminate the contract for cause upon written notice to the managing general agent. The insurer may suspend the underwriting authority of the managing general agent during the pendency of any dispute regarding the cause for termination. Nothing in this subdivision is intended to relieve the managing general agent or insurer of any other contractual obligation;

(2) The managing general agent will render accounts to the insurer detailing all transactions and remit all funds due under the contract to the insurer on not less than a monthly basis;

(3) All funds collected for the account of an insurer will be held by the managing general agent in a fiduciary capacity in a segregated account in a bank which is a member of the Federal Reserve System. This account shall be used for all payments on behalf of the insurer and for no other purpose. The managing general agent may retain no more than three months' estimated claims payments and allocated loss adjustment expenses;

(4) Separate records of business written by the managing general agent shall be maintained. The insurer shall have access and right to copy all accounts and records related to its business in a form usable by the insurer and the director shall have access to all books, bank accounts and records of the managing general agent in a form usable to the director. Such records shall be retained for a minimum of three years following the transactions to which the records relate;

(5) The contract may not be assigned in whole or part by the managing general agent;

(6) Appropriate underwriting guidelines including:

(a) The maximum annual premium volume;

(b) The basis of the rates to be charged;

(c) The types of risks which may be written;

(d) Maximum limits of liability;

(e) Applicable exclusions;

(f) Territorial limitations;

(g) Policy cancellation provisions; and

(h) The maximum policy period;

(7) The insurer shall retain the right to cancel or not renew any policy of insurance subject to the applicable laws and regulations concerning the cancellation and nonrenewal of insurance policies;

(8) If the contract permits the managing general agent to settle claims on behalf of the insurer:

(a) All claims must be reported to the company in a timely manner;

(b) A copy of the claim file will be sent to the insurer at its request or as soon as it becomes known that the claim:

a. Has the potential to exceed a maximum amount determined by the director or exceeds the limit set by the company, whichever is less;

b. Involves a coverage dispute;

c. May exceed the managing general agent's claims settlement authority;

d. Is open for more than six months; or

e. Is closed by payment of an amount set by the director or an amount set by the company, whichever is less;

(c) All claim files will be the joint property of the insurer and managing general agent. However, upon an order of liquidation of the insurer such files shall become the sole property of the insurer or its estate, but the managing general agent shall have reasonable access to and the right to copy the files on a timely basis;

(d) Any settlement authority granted to the managing general agent may be terminated for cause upon the insurer's written notice to the managing general agent or upon the termination of the contract. The insurer may suspend the settlement authority during the pendency of the dispute regarding the cause for termination. Nothing in this paragraph is intended to relieve the managing general agent or insurer of any other contractual obligation;

(9) Where electronic claims files are in existence, the contract must include provision regarding the timely transmission of the data;

(10) If the contract provides for a sharing of interim profits by the managing general agent, and the managing general agent has the authority to determine the amount of the interim profits by establishing loss reserves or controlling claim payments, or in any other manner, interim profits will not be paid to the managing general agent until one year after they are earned for property insurance business and five years after they are earned on casualty business and not until the profits have been verified pursuant to section 375.150;

(11) The managing general agent shall not:

(a) Bind reinsurance or retrocessions on behalf of the insurer, except that the managing general agent may bind facultative reinsurance contracts pursuant to obligatory facultative agreements if the contract with the insurer contains reinsurance underwriting guidelines including, for both reinsurance assumed and ceded, a list of reinsurers with which such automatic agreements are in effect, the coverages and amounts or percentages that may be reinsured and commission schedules;

(b) Commit the insurer to participate in insurance or reinsurance syndicates;

(c) Appoint any producer without assuring that the producer is lawfully licensed to transact the type of insurance for which he is appointed;

(d) Without prior approval of the insurer, pay or commit the insurer to pay a claim over a specified amount, net of reinsurance, which shall not exceed one percent of the insurer's policyholder's surplus as of December thirty-first of the immediately preceding calendar year;

(e) Collect any payment from a reinsurer or commit the insurer to any claim settlement with a reinsurer, without prior approval of the insurer. If prior approval is given, a report must be promptly forwarded to the insurer;

(f) Permit its subproducer to serve on its board of directors;

(g) Jointly employ an individual who is employed with the insurer; or

(h) Appoint a subordinate managing general agent.

(L. 1990 H.B. 1739 § 8)

Effective 7-1-91

Duties of insurer--appointment of or termination of contract withmanaging general agent, notice to director, content.

375.150. 1. The insurer shall have on file an independent financial examination in a form acceptable to the director of each managing general agent with which it has done business.

2. If a managing general agent establishes loss reserves, the insurer shall annually obtain the opinion of an actuary attesting to the adequacy of loss reserves established for losses incurred and outstanding on business produced by the managing general agent. This requirement is in addition to any other required loss reserve certification.

3. The insurer shall periodically conduct an on-site review of the underwriting and claims processing operations of the managing general agent.

4. Binding authority for all reinsurance contracts or participation in insurance or reinsurance syndicates shall rest with an office of the insurer, who shall not be affiliated with the managing general agent.

5. Within thirty days of entering into or termination of a contract with a managing general agent, the insurer shall provide written notification of such appointment or termination to the director. Notices of appointment of a managing general agent shall include a statement of duties which the applicant is expected to perform on behalf of the insurer, the lines of insurance for which the applicant is to be authorized to act, and any other information the director may request.

6. An insurer quarterly shall review its books and records to determine if any producer has become, by operation of subdivision (4) of subsection 3 of section 375.147, a managing general agent as defined in that section. If the insurer determines that a producer has become a managing general agent pursuant to the above review, the insurer shall promptly notify the producer and the director of such determination and the insurer and producer must fully comply with the provisions of sections 375.147 to 375.153 within thirty days.

7. An insurer shall not appoint to its board of directors any* officer, director, employee or controlling shareholder of any of its managing general agents. This subsection shall not apply to relationships governed by the provisions of chapter 382.

(L. 1990 H.B. 1739 § 9)

Effective 7-1-91

*Word "an" appears in original rolls.

Acts of managing general agent acts of insurer.

375.151. The acts of the managing general agent are considered to be the acts of the insurer on whose behalf it is acting. A managing general agent may be examined as if it were the insurer.

(L. 1990 H.B. 1739 § 10)

Effective 7-1-91

Violations, penalties.

375.152. 1. If the director determines that a person has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of sections 375.147 to 375.153 or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business constituting a violation of sections 375.147 to 375.153 or a rule adopted or order issued pursuant thereto, the director may issue such administrative orders as authorized under section 374.046. A violation of any of these sections is a level two violation under section 374.049.

2. If the director believes that a person has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of sections 375.147 to 375.153 or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business constituting a violation of sections 375.147 to 375.153 or a rule adopted or order issued pursuant thereto, the director may maintain a civil action for relief authorized under section 374.048. A violation under any of these sections is a level two violation under section 374.049. In addition to the relief available in this section, the director may also order the managing general agent to reimburse the insurer, the rehabilitator or liquidator of the insurer for any losses incurred by the insurer caused by a violation of sections 375.147 to 375.153 committed by the managing general agent.

3. Nothing contained in this section shall affect the right of the director to impose any other penalties provided for in the insurance law.

4. Nothing contained in sections 375.147 to 375.153 is intended to or shall in any manner limit or restrict the rights of policyholders, claimants and creditors.

(L. 1990 H.B. 1739 § 11, A.L. 2007 S.B. 66)

Managing general agent, director's authority to promulgate rules.

375.153. The director may adopt reasonable rules and regulations for the implementation and administration of sections 375.147 to 375.153.

(L. 1990 H.B. 1739 § 12)

Effective 7-1-91

Insurer shall comply with all insurance laws before doingbusiness--commissions paid, to whom.

375.158. 1. No insurer shall engage in the business of insurance in this state without first complying with all the provisions of the laws of this state governing the business of insurance.

2. No insurer organized or incorporated under the laws of this state shall undertake any business or risk except as provided by those laws. No insurer organized or incorporated by or under the laws of this state or any other state of the United States or any foreign government, transacting the business of life insurance, shall be permitted or allowed to take any other kind of risks except those connected with or pertaining to making assurance on the life of a human being and the granting, purchasing and disposing of annuities and endowments, and the making of insurance against accident and sickness to persons by life or health or life and health insurers as provided in sections 376.010 and 376.309.

3. No insurer doing business in this state shall pay any commission or other compensation to any person or entity for any services, as insurance producer, in obtaining in this state any contract of insurance except to a licensed insurance producer of the insurer and a licensed business entity insurance producer.

(RSMo 1939 § 6004; L. 1965 p. 569, A.L. 1967 p. 516, A.L. 1993 H.B. 709, A.L. 2001 S.B. 193)

Effective 1-01-03

Limited lines travel insurance producer--definitions--authorizedactivities, limitations--rulemaking authority.

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

(1) "Limited lines travel insurance producer", a:

(a) Licensed managing general agent as provided by sections 375.147 to 375.153; or

(b) Licensed insurance producer as provided by chapter 375;

designated by the insurer as the travel insurance supervising entity as set forth in subsection 5 of this section below;

(2) "Offer and disseminate", provide general information, including a description of the coverage and price, as well as process the application, collect premiums, and perform other nonlicensable activities permitted by the state;

(3) "Travel insurance", insurance coverage for personal risks incident to planned travel, including, but not limited to:

(a) Interruption or cancellation of trip or event;

(b) Loss of baggage or personal effects;

(c) Damages to accommodations or rental vehicles; or

(d) Sickness, accident, disability, or death occurring during travel.

Travel insurance does not include major medical plans, which provide comprehensive medical protection for travelers with trips lasting six months or longer, including, for example, those persons working overseas as expatriates or military personnel being deployed;

(4) "Travel retailer", a business entity that makes, arranges, or offers travel services and may offer and disseminate travel insurance as a service to its customers on behalf of and under the direction of a limited lines travel insurance producer.

2. Notwithstanding any other provision of law:

(1) A travel retailer may offer and disseminate travel insurance on behalf of and under the control of a limited lines travel insurance producer only if the following conditions are met:

(a) The limited lines travel insurance producer or travel retailer provides to purchasers of travel insurance:

a. A description of the material terms or the actual material terms of the insurance coverage;

b. A description of the process for filing a claim;

c. A description of the review or cancellation process for the travel insurance policy; and

d. The identity and contact information of the insurer and limited lines travel insurance producer;

(b) At the time of licensure, the limited lines travel insurance producer shall establish and maintain a register on a form prescribed by the director of each travel retailer that offers travel insurance on the limited lines travel insurance producer's behalf. The register shall be maintained and updated annually by the limited lines travel insurance producer and shall include the name, address, and contact information of the travel retailer and an officer or person who directs or controls the travel retailer's operations, and the travel retailer's federal tax identification number. The limited lines travel insurance producer shall submit such register within thirty days upon request by the department. The limited lines travel insurance producer shall also certify that the travel retailer register complies with 18 U.S.C. 1033;

(c) The limited lines travel insurance producer has designated one of its employees who is a licensed individual producer as a person responsible for the business entity's compliance with the travel insurance laws, rules, and regulations of this state;

(d) The designated person under paragraph (c) of this subdivision, president, secretary, treasurer, and any other officer or person who directs or controls the limited lines travel insurance producer's insurance operations complies with the fingerprinting requirements applicable to insurance producers in the resident state of the business entity;

(e) The limited lines travel insurance producer has paid all applicable insurance producer licensing fees as set forth in applicable state law;

(f) The limited lines travel insurance producer requires each employee and authorized representative of the travel retailer whose duties include offering and disseminating travel insurance to receive a program of instruction or training, which may be subject to review by the director. The training material shall, at a minimum, contain instructions on the types of insurance offered, ethical sales practices, and required disclosures to prospective customers;

(2) Any travel retailer offering or disseminating travel insurance shall make available to prospective purchasers brochures or other written materials that:

(a) Provide the identity and contact information of the insurer and the limited lines travel insurance producer;

(b) Explain that the purchase of travel insurance is not required to purchase any other product or service from the travel retailer; and

(c) Explain that an unlicensed travel retailer is permitted to provide general information about the insurance offered by the travel retailer, including a description of the coverage and price, but is not qualified or authorized to answer technical questions about the terms and conditions of the insurance offered by the travel retailer or to evaluate the adequacy of the customer's existing insurance coverage;

(3) A travel retailer's employee or authorized representative, who is not licensed as an insurance producer, may not:

(a) Evaluate or interpret the technical terms, benefits, and conditions of the offered travel insurance coverage;

(b) Evaluate or provide advice concerning a prospective purchaser's existing insurance coverage; or

(c) Hold themselves or itself out as a licensed insurer, licensed producer, or insurance expert.

3. Notwithstanding any other provision of law, a travel retailer whose insurance-related activities, and those of its employees and authorized representatives, are limited to offering and disseminating travel insurance on behalf of and under the direction of a limited lines travel insurance producer meeting the conditions stated in this section is authorized to do so and receive related compensation, upon registration by the limited lines travel insurance producer as described in paragraph (b) of subdivision (1) of subsection 2 of this section.

4. Travel insurance may be provided under an individual policy or under a group or master policy.

5. As the insurer designee, the limited lines travel insurance producer is responsible for the acts of the travel retailer and shall use reasonable means to ensure compliance by the travel retailer with this section.

6. The limited lines travel insurance producer and any travel retailer offering and disseminating travel insurance under the limited lines travel insurance producer license shall be subject to the provisions of chapters 374 and 375, except as provided for in this section.

7. The director may promulgate rules to effectuate this section. Any rule or portion of a rule, as that term is defined in section 536.010, that is created under the authority delegated in this section shall become effective only if it complies with and is subject to all of the provisions of chapter 536 and, if applicable, section 536.028. This section and chapter 536 are nonseverable and if any of the powers vested with the general assembly pursuant to chapter 536 to review, to delay the effective date, or to disapprove and annul a rule are subsequently held unconstitutional, then the grant of rulemaking authority and any rule proposed or adopted after August 28, 2013, shall be invalid and void.

(L. 2013 S.B. 324)

Certificate to do business--when terminated.

375.161. No company shall transact in this state any insurance business unless it shall first procure from the director a certificate stating the requirements of the insurance laws of this state have been complied with authorizing it to do business, which certificate shall be renewed annually as of July first but which shall remain in full force and effect until renewed or refused by the director. Certificates in effect October 13, 1967, shall be extended to terminate on July 1, 1968, unless otherwise terminated, suspended or revoked.

(RSMo 1939 § 6003, A.L. 1953 p. 233, A.L. 1967 p. 516)

Director shall not authorize business if management of company isincompetent or untrustworthy.

375.163. The director shall not grant or continue authority to transact insurance in this state as to any insurer or interinsurance exchange, one or more of the managing officers of which is found by him, after hearing, to be of known bad character or to be so incompetent or untrustworthy as to make the proposed operation hazardous to the insurance buying public; or which he has good reason to believe is affiliated directly or indirectly through ownership, control, reinsurance transactions or other insurance or business relations with any person or persons whose business operations are or have been detrimental to policyholders or stockholders or investors or creditors or* the public by illegal or fraudulent manipulation or dissipation of assets or of accounts, or of reinsurance of any insurance company or companies, or by similar injurious actions.

(L. 1963 p. 485 § 1, A.L. 1967 p. 516)

* Word "of" appears in original rolls.

Management contracts, to be filed with director when requested--mayexamine records of company, to what extent--notice of managementcontract required.

375.164. 1. All agreements or contracts under which any person, organization or corporation enjoys in fact the exclusive or dominant right to manage or control any insurer doing business under any of the insurance laws of this state to the substantial exclusion of the board of directors, officers, attorney in fact or other lawful management shall be filed with the director on his request.

2. The director, for the purpose of ascertaining the assets, conditions and affairs of any insurer, may examine the books, records, documents and assets of any person having a contract or agreement as provided in subsection 1 to the extent necessary to determine the financial condition of the insurer. The failure or refusal of any such person to submit his books, papers, accounts, records or affairs to the reasonable inspection or examination of the director shall be grounds for the suspension or revocation of the certificate of authority of the insurer to do business in this state.

3. No agreement or contract as provided in subsection 1 shall operate to the financial detriment of the insurer in such manner as to endanger the financial stability of the insurer or otherwise be hazardous to the policyholders and creditors of the insurer.

4. On examination of any agreement or contract, if the director finds it violates the provisions of this section, he shall proceed in accordance with the provisions of section 374.046.

5. Any person, organization or corporation having a management contract as provided in subsection 1 hereof shall within five days of execution of such contract provide notice of such contract to the director of the department of insurance, financial institutions and professional registration.

(L. 1967 p. 516)

Expense of organization limited.

375.166. 1. It shall be unlawful for any corporation organized under the laws of this state for the purpose of conducting an insurance business of any kind to pay more than ten percent of the total amount realized from the sale of its capital stock, whether in cash or notes, for the organization of the company.

2. In every case subscribers to the stock shall consent, in writing, to the payment of the organization expenses, which shall, in all cases, be paid out of the surplus funds of the corporation; the ten percent to include commissions paid to agents for the sale of stock, rent, clerk hire, literature and all other expenses of every kind and nature, and all obligations incurred, up to the time that application is made for a license to do an insurance business.

3. No officer of any company shall be permitted to draw any salary before the corporation is fully organized and licensed to do business.

4. Any corporation already organized under the laws of this state to engage in the business aforesaid may increase its capital stock for the purpose, in the manner and to the extent prescribed by law; subject, however, to the restrictions as to expenses incurred in the sale thereof, and the consent of the stock subscribers to the payment of such expenses as are herein specified.

(RSMo 1939 § 6071, A.L. 1967 p. 516)

Violation of section 375.166 a misdemeanor, penalty.

375.169. Any officer, director, clerk, employee or agent of any company who receives or pays out, or orders the payment of any money, or incurs any obligation for the payment of money, in violation of the terms of section 375.166, shall be deemed guilty of a misdemeanor, and upon conviction thereof, shall be punished by a fine of not more than five hundred dollars, or by imprisonment in the county jail for a term of not more than six months, or by both the fine and imprisonment.

(RSMo 1939 § 6072, A.L. 1967 p. 516)

Proceedings against promoters.

375.176. 1. Whenever it appears to the director of the department of insurance, financial institutions and professional registration from any examination made by himself, or from the report of the person or persons appointed by him to make an examination, or from the statements of the company, or its officers or promoters, or from any knowledge or information in his possession that it would be hazardous to the public or to its stockholders for the company to proceed with its organization, the director may, if the company is a domestic corporation, institute proceedings in the circuit court of the county or city in which the company was organized, or in which it has, or last had, its principal or chief office or place of business, and enjoin the company from further proceeding with its organization, either temporarily or perpetually, or for an injunction or dissolution of the company and the settlement or winding up of its affairs or for any or all of these remedies combined and for such other decrees and relief as the court shall deem advisable.

2. In the event that the court appoints a receiver for any company, the director of the department of insurance, financial institutions and professional registration may be appointed as receiver, or some person other than the director of the department of insurance, financial institutions and professional registration may be appointed, in the discretion of the court.

3. The compensation paid to any receiver appointed, upon petition of the director of the department of insurance, financial institutions and professional registration filed against any company under this section, shall, in all cases, be fair and reasonable, and when approved by the court, shall be paid out of any assets which may be in the hands of the receiver.

(RSMo 1939 § 6076, A.L. 1967 p. 516)

Officers required of companies.

375.181. 1. Every insurance company organized under the laws of Missouri shall have a president and a secretary who shall be chosen by the directors, and such other officers as shall be prescribed by the bylaws of the corporation. Unless the bylaws otherwise provide, any two or more offices may be held by the same person except the offices of president and secretary.

2. All officers of the company, as between themselves and the corporation, shall have such authority and perform such duties in the management of the property and affairs of the corporation as may be provided in the bylaws, or, in the absence of such provision, as may be determined by resolution of the board of directors.

(RSMo 1939 § 6016, A.L. 1967 p. 516)

Director to investigate incorporators, directors and proposedofficers, approval withheld, when.

375.183. The director shall not approve any declaration of organization or articles of incorporation or issue a certificate of authority to any company until he has found that there is no good reason to believe that the incorporators, directors and proposed officers are affiliated, directly or indirectly, through ownership, control, management, reinsurance transactions or other insurance or business relations with any person or persons known to have been involved in the improper manipulation of assets, accounts or reinsurance.

(L. 1967 p. 516)

Seal and bylaws.

375.186. The corporators or directors of any insurance company organized under the laws of this state shall have power to adopt a seal, and to make such bylaws, not inconsistent with the constitution and laws of this state, as they may deem necessary for the regulation and management of its affairs.

(RSMo 1939 § 6021, A.L. 1967 p. 516)

Voting by proxy.

375.191. 1. Every person legally entitled to vote at any election, or on any question relating to the management or business of any insurance company organized under the laws of this state, may cast his vote by proxy; but the proxy shall be a legal voter of the company, and the authority to cast the vote shall be in writing and shall state the name of the person authorized to cast the vote and the date of the meeting at which the vote shall be cast.

2. The director shall have power to adopt reasonable rules and regulations relative to the solicitation by domestic stock insurers of proxies, consent and authorization with respect to equity securities of the stock insurers.

(RSMo 1939 § 6022, A.L. 1967 p. 516)

Adoption of same or misleadingly similar name prohibited.

375.196. No insurance company formed under the laws of this state shall adopt the name of any existing company transacting insurance business in this state nor any name so similar thereto as to be calculated to mislead the public.

(RSMo 1939 § 5802, A.L. 1967 p. 516)

Issuance of shares, regulations concerning.

375.198. 1. Any capital stock insurance company shall have power to create and issue the number of shares stated in its articles of incorporation. Such shares may be divided into one or more classes, any or all of which classes shall consist of shares with a minimum par value of one dollar, with such designations, preferences, qualifications, limitations, restrictions and such special or relative rights including the right of conversion into any other class of shares as shall be stated in the articles of incorporation; provided, that the authorized number of shares of any class or classes without voting rights shall not exceed in the aggregate a ratio of two shares of such class or classes to one share of the voting stock of the company to be outstanding when the corporation commences business.

2. In case a corporation is authorized by its articles of incorporation to issue preferred shares entitled to limited preferential dividends and to a limited amount on dissolution or liquidation, the board of directors may, if expressly authorized so to do by the articles of incorporation, and with the written approval of the director of the department of insurance, financial institutions and professional registration, cause such shares to be issued from time to time in series and may, to the extent expressly authorized by such articles of incorporation, by resolution adopted prior to the issue of shares of a particular series, fix the distinctive serial designation of the shares of such series, the dividend rate thereof, the date from which dividends on shares issued prior to date for payment of the first dividend thereon shall be cumulative, the redemption price and the terms of redemption, the amounts payable thereon on dissolution or liquidation and the terms and amount of any sinking fund for the purchase or redemption thereof, and the terms and conditions, if any, under which said shares may be converted; and in respect of the terms so fixed by the board of directors, the shares of a particular series may vary from those of any or all other series, but only in respects and within the limits, if any, set forth in the articles of incorporation; and, except as so varied by the board of directors, all of the shares of the same class, regardless of series, shall in all respects be equal and shall have the preferences, rights, privileges and restrictions fixed by the articles of incorporation. Before the issue of any preferred shares of any series, the number of shares of such series and the designation, description and terms thereof fixed by the board of directors pursuant to such authority shall be set forth in a certificate signed and verified by the president or a vice president and countersigned by the secretary or an assistant secretary of the corporation, which certificates shall be filed with the director of the department of insurance, financial institutions and professional registration and secretary of state and otherwise dealt with as in the case of articles of incorporation.

3. In the event of the conversion or exchange of any issued shares into or for other shares of the corporation, whether of the same or of a different class or classes, the consideration for the shares so issued in such conversion or exchange is deemed to be:

(1) The consideration originally received for the shares so converted or exchanged; and

(2) That part of surplus, if any, transferred to stated capital upon the issuance of shares for the shares so converted or exchanged; and

(3) Any additional consideration paid to the corporation upon the issuance of shares for the shares so exchanged or converted.

4. When payment of the consideration for which shares are to be issued shall have been received by the corporation, the shares are full-paid and nonassessable. In the absence of actual fraud in the transaction, the judgment of the board of directors or the shareholders, as the case may be, as to the value of the consideration received for shares shall be conclusive.

(L. 1967 p. 516 § 375.200)

Charter, amendment of, procedure for.

375.201. 1. Any insurance company organized or incorporated under the laws of this state may amend its charter, articles of incorporation or association, or declaration of organization from time to time in any and as many respects as may be desired; provided, that its articles as amended contain only such provisions as might be lawfully contained in the original articles if made at the time of making the amendment.

2. (1) In particular and without limitation upon the general power of amendment, an insurance company may amend its articles from time to time so as:

(a) To change its name;

(b) To change the place where the principal office for the transaction of its business is located;

(c) To change its period of duration;

(d) To change, enlarge or diminish its purposes;

(e) To increase or decrease the number of its directors or trustees;

(f) To increase or decrease the aggregate number of shares or shares of any class which the corporation has authority to issue;

(g) To increase or decrease the par value of the authorized shares of any class, whether issued or unissued; provided, that if the par value of issued shares is increased there shall be transferred to stated capital at the time of such increase an amount of surplus equal to the aggregate amount by which the par value is increased;

(h) To exchange, classify, reclassify or cancel all or any part of its shares whether issued or unissued;

(i) To change the designation of all or any part of its shares, whether issued or unissued, and to change the preferences, qualifications, limitations, restrictions and special or relative rights including convertible rights in respect of all or any part of its shares whether issued or unissued;

(j) To create a new class or classes of stock and to define the preferences, qualifications, limitation, restrictions, and the special or relative rights of the shares of such new class or classes; provided that the authorized number of shares of any class or classes without voting rights shall not exceed a ratio of two shares of such class or classes without voting rights to one share of the voting stock of the company outstanding at the time the amendment is voted upon by the stockholders;

(k) To establish, limit or deny shareholders the preemptive right to acquire additional shares of capital stock, whether then or thereafter authorized.

(2) In no event, however, may the par value per share of the authorized shares of any class of stock be less than one dollar.

3. Amendment of articles shall be made in the following manner:

(1) The board of directors or other governing body may adopt a resolution setting forth the proposed amendment and directing that it be submitted to a vote at a meeting of the shareholders, members, or other group of persons entitled to vote thereon, which may be either an annual or special meeting; except that the proposed amendment need not be adopted by the board of directors and may be directly submitted to any annual or special meeting of the shareholders, members or other group of persons entitled to vote thereon.

(2) Written or printed notice setting forth the proposed amendment or a summary of the changes to be effected thereby shall be given to each shareholder, member or other person entitled to vote thereon of record. In the case of a mutual insurance company, notice, including the time and place at which such meeting will be held, may, in lieu of such written or printed notice, be given by publication made by the company in two daily newspapers, one of which shall be published in the city of St. Louis or the city of Kansas City, for at least once a week for two weeks before the time appointed for the meeting.

(3) At the meeting a vote of those entitled to vote shall be taken on the proposed amendment. The proposed amendment shall be adopted upon receiving the affirmative vote of a majority of all of those entitled to vote at the meeting either in person or by proxy or may be adopted upon a specified vote if contained in the articles or other provision of law which shall not be less than a majority; except that in the case of a mutual insurance company, the proposed amendment shall be adopted upon the affirmative vote of a majority of the members voting at the meeting in person or by proxy.

(L. 1967 p. 516)

Certificate of amendment, issuance, filing--director,duties--secretary of state, duties.

375.206. Upon receipt by the director of the department of insurance, financial institutions and professional registration of any certificate of amendment in triplicate, he shall file it if he finds that the certificate of amendment conforms to law and that the proceedings were regular, and that the same will not be prejudicial to the interest of the policyholders and, if the amendment increases or reduces the capital stock, that the condition and the assets of the company justify the increase or reduction. Keeping one of the copies as a permanent record, he shall issue his certificate of amendment and shall certify the same to the secretary of state, who shall affix his certificate of amendment to a copy thereof retaining the same as a permanent record and shall forward to the company his certificate of amendment. The secretary of state shall also forward to the director of the department of insurance, financial institutions and professional registration a certified copy of his certificate of amendment.

(L. 1967 p. 516)

Certificate of amendment effective, when--amendment not to affectany existing cause of action.

375.216. 1. Upon the issuance of the certificate by the secretary of state, the amendment shall become effective and the articles shall be deemed to be amended accordingly.

2. No amendment shall affect any existing cause of action in favor or against the insurance company or any pending suit in which the insurance company is a party, or the existing rights of persons other than the shareholders, members or other group of persons voting thereon or entitled to vote thereon; and, in the event the insurance company name is changed by amendment, no suit brought by or against the company under its former name shall be abated for that reason.

(L. 1967 p. 516)

Certificate of amendment of articles, how executed, contents.

375.221. 1. After the adoption of an amendment of the articles, a certificate of amendment shall be executed in triplicate by the insurance company by its president or vice president and its secretary or assistant secretary verified by one of the officers signing with corporate seal affixed. If the insurance company is a reciprocal or interinsurance exchange, the certificate of amendment shall be executed in a like manner by its attorney in fact.

2. The certificates of amendment shall be delivered to the director of the department of insurance, financial institutions and professional registration and shall state:

(1) The name of the insurance company;

(2) The date of the adoption of the amendment by the shareholders, members or other group of persons entitled to vote on the amendment;

(3) The amendment adopted;

(4) The number of shares, members, or other group of persons entitled to vote, or if a mutual, the number of the members present either in person or by proxy entitled to vote;

(5) The number of shares, members, or other group of persons that voted for and against said amendment respectively;

(6) If the amendment effects a change in the number or par value of authorized shares, then a statement showing the number of shares and par value thereof previously authorized.

(L. 1967 p. 516)

Restatement of charter, articles of incorporation or association,or declaration of organization, how made.

375.226. 1. Any insurance company organized or incorporated under the laws of this state may restate its charter, articles of incorporation or association, or declaration of organizing from time to time as may be desired in the same manner as provided in sections 375.201 through 375.221 pertaining to amendments.

2. In lieu of the certificate of amendment as set forth in section 375.206, the director and secretary of state shall issue a certificate of restated articles.

3. Upon the issuance of the certificate of restated articles by the secretary of state, the restated articles shall become effective and shall supersede the original articles and all amendments thereto.

(L. 1967 p. 516)

Reduction of capital stock where same has not been fullysubscribed.

375.231. Any insurance company incorporated under the laws of this state, the capital stock of which has not been fully subscribed, may, by the vote of a majority of its stockholders and subscribers of its capital stock, reduce its capital stock to the extent prescribed by law in the following manner: The stockholders and subscribers of its capital stock of any company desiring so to reduce its stock, shall file or cause to be filed with the director of the department of insurance, financial institutions and professional registration a certified copy of the proceedings of the stockholders and subscribers of its capital stock at which it was determined to reduce the stock, which copy of the proceedings shall set forth in full the amount of the capital stock after the reduction, the number of shares and the par value of each, a list of the stockholders of the company, together with their residences and the amount of stock subscribed by each and the amount paid therefor and such other information as shall be necessary to give the director of the department of insurance, financial institutions and professional registration a complete record of all transactions of the insurance company from its incorporation to the time of the reduction of its capital stock as voted by the stockholders and subscribers of its capital stock, and the director of the department of insurance, financial institutions and professional registration may, in his discretion, make an examination of the records and books of the insurance company; and if the director of the department of insurance, financial institutions and professional registration is satisfied that the provisions of this section have been fully complied with, and that the proceedings were regular, the director shall issue a certificate authorizing the reduction and showing that the capital stock of the company has been reduced, the number and par value of the shares; and the certificate shall be filed and recorded as in sections 375.010 to 375.920 is provided for filing and recording the certificates of incorporation; and thereafter the company shall, with the reduced capital, be subject to the same liabilities that it possessed or was subject to at the time of the reduction of its capital; and the charter or certificate of incorporation of the company shall be deemed to be amended in respect to the amount of capital stock, and the par value and number of shares, so as to conform to the reduction.

(RSMo 1939 § 6025, A.L. 1967 p. 516)

Certificate of authority revoked, when.

375.236. Other provisions of law notwithstanding, the director may suspend or revoke, after a hearing, the certificate of authority or license of any insurance company including a reciprocal or interinsurance exchange for the same reasons and upon the same grounds as set forth in section 374.047.

(L. 1963 p. 485 § 375.155, A.L. 1967 p. 516, A.L. 2007 S.B. 66)

Reinsurance, when allowed as an asset or reduction from liability.

375.246. 1. Credit for reinsurance shall be allowed a domestic ceding insurer as either an asset or a reduction from liability on account of reinsurance ceded only when the reinsurer meets the requirements of subdivisions (1) to (6) of this subsection. Credit shall be allowed pursuant to subdivision (1), (2) or (3) of this subsection only as respects cessions of those kinds or classes of business which the assuming insurer is licensed or otherwise permitted to write or assume in its state of domicile or, in the case of a United States branch of an alien assuming insurer, in the state through which it is entered and licensed to transact insurance or reinsurance. Credit shall be allowed pursuant to subdivision (3), (4), or (5) of this subsection only if the applicable requirements of subdivision (7) have been satisfied.

(1) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is licensed to transact insurance in this state;

(2) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is accredited by the director as a reinsurer in this state. In order to be eligible for accreditation, a reinsurer shall:

(a) File with the director evidence of its submission to this state's jurisdiction;

(b) Submit to the authority of the department of insurance, financial institutions and professional registration to examine its books and records;

(c) Be licensed to transact insurance or reinsurance in at least one state, or in the case of a United States branch of an alien assuming insurer is entered through and licensed to transact insurance or reinsurance in at least one state;

(d) File annually with the director a copy of its annual statement filed with the insurance department of its state of domicile and a copy of its most recent audited financial statement; and

(e) Demonstrate to the satisfaction of the director that it has adequate financial capacity to meet its reinsurance obligations and is otherwise qualified to assume reinsurance from domestic insurers. An assuming insurer is deemed to meet such requirement as of the time of its application if it maintains a surplus regarding policyholders in an amount not less than twenty million dollars and its accreditation has not been denied by the director within ninety days after submission of its application;

(3) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is domiciled in, or in the case of a United States branch of an alien assuming insurer is entered through, a state that employs standards regarding credit for reinsurance substantially similar to those applicable under this statute and the assuming insurer or United States branch of an alien assuming insurer:

(a) Maintains a surplus as regards policyholders in an amount not less than twenty million dollars; except that this paragraph does not apply to reinsurance ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system; and

(b) Submits to the authority of the department of insurance, financial institutions and professional registration to examine its books and records;

(4) (a) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that maintains a trust fund in a qualified United States financial institution, as defined in subdivision (2) of subsection 3 of this section, for the payment of the valid claims of its United States ceding insurers, their assigns and successors in interest. To enable the director to determine the sufficiency of the trust fund, the assuming insurer shall report annually to the director information substantially the same as that required to be reported on the National Association of Insurance Commissioners' annual statement form by licensed insurers. The assuming insurer shall submit to examination of its books and records by the director.

(b) Credit for reinsurance shall not be granted pursuant to this subdivision unless the form of the trust and any amendments to the trust have been approved by:

a. The commissioner or director of the state agency regulating insurance in the state where the trust is domiciled; or

b. The commissioner or director of another state who, pursuant to the terms of the trust instrument, has accepted principal regulatory oversight of the trust.

(c) The form of the trust and any trust amendments shall also be filed with the commissioner or director in every state in which the ceding insurer beneficiaries of the trust are domiciled. The trust instrument shall provide that contested claims shall be valid and enforceable upon the final order of any court of competent jurisdiction in the United States. The trust shall vest legal title to its assets in its trustees for the benefit of the assuming insurer's United States ceding insurers, their assigns and successors in interest. The trust and the assuming insurer shall be subject to examination as determined by the director.

(d) The trust shall remain in effect for as long as the assuming insurer has outstanding obligations due under the reinsurance agreements subject to the trust. No later than February twenty-eighth of each year the trustees of the trust shall report to the director in writing the balance of the trust and listing the trust's investments at the preceding year end and shall certify the date of termination of the trust, if so planned, or certify that the trust will not expire prior to the next following December thirty-first.

(e) The following requirements apply to the following categories of assuming insurers:

a. The trust fund for a single assuming insurer shall consist of funds in trust in an amount not less than the assuming insurer's liabilities attributable to reinsurance ceded by the United States ceding insurers, and, in addition, the assuming insurer shall maintain a trusteed surplus of not less than twenty million dollars, except as provided in subparagraph b. of this paragraph;

b. At any time after the assuming insurer has permanently discontinued underwriting new business secured by the trust for at least three full years, the director with principal regulator oversight of the trust may authorize a reduction in the required trusteed surplus, but only after a finding based on an assessment of risk that the new required surplus level is adequate for the protection of United States ceding insurers, policyholders, and claimants in light of reasonably foreseeable adverse loss development. The risk assessment may involve an actuarial review, including an independent analysis of reserves and cash flows, and shall consider all material risk factors including, when applicable, the lines of business involved, the stability of the incurred loss estimates, and the effect of the surplus requirements on the assuming insurer's liquidity or solvency. The minimum required trusteed surplus shall not be reduced to an amount less than thirty percent of the assuming insurer's liabilities attributable to reinsurance ceded by United States ceding insurers covered by the trust;

c. In the case of a group of incorporated and individual unincorporated underwriters:

(i) For reinsurance ceded under reinsurance agreements with an inception, amendment or renewal date on or after January 1, 1993, the trust shall consist of a trusteed account in an amount not less than the respective underwriter's several liabilities attributable to business ceded by United States domiciled ceding insurers to any underwriter of the group;

(ii) For reinsurance ceded under reinsurance agreements with an inception date on or before December 31, 1992, and not amended or renewed after that date, notwithstanding the other provisions of this section, the trust shall consist of a trustee account in an amount not less than the respective underwriter's several insurance and reinsurance liabilities attributable to business in the United States; and

(iii) In addition to these trusts, the group shall maintain in trust a trusteed surplus of which one hundred million dollars shall be held jointly for the benefit of the United States domiciled ceding insurers of any member of the group for all years of account;

d. The incorporated members of the group shall not be engaged in any business other than underwriting as a member of the group and shall be subject to the same level of regulation and solvency control by the group's domiciliary regulator as are the unincorporated members;

e. Within ninety days after its financial statements are due to be filed with the group's domiciliary regulator, the group shall provide to the director an annual certification by the group's domiciliary regulator of the solvency of each underwriter member; or if a certification is unavailable, financial statements, prepared by independent public accountants, of each underwriter member of the group;

(5) (a) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that has been certified by the director as a reinsurer in this state and secures its obligations in accordance with the requirements of this subdivision.

(b) In order to be eligible for certification, the assuming insurer shall meet the following requirements:

a. The assuming insurer shall be domiciled and licensed to transact insurance or reinsurance in a qualified jurisdiction, as determined by the director under paragraph (d) of this subdivision;

b. The assuming insurer shall maintain minimum capital and surplus, or its equivalent, in an amount to be determined by the director by rule;

c. The assuming insurer shall maintain financial strength ratings from two or more rating agencies deemed acceptable by the director by rule;

d. The assuming insurer shall agree to submit to the jurisdiction of this state, appoint the director as its agent for service of process in this state, and agree to provide security for one hundred percent of the assuming insurer's liabilities attributable to reinsurance ceded by United States ceding insurers if it resists enforcement of a final United States judgment;

e. The assuming insurer shall agree to meet applicable information filing requirements as determined by the director, both with respect to an initial application for certification and on an ongoing basis; and

f. The assuming insurer shall satisfy any other requirements for certification deemed relevant by the director.

(c) An association including incorporated and individual unincorporated underwriters may be a certified reinsurer. To be eligible for certification, in addition to satisfying requirements of paragraph (b) of this subdivision:

a. The association shall satisfy its minimum capital and surplus requirements through the capital and surplus equivalents (net of liabilities) of the association and its members, which shall include a joint central fund that may be applied to any unsatisfied obligation of the association or any of its members, in an amount determined by the director to provide adequate protection;

b. The incorporated members of the association shall not be engaged in any business other than underwriting as a member of the association and shall be subject to the same level of regulation and solvency control by the association's domiciliary regulator as are the unincorporated members; and

c. Within ninety days after its financial statements are due to be filed with the association's domiciliary regulator, the association shall provide to the director:

(i) An annual certification by the association's domiciliary regulator of the solvency of each underwriter member; or

(ii) If a certification is unavailable, financial statements prepared by independent public accountants of each underwriter member of the association.

(d) a. The director shall create and publish a list of qualified jurisdictions, under which an assuming insurer licensed and domiciled in such jurisdiction is eligible to be considered for certification by the director as a certified reinsurer.

b. To determine whether the domiciliary jurisdiction of a non-United States assuming insurer is eligible to be recognized as a qualified jurisdiction, the director shall evaluate the appropriateness and effectiveness of the reinsurance supervisory system of the jurisdiction, both initially and on an ongoing basis, and consider the rights, benefits, and extent of reciprocal recognition afforded by the non-United States jurisdiction to reinsurers licensed and domiciled in the United States. A qualified jurisdiction shall agree to share information and cooperate with the director with respect to all certified reinsurers domiciled within that jurisdiction. A jurisdiction shall not be recognized as a qualified jurisdiction if the director has determined that the jurisdiction does not adequately and promptly enforce final United States judgments and arbitration awards. Additional factors may be considered at the discretion of the director.

c. The director may consider a list of qualified jurisdictions published by the National Association of Insurance Commissioners (NAIC) in determining qualified jurisdictions for the purposes of this section. If the director approves a jurisdiction as qualified that does not appear on the list of qualified jurisdictions, the director shall provide thoroughly documented justification in accordance with criteria to be developed by rule.

d. United States jurisdictions that meet the requirement for accreditation under the NAIC financial standards and accreditation program shall be recognized as qualified jurisdictions.

e. If a certified reinsurer's domiciliary jurisdiction ceases to be a qualified jurisdiction, the director has the discretion to suspend the reinsurer's certification indefinitely, in lieu of revocation.

(e) The director shall assign a rating to each certified reinsurer, giving due consideration to the financial strength ratings that have been assigned by rating agencies deemed acceptable to the director by rule. The director shall publish a list of all certified reinsurers and their ratings.

(f) a. A certified reinsurer shall secure obligations assumed from United States ceding insurers under this subdivision at a level consistent with its rating, as specified in regulations promulgated by the director.

b. For a domestic ceding insurer to qualify for full financial statement credit for reinsurance ceded to a certified reinsurer, the certified reinsurer shall maintain security in a form acceptable to the director and consistent with the provisions of this section or in a multibeneficiary trust in accordance with paragraph (e) of subdivision (4) of this subsection, except as otherwise provided in this subdivision.

c. If a certified reinsurer maintains a trust to fully secure its obligations under paragraph (d) of subdivision (4) of this subsection and chooses to secure its obligations incurred as a certified reinsurer in the form of a multibeneficiary trust, the certified reinsurer shall maintain separate trust accounts for its obligations incurred under reinsurance agreements issued or renewed as a certified reinsurer with reduced security as permitted by this subsection or comparable laws of other United States jurisdictions and for its obligations subject to paragraph (e) of subdivision (4) of this subsection. It shall be a condition to the grant of certification under this section that the certified reinsurer shall have bound itself, by the language of the trust and agreement with the director with principal regulatory oversight of each such trust account, to fund, upon termination of any such trust account, out of the remaining surplus of such trust any deficiency of any other such trust account.

d. The minimum trusteed surplus requirements provided in paragraph (e) of subdivision (4) of this subsection are not applicable with respect to a multibeneficiary trust maintained by a certified reinsurer for the purpose of securing obligations incurred under this paragraph, except that such trust shall maintain a minimum trusteed surplus of ten million dollars.

e. With respect to obligations incurred by a certified reinsurer under this paragraph, if the security is insufficient, the director shall order the certified reinsurer to provide sufficient security for such incurred obligations within thirty days. If a certified reinsurer does not provide sufficient security for its obligations incurred under this subsection within thirty days of being ordered to do so by the director, the director has the discretion to allow credit in the amount of the required security for one year. Following this one-year period, the director shall impose reductions in allowable credit upon finding that there is a material risk that the certified reinsurer's obligations will not be paid in full when due.

f. (i) For purposes of this paragraph, a certified reinsurer whose certification has been terminated for any reason shall be treated as a certified reinsurer required to secure one hundred percent of its obligations.

(ii) As used in this subparagraph, the term "terminated" refers to revocation, suspension, voluntary surrender, and inactive status.

(iii) If the director continues to assign a higher rating as permitted by other provisions of this subdivision, this requirement does not apply to a certified reinsurer in inactive status or to a reinsurer whose certification has been suspended.

g. If an applicant for certification has been certified as a reinsurer in an NAIC-accredited jurisdiction, the director has the discretion to defer to that jurisdiction's certification and to the rating assigned by that jurisdiction, and such assuming insurer shall be considered to be a certified reinsurer in this state.

h. A certified reinsurer that ceases to assume new business in this state may request to maintain its certification in inactive status in order to continue to qualify for a reduction in security for its in-force business. An inactive certified reinsurer shall continue to comply with all applicable requirements of this subsection, and the director shall assign a rating that takes into account, if relevant, the reasons why the reinsurer is not assuming new business.

(6) Credit:

(a) Shall be allowed when the reinsurance is ceded to an assuming insurer not meeting the requirements of subdivision (1), (2), (3), (4), or (5) of this subsection, but only as to the insurance of risks located in a jurisdiction of the United States where the reinsurance is required by applicable law or regulation of that jurisdiction;

(b) May be allowed in the discretion of the director when the reinsurance is ceded to an assuming insurer not meeting the requirements of subdivision (1), (2), (3), (4), or (5) of this subsection, but only as to the insurance of risks located in a foreign country where the reinsurance is required by applicable law or regulation of that country;

(7) If the assuming insurer is not licensed, accredited, or certified to transact insurance or reinsurance in this state, the credit permitted by subdivisions (3) and (4) of this subsection shall not be allowed unless the assuming insurer agrees in the reinsurance agreements:

(a) That in the event of the failure of the assuming insurer to perform its obligations under the terms of the reinsurance agreement, the assuming insurer, at the request of the ceding insurer shall submit to the jurisdiction of the courts of this state, will comply with all requirements necessary to give such courts jurisdiction, and will abide by the final decisions of such courts or of any appellate courts in this state in the event of an appeal; and

(b) To designate the director or a designated attorney as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the ceding insurer. This paragraph is not intended to conflict with or override the obligation of the parties to a reinsurance agreement to arbitrate their disputes, if this obligation is created in the agreement and the jurisdiction and situs of the arbitration is, with respect to any receivership of the ceding company, any jurisdiction of the United States;

(8) If the assuming insurer does not meet the requirements of subdivision (1), (2) or (3) of this subsection, the credit permitted by subdivision (4) or (5) of this subsection shall not be allowed unless the assuming insurer agrees in the trust agreements to the following conditions:

(a) Notwithstanding any other provisions in the trust instrument, if the trust fund is inadequate because it contains an amount less than the amount required by paragraph (e) of subdivision (4) of this subsection, or if the grantor of the trust has been declared insolvent or placed into receivership, rehabilitation, liquidation or similar proceedings under the laws of its state or country of domicile, the trustee shall comply with an order of the commissioner or director with regulatory oversight over the trust or with an order of a court of competent jurisdiction directing the trustee to transfer to the commissioner or director with regulatory oversight all of the assets of the trust fund;

(b) The assets shall be distributed by and claims shall be filed with and valued by the commissioner or director with regulatory oversight in accordance with the laws of the state in which the trust is domiciled that are applicable to the liquidation of domestic insurance companies;

(c) If the commissioner or director with regulatory oversight determines that the assets of the trust fund or any part thereof are not necessary to satisfy the claims of the United States ceding insurers of the grantor of the trust, the assets or part thereof shall be returned by the commissioner or director with regulatory oversight to the trustee for distribution in accordance with the trust agreement; and

(d) The grantor shall waive any right otherwise available to it under United States law that is inconsistent with this subsection.

(9) (a) If an accredited or certified reinsurer ceases to meet the requirements for accreditation or certification, the director may suspend or revoke the reinsurer's accreditation or certification.

(b) The director shall give the reinsurer notice and opportunity for a hearing. The suspension or revocation shall not take effect until after the director's order on hearing, unless:

a. The reinsurer waives its right to hearing;

b. The director's order is based on regulatory action by the reinsurer's domiciliary jurisdiction or the voluntary surrender or termination of the reinsurer's eligibility to transact insurance or reinsurance business in its domiciliary jurisdiction or in the primary certifying state of the reinsurer under subdivision (5)* of this subsection; or

c. The director finds that an emergency requires immediate action, and a court of competent jurisdiction has not stayed the commissioner's action.

(c) While a reinsurer's accreditation or certification is suspended, no reinsurance contract issued or renewed after the effective date of the suspension qualifies for credit except to the extent that the reinsurer's obligations under the contract are secured in accordance with subdivision (5) of this subsection or subsection 2 of this section. If a reinsurer's accreditation or certification is revoked, no credit for reinsurance shall be granted after the effective date of the revocation except to the extent that the reinsurer's obligations under the contract are secured in accordance with subdivision (5) of this subsection or subsection 2 of this section.

(10) (a) A ceding insurer shall take steps to manage its reinsurance recoverables proportionate to its own book of business. A domestic ceding insurer shall notify the director within thirty days after reinsurance recoverables from any single assuming insurer or group of affiliated assuming insurers exceeds fifty percent of the domestic ceding insurer's last reported surplus to policyholders or after it is determined that reinsurance recoverables from any single assuming insurer or group of affiliated assuming insurers is likely to exceed such limit. The notification shall demonstrate that the exposure is safely managed by the domestic ceding insurer.

(b) A ceding insurer shall take steps to diversify its reinsurance program. A domestic ceding insurer shall notify the director within thirty days after ceding to any single assuming insurer or group of affiliated assuming insurers more than twenty percent of the ceding insurer's gross written premium in the prior calendar year or after it has determined that the reinsurance ceded to any single assuming insurer or group of affiliated assuming insurers is likely to exceed such limit. The notification shall demonstrate that the exposure is safely managed by the domestic ceding insurer.

2. An asset or reduction from liability for the reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of subsection 1 of this section shall be allowed in an amount not exceeding the liabilities carried by the ceding insurer. The reduction shall be in the amount of funds held by or on behalf of the ceding insurer, including funds held in trust for the ceding insurer, under a reinsurance contract with the assuming insurer as security for the payment of obligations thereunder, if the security is held in the United States subject to withdrawal solely by, and under the exclusive control of, the ceding insurer; or, in the case of a trust, held in a qualified United States financial institution, as defined in subdivision (2) of subsection 3 of this section. This security may be in the form of:

(1) Cash;

(2) Securities listed by the securities valuation office of the National Association of Insurance Commissioners, including those deemed exempt from filing as defined by the Purposes and Procedures Manual of the Securities Valuation Office, and qualifying as admitted assets;

(3) (a) Clean, irrevocable, unconditional letters of credit issued or confirmed by a qualified United States financial institution, as defined in subdivision (1) of subsection 3 of this section, no later than December thirty-first of the year for which filing is being made, and in the possession of, or in trust for, the ceding insurer on or before the filing date of its annual statement.

(b) Letters of credit meeting applicable standards of issuer acceptability as of the dates of their issuance or confirmation, notwithstanding the issuing or confirming institution's subsequent failure to meet applicable standards of issuer acceptability, shall continue to be acceptable as security until their expiration, extension, renewal, modification or amendment, whichever first occurs;

(4) Any other form of security acceptable to the director.

3. (1) For purposes of subdivision (3) of subsection 2 of this section, a "qualified United States financial institution" means an institution that:

(a) Is organized or, in the case of a United States office of a foreign banking organization, licensed under the laws of the United States or any state thereof;

(b) Is regulated, supervised and examined by federal or state authorities having regulatory authority over banks and trust companies; and

(c) Has been determined by either the director, or the securities valuation office of the National Association of Insurance Commissioners, to meet such standards of financial condition and standing as are considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit will be acceptable to the director.

(2) A "qualified United States financial institution" means, for purposes of those provisions of this law specifying those institutions that are eligible to act as a fiduciary of a trust, an institution that:

(a) Is organized, or in the case of a United States branch or agency office of a foreign banking organization, licensed under the laws of the United States or any state thereof and has been granted authority to operate with fiduciary powers; and

(b) Is regulated, supervised and examined by federal or state authorities having regulatory authority over banks and trust companies.

4. The director may adopt rules and regulations implementing the provisions of this section.

5. (1) The director shall disallow any credit as an asset or as a deduction from liability for any reinsurance found by him to have been arranged for the purpose principally of deception as to the ceding company's financial condition as of the date of any financial statement of the company. Without limiting the general purport of this provision, reinsurance of any substantial part of the company's outstanding risks contracted for in fact within four months prior to the date of any such financial statement and cancelled in fact within four months after the date of such statement, or reinsurance under which the assuming insurer bears no substantial insurance risk or substantial risk of net loss to itself, shall prima facie be deemed to have been arranged for the purpose principally of deception within the intent of this provision.

(2) (a) The director shall also disallow as an asset or deduction from liability to any ceding insurer any credit for reinsurance unless the reinsurance is payable to the ceding company, and if it be insolvent to its receiver, by the assuming insurer on the basis of the liability of the ceding company under the contracts reinsured without diminution because of the insolvency of the ceding company.

(b) Such payments shall be made directly to the ceding insurer or to its domiciliary liquidator except:

a. Where the contract of insurance or reinsurance specifically provides for payment to the named insured, assignee or named beneficiary of the policy issued by the ceding insurer in the event of the insolvency of the ceding insurer; or

b. Where the assuming insurer, with the consent of it and the direct insured or insureds in an assumption reinsurance transaction subject to sections 375.1280 to 375.1295, has assumed such policy obligations of the ceding insurer as direct obligations of the assuming insurer to the payees under such policies and in substitution for the obligations of the ceding insurer to such payees.

(c) Notwithstanding paragraphs (a) and (b) of this subdivision, in the event that a life and health insurance guaranty association has made the election to succeed to the rights and obligations of the insolvent insurer under the contract of reinsurance, then the reinsurer's liability to pay covered reinsured claims shall continue under the contract of reinsurance, subject to the payment to the reinsurer of the reinsurance premiums for such coverage. Payment for such reinsured claims shall only be made by the reinsurer pursuant to the direction of the guaranty association or its designated successor. Any payment made at the direction of the guaranty association or its designated successor by the reinsurer will discharge the reinsurer of all further liability to any other party for such claim payment.

(d) The reinsurance agreement may provide that the domiciliary liquidator of an insolvent ceding insurer shall give written notice to the assuming insurer of the pendency of a claim against such ceding insurer on the contract reinsured within a reasonable time after such claim is filed in the liquidation proceeding. During the pendency of such claim, any assuming insurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated any defenses which it deems available to the ceding insurer, or its liquidator. Such expense may be filed as a claim against the insolvent ceding insurer to the extent of a proportionate share of the benefit which may accrue to the ceding insurer solely as a result of the defense undertaken by the assuming insurer. Where two or more assuming insurers are involved in the same claim and a majority in interest elect to interpose a defense to such claim, the expense shall be apportioned in accordance with the terms of the reinsurance agreement as though such expense had been incurred by the ceding insurer.

6. To the extent that any reinsurer of an insurance company in liquidation would have been required under any agreement pertaining to reinsurance to post letters of credit or other security prior to an order of liquidation to cover such reserves reflected upon the last financial statement filed with a regulatory authority immediately prior to receivership, such reinsurer shall be required to post letters of credit or other security to cover reserves after a company has been placed in liquidation or receivership. If a reinsurer shall fail to post letters of credit or other security as required by a reinsurance agreement or the provisions of this subsection, the director may consider disallowing as a credit or asset, in whole or in part, any future reinsurance ceded to such reinsurer by a ceding insurance company that is incorporated under the laws of the state of Missouri.

7. The provisions of section 375.420 shall not apply to any action, suit or proceeding by a ceding insurer against an assuming insurer arising out of a contract of reinsurance effectuated in accordance with the laws of Missouri.

8. Notwithstanding any other provision of this section, a domestic insurer may take credit for reinsurance ceded either as an asset or a reduction from liability only to the extent such credit is allowed by the consistent application of either applicable statutory accounting principles adopted by the NAIC or other accounting principles approved by the director.

9. The director may suspend the accreditation, approval, or certification under subsection 1 of this section of any reinsurer for failure to comply with the applicable requirements of subsection 1 of this section after providing the affected reinsurer with notice and opportunity for hearing.

(L. 1967 p. 516, A.L. 1990 H.B. 1739, A.L. 1991 H.B. 385, et al., A.L. 1994 H.B. 1449 merged with S.B. 687, A.L. 2002 H.B. 1568, A.L. 2004 H.B. 1253 merged with S.B. 1235, A.L. 2013 H.B. 133)

Effective 1-01-14

*Words "subdivision (6)" appear in original rolls

Actions by and against companies.

375.251. 1. Civil actions may be maintained by any insurance corporation formed under the laws of this state against any of its members or stockholders, for any cause relating to the business of the company.

2. Civil actions may also be prosecuted and maintained by any member or stockholder of the corporation against the corporation for loss which may have accrued in favor of any member or stockholder on any risk or policy, if payment is withheld for more than two months after the loss shall have become due; but no action shall be brought or maintained by any person other than the director of the department of insurance, financial institutions and professional registration of this state for the winding up or dissolution of any insurance company, or the distribution of its assets among its creditors.

(RSMo 1939 § 6023, A.L. 1967 p. 516)

Service of process on companies not authorized to do business inthis state.

375.256. Any insurance company, association, or other insurer not incorporated or authorized under the laws of this state, which shall do or cause to be done any of the following acts in this state, effected by mail or otherwise: the issuance or delivery of contracts of insurance to residents of this state or to corporations authorized to do business in this state, the solicitation of applications for contracts of insurance, the collection of premiums, membership fees, assessments or other considerations for contracts, or any other transaction of business, shall be deemed to have constituted and appointed the director of the department of insurance, financial institutions and professional registration of the state of Missouri, and his successor or successors in office, to be its true and lawful attorney, upon whom may be served all lawful process in any action, suit, or proceeding instituted in any county in this state, by or on behalf of an insured or beneficiary arising out of any contract of insurance, and any such act shall be signification of its agreement that the service of process is of the same legal force and validity as personal service of process in this state upon the insurer, notwithstanding the fact that the insurance company, association, or other insurer has failed or neglected to file written power of attorney appointing and authorizing the director of the department of insurance, financial institutions and professional registration of this state to acknowledge or receive service of all lawful process for and on behalf of the insurance company, association or other insurer, as provided in section 375.906.

(RSMo 1939 § 6008, A.L. 1951 p. 276, A.L. 1967 p. 516)

Service of process--procedure.

375.261. 1. Service of process as provided herein shall be made by delivery of two copies of the summons, with copies of the petition thereto attached, to the director, or in his or her absence to the deputy director of the department, or in the absence of both the director and deputy director, to the chief clerk of the department, at the office of the director of the department of insurance, financial institutions and professional registration of this state at Jefferson City, Missouri. The director shall forthwith mail by certified mail, with return receipt requested, one of the copies of the summons, with petition thereto attached, to the defendant at its last known principal place of business, and shall keep a record of all process so served upon the director, deputy director or chief clerk, and the date of service, and the return receipt showing delivery thereof to the defendant shall be filed therewith.

2. The director, upon receiving the return receipt, shall so certify the fact to the clerk of the court in which the action is pending. The service of process shall be deemed sufficient provided notice of service, and a copy of the summons, with a copy of plaintiff's petition thereto attached, are sent certified mail, with return receipt requested, within ten days after service of process upon the director, or his or her deputy or chief clerk, as aforesaid, by plaintiff or plaintiff's attorney to the defendant at its last known principal place of business, and the return receipt therefor issued by the post office and the affidavit of plaintiff or plaintiff's attorney showing compliance with the aforesaid provisions are filed in the office of the clerk of the court in which the action is pending on or before the date the defendant is required to appear and defend the cause of action.

(L. 1951 p. 276 § 375.161, A.L. 1967 p. 516, A.L. 2008 S.B. 788)

Service of process valid, when.

375.266. Service of process in any action, suit or proceeding referred to in section 375.256 shall, in addition to the manner provided in section 375.261, be valid if served upon any person within this state who, in this state on behalf of the insurer, is:

(1) Soliciting insurance, or

(2) Making, issuing or delivering any contract of insurance, or

(3) Collecting or receiving any premium, membership fee, assessment or other consideration for insurance; and if a copy of the summons issued, with a copy of the officer's return thereon, together with a copy of plaintiff's petition thereto attached, are sent within ten days thereafter by certified mail, with return receipt requested, by the plaintiff or plaintiff's attorney to the defendant at the last known principal place of business of the defendant, and the return receipt and the affidavit of plaintiff or plaintiff's attorney showing compliance therewith are filed with the clerk of the court in which the action is pending on or before the date the defendant is required to appear and defend the cause of action.

(L. 1951 p. 276 § 375.162, A.L. 1967 p. 516)

Plaintiff entitled to default judgment, when.

375.271. No plaintiff shall be entitled to a judgment against the defendant by default under this section until after the expiration of forty-five days from the date of service of summons with copy of plaintiff's petition thereto attached upon the director of the department of insurance, financial institutions and professional registration, his deputy or chief clerk as provided in section 375.261, or upon either of the persons referred to in section 375.266.

(L. 1951 p. 276 § 375.163, A.L. 1967 p. 516)

Sections 375.256 to 375.271 not to abridge right to serve processin other legal manner.

375.276. Nothing herein contained shall limit or abridge the right of the plaintiff to serve any process, notice or demand upon any insurance company, association, or other insurer in any other manner now or hereafter permitted by law.

(L. 1951 p. 276 § 375.164, A.L. 1967 p. 516)

Company to furnish bond or certificate of authority before pleading.

375.281. Before any insurance company, association, or other insurer not incorporated or authorized under the laws of this state shall file or cause to be filed in any action, suit or other proceeding instituted against it any answer or other pleading, the insurance company, association, or other insurer aforesaid shall either:

(1) Deposit with the clerk of the court in which the action, suit or proceeding is pending, cash or securities, or shall file with the clerk a bond with good and sufficient sureties to be approved by the court, in any amount to be fixed by the court sufficient to secure the payment of any final judgment which may be rendered against it in the action, together with costs thereof; provided, however, that the court may in its discretion make an order dispensing with the deposit or bond where the insurer makes a showing satisfactory to the court that* it maintains in a state of the United States funds or securities, in trust or otherwise, sufficient and available to satisfy any final judgment which may be entered in the action, suit or proceedings; or

(2) Shall procure a certificate of authority to transact the business of insurance in this state.

(L. 1951 p. 276 § 375.165, A.L. 1967 p. 516)

*Word "that" does not appear in original rolls.

Postponement of action permitted, when.

375.286. The court, in any action, suit or proceeding, in which service of process is made in the manner provided in sections 375.256 to 375.301, may, in its discretion, order such postponement as the court shall deem necessary to afford the defendant reasonable opportunity to comply with the provisions of section 375.281 and to defend the action, suit or proceeding.

(L. 1951 p. 276 § 375.166, A.L. 1967 p. 516)

Company may file motion to quash service--grounds.

375.291. Nothing contained in section 375.281 shall be construed to prevent any defendant insurance company, association, or other insurer, not incorporated or authorized under the laws of this state, who has been served with process under the provisions of sections 375.256 to 375.301, from filing motion to quash service upon the ground either:

(1) That the defendant insurance company, association, or other insurer has not done or committed or caused to be done or committed any of the acts enumerated in section 375.256; or

(2) That the person upon whom service of process was made pursuant to the provisions of section 375.266 was not engaged in or doing any of the acts enumerated therein.

(L. 1951 p. 276 § 375.167, A.L. 1967 p. 516)

Additional damages for vexatious refusal to pay.

375.296. In any action, suit or other proceeding instituted against any insurance company, association or other insurer upon any contract of insurance issued or delivered in this state to a resident of this state, or to a corporation incorporated in or authorized to do business in this state, if the insurer has failed or refused for a period of thirty days after due demand therefor prior to the institution of the action, suit or proceeding, to make payment under and in accordance with the terms and provisions of the contract of insurance, and it shall appear from the evidence that the refusal was vexatious and without reasonable cause, the court or jury may, in addition to the amount due under the provisions of the contract of insurance and interest thereon, allow the plaintiff damages for vexatious refusal to pay and attorney's fees as provided in section 375.420. Failure of an insurer to appear and defend any action, suit or other proceeding shall be deemed prima facie evidence that its failure to make payment was vexatious without reasonable cause.

(L. 1951 p. 276 § 375.168, A.L. 1967 p. 516)

Loan against policy by policyholder, insurer to give notice ofinterest due.

375.298. If a policyholder has taken a loan against an insurance policy, the insurer of such policy shall annually notify the policyholder of any interest due on the loan.

(L. 1998 H.B. 1374 § 1)

Exemptions from provisions of sections 375.256 to 375.301.

375.301. The provisions of sections 375.256 to 375.301 shall not apply to any action, suit or proceeding against any unauthorized insurer arising out of a contract of:

(1) Reinsurance effectuated in accordance with the laws of Missouri;

(2) Insurance effectuated in accordance with chapter 384;

(3) Aircraft insurance;

(4) Insurance on property or operations of railroads engaged in interstate commerce;

(5) Insurance against legal liability arising out of the ownership, operation or maintenance of any property having a permanent situs outside of this state; or

(6) Insurance against loss of or damage to any property having a permanent situs outside this state; where the contract contains a provision designating the insurance commissioner to be its true and lawful attorney upon whom may be served all lawful process in any action, suit or proceeding instituted by or on behalf of an insured or beneficiary arising out of any contract.

(L. 1951 p. 276 § 375.169, A.L. 1967 p. 516, A.L. 1977 S.B. 274)

Not to act for insolvent company--guarantee fund, wheredeposited--advertisements--penalty for violation.

375.306. 1. It is unlawful for any person to act within this state as agent, producer, or otherwise, in receiving or procuring applications for insurance, or in any manner to aid in transacting the business referred to in this chapter for any company or association doing business in this state, unless the company is possessed of the amount of capital and of actual paid-up capital, or of premium notes, cash premiums or guarantee fund, of the kind, character and amounts required of companies organized under the provisions of this chapter.

2. The guarantee fund of companies other than those of this state shall be deposited with the proper officer of the state or country under the laws of which the company is organized, or with the director, in the manner provided by section 379.050 in regard to the making of such deposit by companies organized under this chapter.

3. Whenever any insurance company doing business in this state advertises its assets, either in any newspaper or periodical, or by any sign, circular, card, policy of insurance or certificate of renewal thereof, it shall, in the same connection, equally conspicuously advertise its liabilities, and the amount of its assets available for fire and life losses separately, the same to be determined in the manner required in making statement to the department, and all advertisements purporting to show the amount of capital of the company shall show only the amount of capital actually paid up in cash.

4. If the director determines that a person has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, the director may issue such administrative orders as authorized under section 374.046. A violation of this section is a level two violation under section 374.049.

5. If the director believes that a person has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, the director may maintain a civil action for relief authorized under section 374.048. A violation of this section is a level two violation under section 374.049.

(RSMo 1939 § 6017, A.L. 1967 p. 516, A.L. 2007 S.B. 66)

Unauthorized persons or corporationsenjoined from transaction of insurance business, penalty.

375.310. 1. It is unlawful for any person, association of individuals, or any corporation to transact in this state any insurance business unless the person, association, or corporation is duly authorized by the director under a certificate of authority or appropriate licensure, or is an insurance company exempt from certification under section 375.786.

2. If the director determines that a person has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, the director may issue such administrative orders as authorized under section 374.046. A violation of this section is a level four violation under section 374.049.

3. If the director believes that a person has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, the director may maintain a civil action for relief authorized under section 374.048. A violation of this section is a level four violation under section 374.049.

4. Any person who knowingly engages in any act, practice, omission, or course of business in violation of this section is guilty of a class E felony.

5. The director may refer such evidence as is available concerning violations of this chapter to the proper prosecuting attorney, who with or without a criminal reference, or the attorney general under section 27.030, may institute the appropriate criminal proceedings.

6. Nothing in this section shall limit the power of the state to punish any person for any conduct that constitutes a crime under any other state statute.

(RSMo 1939 § 6020, A.L. 1965 p. 573, A.L. 2007 S.B. 66, A.L. 2014 S.B. 491)

Prior revisions: 1929 § 5909; 1919 § 6322; 1909 § 7054

Effective 1-01-17

Not to trade--exception.

375.320. 1. No insurance company formed under the laws of this state shall, directly or indirectly, deal or trade in any goods, wares, merchandise or other commodities whatsoever, except such as may be incident to and necessary in connection with the ownership and operation of property held under the provisions of sections 375.330 and 375.340.

2. This section shall not apply to an insurer organized under chapter 376.

(RSMo 1939 § 6028, A.L. 1945 p. 1011, A.L. 2007 S.B. 66)

Prior revisions: 1929 § 5917; 1919 § 6329; 1909 § 7060

Mechanical data processing equipment as assets.

375.325. Notwithstanding any prohibitions or restrictions contained in the statutes, any insurance company may acquire by purchase electronic or mechanical machines constituting a data processing system, and thereafter may hold the system as an admitted asset for use in connection with the business of the company if

(1) The system shall have an aggregate cost of not less than twenty-five thousand dollars and its aggregate cost shall not exceed five percent of the admitted assets of the company;

(2) The cost of the component machines constituting the system shall be fully amortized over a period not to exceed ten calendar years. If a data processing system consists of separate component machines which are acquired at different times, then the cost of each component shall be fully amortized over a period not to exceed ten calendar years commencing with the date of acquisition of each component.

(L. 1961 p. 167 § 1, A.L. 1967 p. 516)

Automobiles as assets.

375.326. 1. Notwithstanding any prohibitions or restrictions contained in the statutes or otherwise, any stock, mutual, or reciprocal insurance company doing the business of property and casualty business in this state may acquire by purchase motor vehicles and thereafter may hold them as admitted assets for use in connection with the business of the company if:

(1) The aggregate cost of such motor vehicles shall be at least twenty-five thousand dollars. Such aggregate cost shall not exceed two percent of the admitted assets of the company, and such company shall have a minimum of three million dollars of surplus;

(2) The cost of each such motor vehicle shall be fully amortized over a period not to exceed five years;

(3) The company has obtained in its name proper title or registration from a governmental agency authorized by law or custom to issue such title or registration.

2. Nothing in this section shall be construed to allow insurers to declare motor vehicles to the extent such vehicles are used for personal use and not used in furtherance of activities not necessary to the business of the insurer.

3. No insurance company domiciled in another state which state refuses to allow insurance companies domiciled in this state to declare on any statement to be filed in that state motor vehicles under the provisions of this section shall be allowed to declare such amounts on statements filed in this state.

(L. 1979 S.B. 227 §§ 1, 2, 3)

Purchase and ownership of real estate.

375.330. 1. No insurance company formed under the laws of this state shall be permitted to purchase, hold or convey real estate, excepting for the purpose and in the manner herein set forth, to wit:

(1) Such as shall be necessary for its accommodation in the transaction of its business; provided that before the purchase of real estate for any such purpose, the approval of the director of the department of insurance, financial institutions and professional registration must be first had and obtained, and except with the approval of the director, the value of such real estate, together with all appurtenances thereto, purchased for such purpose shall not exceed twenty percent of the insurance company's capital and surplus as shown by its last annual statement; or

(2) Such as shall have been mortgaged in good faith by way of security for loans previously contracted, or for moneys due; or

(3) Such as shall have been conveyed to it in satisfaction of debts contracted in the course of its dealings; or

(4) Such as shall have been purchased at sales upon the judgments, decrees or mortgages obtained or made for such debts; or

(5) Such as shall be necessary and proper for carrying on its legitimate business under the provisions of the Urban Redevelopment Corporations Act; or

(6) Such as shall have been acquired under the provisions of the Urban Redevelopment Corporations Act permitting such company to purchase, own, hold or convey real estate; or

(7) Such real estate, or any interest therein, as may be acquired or held by it by purchase, lease or otherwise, as an investment for the production of income, which real estate or interest therein may thereafter be held, improved, developed, maintained, managed, leased, sold or conveyed by it as real estate necessary and proper for carrying on its legitimate business; or

(8) A reciprocal or interinsurance exchange may, in its own name, purchase, sell, mortgage, hold, encumber, lease, convey, or otherwise affect the title to real property for the purposes and objects of the reciprocal or interinsurance exchange. Such deeds, notes, mortgages or other documents relating to real property may be executed by the attorney in fact of the reciprocal or interinsurance exchange. This provision shall be retroactive and shall apply to real estate owned or sold by a reciprocal insurer prior to August 28, 1990.

2. The investments acquired under subdivision (7) of subsection 1 of this section may be in either existing or new business or industrial properties, or for new residential properties or new housing purposes.

3. Provided, no such insurance company shall invest more than ten percent of its admitted assets, as shown by its last annual statement preceding the date of acquisition, as filed with the director of the department of insurance, financial institutions and professional registration of the state of Missouri, in the total amount of real estate acquired under subdivision (7) of subsection 1, nor more under subdivision (7) of subsection 1 than one percent of its admitted assets or ten percent of its capital and surplus, whichever is greater, in any one property, nor more under subdivision (7) of subsection 1 than one percent of its admitted assets or ten percent of its capital and surplus, whichever is greater, in total properties leased or rented to any one individual, partnership or corporation.

4. It shall not be lawful for any company incorporated as aforesaid to purchase, hold or convey real estate in any other case or for any other purpose; and all such real estate acquired in payment of a debt, by foreclosure or otherwise, and real estate exchanged therefor, shall be sold and disposed of within ten years after such company shall have acquired absolute title to the same, unless the company owning such real estate or interest therein shall elect to hold it pursuant to subdivision (7) of subsection 1.

5. The director of the department of insurance, financial institutions and professional registration may, for good cause shown, extend the time for holding such real estate acquired in paying of a debt, by foreclosure or otherwise, and real estate exchanged therefor, and not held by the company under subdivision (7) of subsection 1, for such period as he may find to be to the best interests of the policyholders of said company.

6. If a life insurance company depositing under section 376.170 becomes the owner of real estate pursuant to this section, the company may execute its own deed for the real estate to the director of the department of insurance, financial institutions and professional registration, as trustee. The deed may be deposited with the director as proper security, under and according to the provisions of sections 376.010 to 376.670, the value to be subject to the approval of the director.

7. This section shall not apply to an insurer organized under chapter 376.

(RSMo 1939 § 6029, A.L. 1945 p. 1011, A.L. 1947 V. II p. 271, A.L. 1949 p. 302, A.L. 1957 p. 220, A.L. 1961 p. 168, A.L. 1979 S.B. 322, A.L. 1985 H.B. 823, A.L. 1990 H.B. 1739, A.L. 2002 H.B. 1568 merged with S.B. 1009, A.L. 2007 S.B. 66)

Prior revisions: 1929 § 5918; 1919 § 6330; 1909 § 7061

Sale and exchange of real estate.

375.340. 1. In all cases in which life insurance companies, benefit societies or other associations doing business in this state shall have legally acquired by foreclosure or in payment of a debt previously contracted any real estate or personal property situated in this state or elsewhere, said company, society or association may upon the sale of said property take in payment or part payment thereof the stocks or bonds of any company or corporation purchasing said property and may exchange any real estate acquired in foreclosure or in payment of debts, in whole or in part, for other real estate.

2. This section shall not apply to an insurer organized under chapter 376.

(RSMo 1939 § 6030, A.L. 1945 p. 1011, A.L. 2007 S.B. 66)

Prior revision: 1929 § 5919

Derivative transactions permitted, conditions--definitions--rules.

375.345. 1. As used in this section, the following words and terms mean:

(1) "Admitted assets", assets permitted to be reported as admitted assets on the statutory financial statement of the insurance company most recently required to be filed with the director, but excluding assets of separate accounts, the investments of which are not subject to the provisions of law governing the general investment account of the insurance company;

(2) "Cap", an agreement obligating the seller to make payments to the buyer, with each payment based on the amount by which a reference price, level, performance, or value of one or more underlying interests exceeds a predetermined number, sometimes called the strike rate or strike price;

(3) "Collar", an agreement to receive payments as the buyer of an option, cap, or floor and to make payments as the seller of a different option, cap, or floor;

(4) "Counterparty exposure amount":

(a) The amount of credit risk attributable to an over-the-counter derivative instrument. The amount of credit risk equals:

a. The market value of the over-the-counter derivative instrument if the liquidation of the derivative instrument would result in a final cash payment to the insurance company; or

b. Zero if the liquidation of the derivative instrument would not result in a final cash payment to the insurance company;

(b) If over-the-counter derivative instruments are entered into under a written master agreement which provides for netting of payments owed by the respective parties, and the domicile of the counterparty is either within the United States or within a foreign jurisdiction listed in the Purposes and Procedures of the Securities Valuation Office as eligible for netting, the net amount of credit risk shall be the greater of zero or the net sum of:

a. The market value of the over-the-counter derivative instruments entered into under the agreement, the liquidation of which would result in a final cash payment to the insurance company; and

b. The market value of the over-the-counter derivative instruments entered into under the agreement, the liquidation of which would result in a final cash payment by the insurance company to the business entity;

(c) For open transactions, market value shall be determined at the end of the most recent quarter of the insurance company's fiscal year and shall be reduced by the market value of acceptable collateral held by the insurance company or placed in escrow by one or both parties;

(5) "Derivative instrument", an agreement, option, instrument, or a series or combination thereof that makes, takes delivery of, assumes, relinquishes, or makes a cash settlement in lieu of a specified amount of one or more underlying interests, or that has a price, performance, value, or cash flow based primarily upon the actual or expected price, level, performance, value or cash flow of one or more underlying interests. Derivative instruments also include options, warrants used in a hedging transaction and not attached to another financial instrument, caps, floors, collars, swaps, forwards, futures and any other agreements, options or instruments substantially similar thereto, and any other agreements, options, or instruments permitted under rules or orders promulgated by the director;

(6) "Derivative transaction", a transaction involving the use of one or more derivative instruments;

(7) "Director", the director of the department of insurance, financial institutions and professional registration of this state;

(8) "Floor", an agreement obligating the seller to make payments to the buyer in which each payment is based on the amount by which a predetermined number, sometimes called the floor rate or price, exceeds a reference price, level, performance, or value of one or more underlying interests;

(9) "Forward", an agreement other than a future to make or take delivery of, or effect a cash settlement based on the actual or expected price, level, performance or value of, one or more underlying interests, but not including spot transactions effected within customary settlement periods, when issued purchases or other similar cash market transactions;

(10) "Future", an agreement traded on an exchange to make or take delivery of, or effect a cash settlement based on the actual or expected price, level, performance or value of one or more underlying interests and which includes an insurance future;

(11) "Hedging transaction", a derivative transaction that is entered into and maintained to reduce:

(a) The risk of economic loss due to a change in the value, yield, price, cash flow or quantity of assets or liabilities that the insurance company has acquired or incurred or anticipates acquiring or incurring;

(b) The currency exchange rate risk or the degree of exposure as to assets or liabilities that the insurance company has acquired or incurred or anticipates acquiring or incurring; or

(c) Risk through such other derivative transactions as may be specified to constitute hedging transactions by rules or orders adopted by the director;

(12) "Income generation transaction":

(a) A derivative transaction involving the writing of covered call options, covered put options, covered caps or covered floors that is intended to generate income or enhance return; or

(b) Such other derivative transactions as may be specified to constitute income generation transactions in rules or orders adopted by the director;

(13) "Initial margin", the amount of cash, securities or other consideration initially required to be deposited to establish a futures position;

(14) "NAIC", the National Association of Insurance Commissioners;

(15) "Option", an agreement giving the buyer the right to buy or receive, sell or deliver, enter into, extend, terminate or effect a cash settlement based on the actual or expected price, level, performance or value of one or more underlying interests;

(16) "Over-the-counter derivative instrument", a derivative instrument entered into with a business entity other than through an exchange or clearinghouse;

(17) "Potential exposure", the amount determined in accordance with the NAIC Annual Statement Instructions;

(18) "Replication transaction", a derivative transaction effected either separately or in conjunction with cash market investments included in the insurer's investment portfolio and intended to replicate the investment characteristic of another authorized transaction, investment or instrument or to operate as a substitute for cash market transactions. A derivative transaction that is entered into as a hedging transaction or an income generation transaction shall not be considered a replication transaction;

(19) "SVO", the Securities Valuation Office of the NAIC or any successor office established by the NAIC;

(20) "Swap", an agreement to exchange or to net payments at one or more times based on the actual or expected price, level, performance or value of one or more underlying interests;

(21) "Underlying interest", the assets, liabilities, other interests, or a combination thereof underlying a derivative instrument, such as any one or more securities, currencies, rates, indices, commodities or derivative instruments;

(22) "Warrant", an instrument that gives the holder the right to purchase an underlying financial instrument at a given price and time or at a series of prices and times outlined in the warrant agreement.

2. An insurance company, including those organized under chapter 376, may, directly or indirectly through an investment subsidiary, engage in derivative transactions pursuant to this section under the following conditions:

(1) In general:

(a) An insurance company may use derivative instruments pursuant to this chapter to engage in hedging transactions and certain income generation transactions;

(b) Upon request, an insurance company shall demonstrate to the director the intended hedging characteristics and the ongoing effectiveness of the derivative transaction or combination of the transactions through cash flow testing or other appropriate analyses;

(2) An insurance company shall only maintain its position in any outstanding derivative instrument used as part of a hedging transaction for as long as the hedging transaction continues to be effective;

(3) An insurance company may enter into hedging transactions if as a result of and after giving effect to the transaction:

(a) The aggregate statement value of options, caps, floors and warrants not attached to another financial instrument purchased and used in hedging transactions then engaged in by the insurer does not exceed seven and one-half percent of its admitted assets;

(b) The aggregate statement value of options, caps and floors written in hedging transactions then engaged in by the insurer does not exceed three percent of its admitted assets; and

(c) The aggregate potential exposure of collars, swaps, forwards and futures used in hedging transactions then engaged in by the insurer does not exceed six and one-half percent of its admitted assets;

(4) An insurance company may only enter into the following types of income generation transactions if as a result of and after giving effect to an income generation transaction, the aggregate statement value of the fixed income assets that are subject to call or that generate the cash flows for payments under the caps or floors, plus the face value of fixed income securities underlying a derivative instrument subject to call, plus the amount of the purchase obligations under the puts, shall not exceed ten percent of its admitted assets:

(a) Sales of covered call options on noncallable fixed income securities, callable fixed income securities if the option expires by its terms prior to the end of the noncallable period, or derivative instruments based on fixed income securities;

(b) Sales of covered call options on equity securities if the insurance company holds in its portfolio or can immediately acquire through the exercise of options, warrants or conversion rights already owned, the equity securities subject to call during the complete term of the call option sold;

(c) Sales of covered puts on investments that the insurance company is permitted to acquire under the applicable insurance laws of the state, if the insurance company has escrowed or entered into a custodian agreement segregating cash or cash equivalents with a market value equal to the amount of its purchase obligations under the put during the complete term of the put option sold; or

(d) Sales of covered caps or floors if the insurance company holds in its portfolio the investments generating the cash flow to make the required payments under the caps or floors during the complete term that the cap or floor is outstanding;

(5) An insurance company may use derivative instruments for replication transactions only after the director promulgates reasonable rules that set forth methods of disclosure, reserving for risk-based capital, and determining the asset valuation reserve for these instruments. Any asset being replicated is subject to all the provisions and limitations on the making thereof specified in this chapter and chapters 376 and 379 with respect to investments by the insurer as if the transaction constituted a direct investment by the insurer in the replicated asset;

(6) An insurance company shall include all counterparty exposure amounts in determining compliance with this state's single-entity investment limitations;

(7) The director may approve, by rule or order, additional transaction conditions involving the use of derivative instruments for other risk management purposes.

3. Written investment policies and record-keeping procedures shall be approved by the board of directors of the insurance company or by a committee authorized by such board before the insurance company may engage in the practices and activities authorized by this section. These policies and procedures must be specific enough to define and control permissible and suitable investment strategies with regard to derivative transactions with a view toward the protection of the policyholders. The minutes of any such committee shall be recorded and regular reports of such committee shall be submitted to the board of directors.

4. The director may promulgate reasonable rules and regulations pursuant to the provisions of chapter 536, not inconsistent with this section and any other insurance laws of this state, establishing standards and requirements relating to practices and activities authorized in this section, including, but not limited to, rules which impose financial solvency standards, valuation standards, and reporting requirements.

(L. 1985 H.B. 823, A.L. 2002 S.B. 1009, A.L. 2007 S.B. 66)

Restriction on ownership of certain assets not exclusively controlledby an insurance company.

375.347. Securities and other related assets not exclusively controlled by an insurance company shall only be held by banks, trust companies, or securities depositories that are members of or regulated by the Securities and Exchange Commission, the Federal Reserve System or the appropriate bank regulatory authority.

(L. 2000 S.B. 896)

Reacquisition and holding of own stock, when--approval of director,when--effect on assets and solvency.

375.350. 1. No insurance company shall, directly or indirectly, purchase or hold, either absolutely or as collateral, its own stock, after the same has been once issued, without prior approval of the director of the department of insurance, financial institutions and professional registration. The written application shall specify the number of shares offered, their description, the price offered by the company, the book value of said shares and any other pertinent information regarding the value of said shares. A copy of said application shall be given to the seller prior to the filing of said written application with the director of the department of insurance, financial institutions and professional registration. This section shall not prevent a company from buying its own stock, if the same shall be forfeited and sold to the company for nonpayment of assessments thereon, in which case it shall be treated and issued as part of the original stock. Any person willfully making a false statement or representation in the application mentioned above shall be deemed guilty of a felony and be imprisoned for a period of not less than two years nor more than five years.

2. Notwithstanding the limitations set out in subsection 1 of this section, an insurance company may purchase or otherwise acquire its own stock, after the same has once been issued, without prior approval of the director of the department of insurance, financial institutions and professional registration provided that:

(1) The insurance company does not thereby reduce its capital and surplus below the minimums required by law for such company to continue to do business; and

(2) The insurance company, within ten days after the end of any three-month period in which it acquires more than five percent of any class of its outstanding shares, files a report with the director of the department of insurance, financial institutions and professional registration showing:

(a) The date of such purchase;

(b) The class of stock purchased;

(c) The number of shares of each class so purchased;

(d) The aggregate price paid for such shares of each class so purchased; and

(e) The authorized capital, actual capital, and surplus of such company immediately prior to such purchase.

3. No shares which are or have been reacquired, purchased, pledged, or held by an insurance company pursuant to subsection 1 or 2 of this section shall be considered an admitted asset, nor shall be considered in determining the solvency of any insurance company.

(RSMo 1939 § 6035, A.L. 1957 p. 223, A.L. 1984 S.B. 679)

Prior revisions: 1929 § 5924; 1919 § 6332; 1909 § 7063

Acquisition of control of one company by another, director mayauthorize, procedure, exceptions.

375.355. 1. Any insurance company organized under the laws of this state may hereafter, with the approval of the director first obtained,

(1) Organize any subsidiary insurance company in which it shall own and hold not less than a majority of the common stock; or

(2) Acquire control of another insurance company by purchase, merger or otherwise, regardless of the domicile of any company so organized or acquired, for the purpose of operating any such company under a plan of common control.

2. Whenever any insurance company shall propose under the provisions of this section to acquire control of another insurance company by purchase, merger or otherwise or to dispose of any stock so purchased or so acquired, it shall present its petition to the director setting forth the terms and conditions of the proposed acquisition or disposition and praying for the approval of the acquisition or disposition. The director shall thereupon issue an order of notice, requiring notice to be given, to the policyholders of a mutual company and stockholders of a stock company, of the pendency of the petition, and the time and place at which the same will be heard, by publication of the order of notice in two daily newspapers designated by the director for at least once a week for two weeks before the time appointed for the hearing upon the petition; and any further notice which the director may require shall be given by the petitioners. At the time and place fixed in the notice, or at such time and place as shall be fixed by adjournment, the director shall proceed with the hearing, and may make such examination into the affairs and conditions of the companies as he may deem proper. For the purpose of making the examination, or having the same made, the director may employ the necessary clerical, actuarial, legal, and other assistance. The director of the department of insurance, financial institutions and professional registration of this state shall have the same power to summon and compel the attendance and testimony of witnesses and the production of books and papers at the hearing as by law granted in examinations of companies. Any policyholder or stockholder of the company or companies may appear before the director and be heard in reference to the petition. The director, if satisfied that the proposed acquisition or disposition was properly approved after notice as required by the articles and bylaws of the company or companies, and that the interest of the policyholders of the company or companies is protected, and that no reasonable objection exists as to the acquisition or disposition, and that the acquisition will not tend to substantially lessen competition or create a monopoly, shall approve and authorize the proposed acquisition or disposition. All expenses and costs incident to the proceedings under this subsection shall be paid by the company or companies bringing the petition.

3. The shares of any subsidiary life insurance company acquired or held under the provisions of this section by a parent life insurance company organized under the provisions of chapter 376 shall be eligible for deposit by the parent life insurance company as provided in section 376.170 at a value no greater than the proportion of the capital and surplus of the subsidiary company as shown by its last annual statement filed in the state of its domicile represented by the shares held by the parent life insurance company, but only to the extent that the capital and surplus is represented by cash or securities of the kind and type eligible for deposit under the provisions of section 376.170 and other applicable statutes.

4. (1) The provisions of this section shall not apply to the acquisition or disposition by purchase, sale or otherwise of not less than the majority of the stock of any insurance company domiciled outside of the state of Missouri, if the consideration involved in such acquisition or disposition does not exceed the following threshold:

(a) With respect to an insurance holding company, so long as such consideration does not exceed the lesser of three percent of its consolidated assets or twenty percent of its consolidated stockholders' equity as of the thirty-first day of December of the preceding year according to its consolidated balance sheet prepared in accordance with generally accepted accounting principles and audited by independent certified accountants in accordance with generally acceptable auditing standards; or

(b) With respect to an insurance company organized under the laws of this state, so long as such consideration does not exceed the lesser of three percent of its assets or ten percent of its capital and surplus as of the thirty-first day of December of the preceding year according to its balance sheet prepared in accordance with accounting practices prescribed or permitted by the department of insurance, financial institutions and professional registration and in conformity with the practices of the National Association of Insurance Commissioners and audited by independent certified accountants in accordance with generally acceptable auditing standards.

(2) In calculating the amount of consideration involved in such acquisition or disposition for the purposes of subdivision (1) of this subsection, there shall be included total net moneys or other consideration expended, and obligations assumed in the acquisition or disposition, including all organizational expenses and contributions to capital and surplus of such insurance company domiciled outside of the state of Missouri, whether represented by the purchase of capital stock or issuance of other securities. For the purposes of this subsection, the term "insurance holding company" means a domestic insurance holding company in which the majority of stock is owned by a domestic insurance company, or a domestic insurance holding company which owns the majority of the stock of a domestic insurance company.

(L. 1959 H.B. 294 §§ 1, 2, A.L. 1965 p. 574, A.L. 1967 p. 516, A.L. 1979 S.B. 322, A.L. 1997 H.B. 793, A.L. 2001 H.B. 212 merged with S.B. 241)

Note not considered payment--not to loan when insolvent.

375.360. No note or obligation given by any stockholder, whether secured by deed of trust, mortgage or otherwise, shall be considered as payment of any part of the capital stock; and no loan of any money shall be made by any such company to any director, trustee, officer or agent thereof when such company is insolvent, and the failure to collect such loans before the company shall have been adjudged insolvent shall be prima facie evidence of its insolvency at the time such loan was made; and if any such loan shall be made, the persons making it, or who shall assent thereto, shall be jointly and severally liable to the company for the amount of such loan and the interest; provided, however, that this shall not apply to premium notes given by directors, trustees, officers or agents who are also policyholders in such company, when given in the usual course of business of such company in issuing policies.

(RSMo 1939 § 6035)

Prior revisions: 1929 § 5924; 1919 § 6332; 1909 § 7063

Collateral to be assigned to company.

375.370. All stocks and other evidence of indebtedness, except such as are transferable by delivery, held by insurance companies doing business in this state, as collateral for moneys loaned or other obligations, shall be regularly assigned and transferred over to said companies by the corporations or individuals issuing the same, and shall be surrendered by such companies only when the obligations of the assignors shall have been permanently and satisfactorily fulfilled and discharged.

(RSMo 1939 § 6035)

Prior revisions: 1929 § 5924; 1919 § 6332; 1909 § 7063

Dividends shall not be paid, when--penalty--liability ofstockholder.

375.380. 1. It shall not be lawful for the directors, trustees or managers of any insurance company to make any dividend, except from the surplus profits arising from their business, nor for any company to solicit or do new business, when its assets are less than three-fourths of its liabilities.

2. Any company violating the provisions aforesaid shall be subject to proceedings for dissolution.

3. Each stockholder in a stock company receiving any dividend made in violation of the above provision shall be liable to the creditors of such company to the extent of the dividend received, with compound interest on the same from the date of its receipt, as well as the costs of collecting the same, and the managers, trustees or directors assenting to the same, or any agent soliciting or doing new business, knowing or having reasonable cause to believe that such company is impaired as aforesaid, shall be deemed guilty of a violation of the provisions of this law, and shall be punished as by sections 375.010 to 375.920 provided.

(RSMo 1939 § 6036)

Prior revisions: 1929 § 5925; 1919 § 6333; 1909 § 7064

Officers not to use funds for private gain--penalty.

375.390. No officer, stockholder, agent or employee of any insurance company, formed under the laws of this state, or doing business herein, shall, directly or indirectly, use or employ, or permit others to use or employ, any of the money, funds or securities of such company for private profit or gain, and any such use shall be deemed a felony, punishable, upon conviction, by imprisonment in the penitentiary not less than two years nor more than five years for each offense.

(RSMo 1939 § 6037)

Prior revisions: 1929 § 5926; 1919 § 6334; 1909 § 7065

Investigation by director--duty of prosecuting attorney.

375.400. 1. The director of the department of insurance, financial institutions and professional registration shall, as often as he may deem proper, make careful inquiry and investigation as to the manner in which the money, funds or securities of insurance companies, doing business in this state, are invested or employed, and record the result of such inquiry or investigation in records kept in his office for the inspection of policyholders and public officials.

2. In the event of a violation of this section or of section 375.390, the prosecuting attorney of the proper county, or in the city of St. Louis, the circuit attorney, shall proceed at once by information or indictment against the offenders.

(RSMo 1939 § 6038)

Prior revisions: 1929 § 5927; 1919 § 6335; 1909 § 7066

Penalty for violation.

375.410. Any public official failing, neglecting or refusing to comply with any of the provisions of sections 375.390 and 375.400 shall be deemed guilty of a misdemeanor, and, upon conviction, shall be fined not less than five hundred dollars and forfeit his office.

(RSMo 1939 § 6039)

Prior revisions: 1929 § 5928; 1919 § 6336; 1909 § 7067

Vexatious refusal to pay claim, damages for, exception.

375.420. In any action against any insurance company to recover the amount of any loss under a policy of automobile, fire, cyclone, lightning, life, health, accident, employers' liability, burglary, theft, embezzlement, fidelity, indemnity, marine or other insurance except automobile liability insurance, if it appears from the evidence that such company has refused to pay such loss without reasonable cause or excuse, the court or jury may, in addition to the amount thereof and interest, allow the plaintiff damages not to exceed twenty percent of the first fifteen hundred dollars of the loss, and ten percent of the amount of the loss in excess of fifteen hundred dollars and a reasonable attorney's fee; and the court shall enter judgment for the aggregate sum found in the verdict.

(RSMo 1939 § 6040, A.L. 1975 H.B. 93)

Prior revisions: 1929 § 5929; 1919 § 6337; 1909 § 7068

(2000) Plain language of statute does not preempt a tort claim for defamation. Overcast v. Billings Mutual Insurance Co., 11 S.W.3d 62 (Mo.banc).

Prepayment for policy, return of, when--limitations--violation anunfair trade practice.

375.421. 1. For purposes of this section, the following words and phrases shall mean:

(1) "Insurer" shall include any insurance company, health services corporation or health maintenance organization, regulated pursuant to chapter 354 or chapters 375 to 385;

(2) "Policy" or "contract" shall include any insurance policy, subscriber contract or member contract, issued or delivered by any insurer, of any of the following types or description:

(a) Noncommercial fire;

(b) Homeowners';

(c) Noncommercial tenants';

(d) Noncommercial motor vehicle;

(e) Individual life;

(f) Individual health;

(g) Group health, other than employer-provided group health coverage.

2. No insurer which requires, as a condition of or part of any application for any policy or contract, the payment of any sum of money prior to issuance of the policy or contract shall retain such sum or any portion of such sum, except for dues for current membership, for a period in excess of sixty days after the date of such application unless the insurer:

(1) Issues and delivers to the applicant the policy or contract for which application is made on or prior to such sixtieth day; or

(2) Issues and delivers to the applicant a binder, conditional receipt or temporary insurance agreement providing the coverage for which the application was made, to extend from the date that such application was made to the date that such policy or contract is issued.

3. Any insurer required to refund any sum of money to an applicant for a policy or contract pursuant to this section shall do so by negotiable instrument payable on demand, delivered to the applicant on or before the sixtieth day after the date of application for such policy or contract.

4. The provisions of this section shall not bar an insurer which refunds any money pursuant to subsections 2 and 3 of this section from later making a decision relating to an application for a policy or contract, and issuing such policy or contract conditionally upon payment of any required premium, subscriber or member fee or dues, or payment of any other such sum of money.

5. The provisions of this section shall not be construed to affect the right of an insurer, as otherwise provided by law, from voiding any policy from its inception date if the insured made any misrepresentation on his application for such policy, or have any effect on policy cancellation laws.

6. Violation of the provisions of this section shall be an unfair trade practice as defined by sections 375.930 to 375.948, and shall be subject to all of the provisions and penalties provided by such sections.

(L. 1992 H.B. 1574 § 25)

Directors and officers of stock companies to report ownership.

375.422. Every person who is directly or indirectly the beneficial owner of more than ten percent of any class of any equity security of any insurance company organized under the laws of this state and having capital stock, or who is a director or an officer of such company, shall file in the office of the director of the department of insurance, financial institutions and professional registration of the state of Missouri on or before January 1, 1966, or within ten days after he becomes such beneficial owner, director or officer, a statement in such form as the director may prescribe, of the amount of all equity securities of such company of which he is the beneficial owner, and within ten days after the close of each calendar month thereafter, if there has been a change in such ownership during such month, any such person shall file in the office of the director a statement, in such form as the director may prescribe, indicating his ownership at the close of each such calendar month and such changes in his ownership as have occurred during such calendar month.

(L. 1965 p. 575 § 1)

Company may recover profits realized by officer or director incertain transactions--exceptions.

375.423. For the purpose of preventing the unfair use of information which may have been obtained by such beneficial owner, director or officer by reason of his relationship to such company, any profit realized by him from any purchase and sale, or any sale and purchase, of any equity security of such company within any period of less than six months, unless such security was acquired in good faith in connection with a debt previously contracted shall inure to and be recoverable by the company, irrespective of any intention on the part of such beneficial owner, director or officer in entering into such transaction of holding the security purchased or of not repurchasing the security sold for a period exceeding six months. Suit to recover such profit may be instituted in any court of competent jurisdiction by the company, or by the owner of any security of the company in the name and on behalf of the company if the company shall fail or refuse to bring such suit within sixty days after request or shall fail diligently to prosecute the suit thereafter; but no such suit shall be brought more than two years after the date the profit was realized. This section shall not be construed to cover any transaction where the beneficial owner of the equity security involved was not the owner both at the time of the purchase and sale, or the sale and purchase, or any transaction or transactions which the director by rules and regulations may exempt as not comprehended within the purpose of this section.

(L. 1965 p. 575 § 2)

Unlawful for officer or director to sell equity security notowned by him--delivery.

375.424. It shall be unlawful for any beneficial owner, director or officer, directly or indirectly, to sell any equity security of such company if the person selling the security or his principal does not own the security sold, or if owning the security, does not deliver it against such sale within twenty days thereafter, or does not within five days after such sale deposit it in the mails or other usual channels of transportation; but no person shall be deemed to have violated this section if he proves that notwithstanding the exercise of good faith he was unable to make such delivery or deposit within such time, or that to do so would cause undue inconvenience or expense.

(L. 1965 p. 575 § 3)

Provisions of 375.423 and 375.424 not to apply, when--equitysecurity defined.

375.425. 1. The provisions of section 375.423 shall not apply to any purchase and sale, or sale and purchase, and the provisions of section 375.424 shall not apply to any sale, of an equity security of such insurance company not then or theretofore held by him in an investment account, by a dealer in the ordinary course of his business and incident to the establishment or maintenance by him of a primary or secondary market, otherwise than on an exchange as defined in the Securities Exchange Act of 1934, for such security. The director may, by such rules and regulations as he deems necessary or appropriate in the public interest, define and prescribe terms and conditions with respect to securities held in an investment account and transactions made in the ordinary course of business and incident to the establishment or maintenance of a primary or secondary market.

2. The provisions of sections 375.422, 375.423 and 375.424 shall not apply to foreign or domestic arbitrage transactions unless made in contravention of such rules and regulations as the director may adopt in order to carry out the purposes of this section.

3. The provisions of sections 375.422, 375.423 and 375.424 shall not apply to equity securities of such insurance company if:

(1) Such securities shall be registered, or shall be required to be registered, pursuant to section 12 of the Securities Exchange Act of 1934, as amended; or

(2) If such insurance company shall not have any class of its equity securities held of record by one hundred or more persons on the last business day of the year next preceding the year in which equity securities of the company would be subject to the provisions of sections 375.422, 375.423 and 375.424, except for the provisions of this subdivision.

4. The term "equity security" when used in this section means any stock or similar security; or any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security; or any such warrant or right; or any other security which the director shall deem to be of similar nature and consider necessary or appropriate, by such rules and regulations as he may prescribe in the public interest or for the protection of investors, to treat as an equity security.

(L. 1965 p. 575 §§ 4 to 7)

Director to make rules and regulations.

375.426. The director shall have the power to make such rules and regulations as may be necessary for the execution of the functions vested in him by sections 375.422 to 375.426, and may for such purpose classify such insurance companies, securities, and other persons or matters within his jurisdiction. All such rules and regulations shall conform to, and be subject to, the provisions of chapter 536 as now constituted or hereafter amended. No provision of sections 375.422, 375.423 and 375.424, imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule or regulation of the director, notwithstanding that such rule or regulation may, after such act or omission, be amended or rescinded or determined by judicial or other authority to be invalid for any reason.

(L. 1965 p. 575 § 8)

Department rules for payment of fees by and integration of systems ofinsurers and entities administering claims for injured employeesnot applicable, when.

375.427. Notwithstanding any other provision of law to the contrary, no rule promulgated by the department setting forth criteria for payment of fees by or integration of systems of an insurer and an entity administering claims involving injured employees shall apply to such parties, unless a contractual relationship between such parties to administer claims on behalf of one or more employers is established and the provisions of the rule are not contrary to specific terms in the contract.

(L. 2002 S.B. 895 § 375.919, subsec. 2)

Certificate revoked if judgment not satisfied.

375.430. Whenever any judgment shall be obtained in any of the courts of this state against any insurance company doing business in this state, and said judgment shall remain unsatisfied for fifteen days after execution shall have been lawfully issued thereon, the certificate of authority or license to do business issued or granted to such insurance company shall immediately be suspended or revoked by the director of the department of insurance, financial institutions and professional registration, upon said director being notified thereof, and such insurance company shall, after such suspension or revocation, be prohibited from transacting any business in this state until such judgment shall be satisfied.

(RSMo 1939 § 6041)

Prior revisions: 1929 § 5930; 1919 § 6338; 1909 § 7069

Revocation of license for failure to comply with judicial decree.

375.440. Any person, who has heretofore obtained or may hereafter obtain, in any of the courts of this state, a decree against any insurance company, doing business in this state, commanding or directing said insurance company to specifically perform a contract of insurance, may, if the insurance company against which said decree is obtained, fails, for a period of fifteen days after the rendition of said decree, to comply with the same, obtain a copy of said decree, certified to under the hand and seal of the clerk of the court in which said decree was rendered, and transmit the same, together with the certificate of said clerk, reciting therein, the failure of such insurance company to comply with said decree, and transmit the same to the director of the department of insurance, financial institutions and professional registration of the state of Missouri, and immediately upon receipt thereof, the said director of the department of insurance, financial institutions and professional registration shall cause such insurance company to be notified of the fact of the filing of such certified copy of said decree and certificate, and if such insurance company fails for a period of thirty days thereafter to comply with said decree, the certificate of authority or license to do business issued or granted to such insurance company, shall immediately be suspended or revoked by the director of the department of insurance, financial institutions and professional registration, until such decree shall be satisfied; provided, however, the foregoing shall not be applicable while an appeal is pending if a supersedeas bond shall have been given.

(RSMo 1939 § 6042)

Prior revisions: 1929 § 5931; 1919 § 6339

Company operating fraudulently or in bad faith, penalties.

375.445. 1. It is unlawful for any insurance company transacting business under the laws of this state to:

(1) Conduct its business fraudulently;

(2) Fail to carry out its contracts in good faith; or

(3) Habitually and as a matter of business practice compelling claimants under policies or liability judgment creditors of the insured to either accept less than the amount due under the terms of the policy or resort to litigation against the company to secure payment of the amount due.

2. If the director determines that a person has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, the director may issue such administrative orders as authorized under section 374.046. Each practice in violation of this section is a level two violation under section 374.049. Each act as a part of a practice does not constitute a separate violation under section 374.049. The director may also suspend or revoke the license or certificate of authority of such person for any willful violation.

3. If the director believes that a person has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, the director may maintain a civil action for relief authorized under section 374.048. Each practice violation of this section is a level two violation under section 374.049. Each act as part of a practice does not constitute a separate violation under section 374.049.

(L. 1967 p. 516, A.L. 2007 S.B. 66)

Director to keep deposits--rights of companies.

375.460. 1. The director of the department of insurance, financial institutions and professional registration shall receive the deposits and securities required by law to be transferred to and deposited with him, and shall give vouchers for the same to the parties so depositing.

2. He shall at all times require each company to keep up its deposits aforesaid to the full actual value required by law.

3. It shall be the duty of the director of the department of insurance, financial institutions and professional registration, upon receipt of securities from any insurance company, to forthwith deposit the same in the presence of the president, vice president or authorized agent of the company, in a strong iron box, which shall require two distinct and different keys to unlock the same, one key to be kept by the director and the other by the company; and the box shall not be opened except in the presence of the director or deputy, and said president, vice president, or authorized agent of the company; provided, however, that in case the company having such securities on deposit shall be adjudged insolvent, or be dissolved, or in cases arising under section 375.490, the court shall make and enforce the necessary orders to place said securities, or any part of them, at the sole disposal of the director.

4. The boxes shall be kept in the vault of the Safe Deposit Company of St. Louis, or other like depositary to be selected by said director, and the insurance companies shall pay the several fees for the safekeeping of their respective boxes.

5. So long as any company so depositing shall continue solvent, the director shall permit such company to collect and receive the interest or dividends on its securities so deposited and transferred, and from time to time to withdraw any such securities on depositing other securities in the stead of those to be withdrawn, such new securities to be of the same value and of the kinds required by law in the first instance.

6. The director shall not be subject to garnishment, attachment or any other process or order in respect to such securities than by law provided.

(RSMo 1939 § 6044)

Prior revisions: 1929 § 5933; 1919 § 6341; 1909 § 7071

Penalty for violations by director.

375.470. If said director or his deputy shall willfully fail, refuse or neglect to faithfully keep, deposit, account or surrender, in the manner by law authorized or required, any such securities as aforesaid, transferred to and received by him or into his custody, under the provisions of law, such director shall be responsible upon his official bond, and suit may be brought upon said bond by any person injured; and said director or his deputy so offending shall, upon conviction thereof, be adjudged guilty of a felony, and punished by a fine not exceeding ten thousand dollars, and by imprisonment in the state penitentiary for not less than two or more than ten years; and for any other willful violation or failure or neglect to perform any duty prescribe by law, and pertaining to his office, said director or his deputy, upon conviction thereof, shall be deemed guilty of a misdemeanor, and punished by a fine not exceeding one thousand dollars, or by imprisonment in the county jail not exceeding twelve months, or by both such fine and imprisonment.

(RSMo 1939 § 6044)

Prior revisions: 1929 § 5933; 1919 § 6341; 1909 § 7071

Withdrawal of securities--notice--examination by director.

375.480. 1. When any company, which has on deposit the securities named in section 376.170 with the director of the department of insurance, financial institutions and professional registration, shall desire to relinquish and cease its business in this state, said director shall, upon application of such company, under the oath of the president or vice president and secretary or assistant secretary, give notice of such intention in any newspaper of general circulation published in the county or city in which said company is located, if it is a company of this state, or in some newspaper published in the city of St. Louis, if it is a company of another state or government, at least twice a week for six weeks.

2. After such publication he shall deliver up and transfer to said company the securities held by him and belonging to the company; but before making such transfer, the director shall be satisfied, by an examination of the books and papers of such company, to be made by himself or some competent person to be appointed by him, or by the oath of the acting president and secretary or assistant secretary of said company if it be a company organized under the laws of this state, that all debts and liabilities of every kind that are due, or may become due, upon all contracts or agreements made with the policyholders in said company, or in any company reinsured by said company, if the deposit is that of a reinsured company and is held for the security of the policyholders of said reinsured company under sections 375.010 to 375.920, are released, satisfied or extinguished; or if it be a company not organized under the laws of this state, that all debts and liabilities of every kind, whether fixed or contingent, due or that may become due to this state or to any county or municipality or citizen thereof, are released, satisfied or extinguished; and the said director may, from time to time, authorize the delivery in the manner aforesaid, to such company or its assigns, of any portion of such securities, on being satisfied in the manner and form aforesaid, that all debts and liabilities of every kind as aforesaid are less than one-half the amount of the said securities which are retained.

(RSMo 1939 § 6045, A.L. 2007 S.B. 66)

Prior revisions: 1929 § 5934; 1919 § 6342; 1909 § 7072

Payment of judgments out of deposits.

375.490. 1. Any court of competent jurisdiction, wherein a judgment shall have been recovered against any company by which any securities have been deposited, as by law required, upon a policy issued by such company, and execution issued upon such judgment shall have been returned partly or wholly unsatisfied, shall, upon motion of the plaintiff in such executions, upon three days' notice to said director, order said director to forthwith dispose of enough of said securities at the best price he can obtain for the same to satisfy said judgment, execution and costs, so far as such securities shall suffice; and the director shall, upon realizing the amount necessary to pay said claim, with interest and costs, pay the same into the hands of the officer holding the original execution, and the receipt of said officer to him shall be a full acquittance from any further liability for the amount so turned over; provided, however, that in case of companies organized under the laws of this state, if the director has reason to believe that such company is insolvent, and will not be able to replace the securities to be withdrawn, he shall make return to the order to that effect, and thereupon the execution of such order shall be stayed until the question of solvency is determined; if the company is declared solvent, the director shall satisfy said execution out of said securities as above provided; if it is found insolvent, the judgment upon which said execution or order issued shall be liquidated or disposed of in the same manner as is provided by law for the adjustment of policy claims against insolvent companies.

2. Whenever any securities such as aforesaid shall have been disposed of by the director as aforesaid, said director, unless the company whose securities shall have been withdrawn as aforesaid shall, within ten days thereafter, deposit with him other securities of like kind and value, and for the like purpose as the securities so withdrawn, shall proceed, in respect to such company, in the manner authorized by law in case of insolvent or unsound companies.

(RSMo 1939 § 6047)

Prior revisions: 1929 § 5936; 1919 § 6344; 1909 § 7074

Distribution of assets.

375.500. 1. Whenever any company has been or shall be adjudged insolvent, or shall be or has been dissolved, if a distribution of its assets among its policyholders and creditors is or shall be decreed, it shall be the duty of the director of the department of insurance, financial institutions and professional registration to hold all securities on deposit for the benefit of all policyholders in such company, whether the claims of such policyholders are in judgment or not, to reduce such securities to money, and when so reduced, to apply the same, less the expenses herein provided for, to the liquidation of policy claims pro rata; in case there should be any surplus after the payment of all policy claims in full, such surplus shall become a part of the general assets of the company.

2. If the policy claimants are not paid in full out of the proceeds of said securities, they shall be entitled to share in the distribution of its general assets for the remainder of their claims, as is provided by law, and as to said remainder shall not be charged with the amount received by them on their policy claims out of the proceeds of said securities; provided, however, that when said securities have been deposited to secure registered policies or annuity bonds, as provided by sections 375.010 to 375.920, the proceeds of the securities so deposited shall be first applied to the payment of the registered policies and annuity bonds, for the security of which the same were deposited.

(RSMo 1939 § 6048, A. 1949 H.B. 2092)

Prior revisions: 1929 § 5937; 1919 § 6345; 1909 § 7075

Reinsurance--rights and liabilities--insolvency.

375.510. 1. If any insolvent and dissolved company shall be reinsured under the provisions of law, the securities on deposit with the director at the date of the dissolution of the said company shall remain on deposit with him, as a fund for the benefit of the policyholders of the reinsured company, so long as their said policies remain in force; and the same shall not, by virtue of the reinsurance, be transferred to or become a part of the deposit of the reinsuring company, except that said reinsuring company shall have the same right as to the withdrawal or substitution, and as to receiving the interest thereon, as the depositing company had; and said reinsuring company shall be subject to the same liabilities, penalties and obligations as the company depositing would have been with respect to policy claims against it.

2. In case the reinsuring company becomes insolvent, the director of the department of insurance, financial institutions and professional registration shall dispose of the deposits as provided in case of insolvent companies, paying first, out of the net proceeds thereof, the policy claims against the reinsured company, and the remainder, if any, into the general assets of the reinsuring company.

(RSMo 1939 § 6048, A. 1949 H.B. 2092)

Prior revisions: 1929 § 5937; 1919 § 6345; 1909 § 7075

Costs to be paid from deposits--amount.

375.520. 1. The deposits of a company shall be subject to or liable for the following costs only:

(1) The actual cost of collecting the deposits; and

(2) An amount not to exceed one percent of all policies proved up and allowed which amount shall be full compensation for the services of all actuaries, clerks or other persons employed or appointed by the director or the court in the adjusting and settling of policy claims.

2. The cost of collecting deposits shall be the amount actually paid out by the director and in no case shall exceed two and one-half percent of the amount collected. The director, subject to the approval of the court as to amount, shall pay such costs from the proceeds of the deposits.

(RSMo 1939 § 6048, A. 1949 H.B. 2092)

Prior revisions: 1929 § 5937; 1919 § 6345; 1909 § 7075

Accounting among beneficiaries of foreign deposits.

375.530. If any company of this state shall, under the requirements of any law of another state or foreign government, have on deposit in such other state or foreign government securities upon which the citizens or residents of such state or government have, by virtue of its laws, a lien, claim or right, prior or superior to that of the citizens or residents of other states, then no citizen or resident of the state or country in which such deposit is held shall be entitled to share in the distribution of the proceeds of the deposits or other assets in this state, until the amount deposited in such other state or country shall be deducted from the claims of the persons who by the laws of such state or country hold such prior or superior lien, and until the other policy claimants and creditors of said company shall have received from the proceeds of deposits or other assets an equal percent upon their claims.

(RSMo 1939 § 6049)

Prior revisions: 1929 § 5938; 1919 § 6346; 1909 § 7076

Investment in debt of institution permitted, when.

375.532. 1. The capital, reserve and surplus of a domestic insurer may be invested in bonds, notes or other evidences of indebtedness, or preferred or guaranteed stocks or shares, issued, assumed or guaranteed by an institution organized under the laws of the United States, any state, territory or possession of the United States, or the District of Columbia, if such bonds, notes or other evidences of indebtedness, or preferred or guaranteed stocks or shares, shall carry at least the second highest designation or quality rating conferred by the Securities Valuation Office of the National Association of Insurance Commissioners, or some similar or equivalent rating by a nationally recognized rating agency which has been approved by the director.

2. As used in this section, the term "institution" means a corporation, a joint stock company, an association, a trust, a business partnership, a business joint venture or similar entity.

3. This section shall not apply to an insurer organized under chapter 376.

(L. 1991 H.B. 385, et al. § 21, A.L. 1992 S.B. 831, A.L. 2005 H.B. 69 merged with S.B. 131, A.L. 2007 S.B. 66)

Foreign governments or corporations, investment inpermitted--conditions, requirements.

375.534. 1. In addition to other foreign investments permitted by Missouri law for the type or kind of insurance company involved, the capital, reserves and surplus of all insurance companies of whatever kind and character organized under the laws of this state, having admitted assets of not less than one hundred million dollars, may be invested in securities, investments and deposits issued, guaranteed or assumed by a foreign government or foreign corporation, or located in a foreign country, whether denominated in United States dollars or in foreign currency, subject to the following conditions:

(1) Such securities, investments and deposits shall be of substantially the same kind, class and quality of like United States investments eligible for investment by an insurance company under Missouri law;

(2) An insurance company shall not invest or deposit in the aggregate more than twenty percent of its admitted assets under this section, except that an insurance company may reinvest or redeposit any income or profits generated by investments permitted under this section;

(3) The aggregate amount of foreign investments then held by the insurer under this subsection in a single foreign jurisdiction shall not exceed ten percent of its admitted assets as to a foreign jurisdiction that has a sovereign debt rating of SVO "1" or five percent of its admitted assets as to any other foreign jurisdiction; and

(4) Such securities, investments and deposits shall be aggregated with United States investments of the same class in determining compliance with percentage limitations imposed under Missouri law for investments in that class for the type or kind of insurance company involved.

2. This section shall not apply to an insurer organized under chapter 376.

(L. 1991 H.B. 385, et al. § 22, A.L. 2007 S.B. 66, A.L. 2015 S.B. 164)

Director to issue charges when he believes assumption of additionalrisks financially hazardous--hearing--cease and desist order,when.

375.535. Whenever the director has reason to believe that any insurance company licensed to do business in this state is, because of the nature and extent of the risks assumed by the company, in such financial condition that the assumption of additional risks would be hazardous to creditors, policyholders, or the general public, he may issue and serve upon the company a statement of charges and notice of hearing thereon. If after a hearing the director finds that the company is in such financial condition that the assumption of additional risks would be hazardous to creditors, policyholders or the general public, he shall order the company to cease and desist from writing any new business until the company's financial condition is no longer hazardous thereto.

(L. 1967 p. 516)

Impaired insurer, defined--duty to notifydirector--penalties for failure to notify.

375.537. 1. As used in this section, the following terms mean:

(1) "Chief executive officer", the person, irrespective of his title, designated by the board of directors or trustees of an insurer as the person charged with the responsibility of administering and implementing the insurer's policies and procedures;

(2) "Director", the director of the department of insurance, financial institutions and professional registration;

(3) "Impaired", a financial situation in which the assets of an insurer are less than the sum of the insurer's minimum required capital, minimum required surplus and all liabilities as determined in accordance with the requirements for the preparation and filing of the annual statement of an insurer;

(4) "Insurer", any insurance company or other insurer licensed to do business in this state.

2. Whenever an insurer is impaired, its chief executive officer shall immediately notify the director in writing of such impairment and shall also immediately notify in writing all of the board of directors or trustees of the insurer.

3. Any officer, director or trustee of an insurer shall notify the person serving as chief executive officer of the impairment of such insurer in the event such officer, director or trustee knows or has reason to know that the insurer is impaired.

4. Any person who knowingly or recklessly violates subsection 2 or 3 of this section shall, upon conviction thereof, be fined not more than fifty thousand dollars or be imprisoned for not more than one year, or both. Any person who knowingly does any of the following shall be guilty of a class E felony:

(1) Conceals any property belonging to an insurer;

(2) Transfers or conceals in contemplation of a state insolvency proceeding his own property or property belonging to an insurer;

(3) Conceals, destroys, mutilates, alters or makes a false entry in any document which affects or relates to the property of an insurer or withholds any such document from a receiver, trustee or other officer of a court entitled to its possession;

(4) Gives, obtains or receives a thing of value for acting or forbearing to act in any court proceedings; and any such act or acts results in or contributes to an insurer's becoming impaired or insolvent.

(L. 1991 H.B. 385, et al. § 23, A.L. 2014 S.B. 491)

Effective 1-01-17

Hazardous operation, discontinuation determination, standardsfor--issuance of order by director, hearing procedure.

375.539. 1. The director of the department of insurance, financial institutions and professional registration may deem an insurance company to be in such financial condition that its further transaction of business would be hazardous to policyholders, creditors, and the public, if such company is a property or casualty insurer, or both a property and casualty insurer, which has in force any policy with any single net retained risk larger than ten percent of that company's capital and surplus as of the December thirty-first next preceding.

2. The following standards, either singly or a combination of two or more, may be considered by the director to determine whether the continued operation of any insurer transacting an insurance business in this state might be deemed to be hazardous to its policyholders, creditors, or the general public:

(1) Adverse findings reported in financial condition and market conduct examination reports, audit reports, and actuarial opinions, reports, or summaries;

(2) The National Association of Insurance Commissioners Insurance Regulatory Information System and its other financial analysis solvency tools and reports;

(3) Whether the insurer has made adequate provision, according to presently accepted actuarial standards of practice, for the anticipated cash flows required by the contractual obligations and related expenses of the insurer, when considered in light of the assets held by the insurer with respect to such reserves and related actuarial items including, but not limited to, the investment earnings on such assets, and the considerations anticipated to be received and retained under such policies and contracts;

(4) The ability of an assuming reinsurer to perform and whether the insurer's reinsurance program provides sufficient protection for the insurer's remaining surplus after taking into account the insurer's cash flow and the classes of business written as well as the financial condition of the assuming reinsurer;

(5) Whether the insurer's operating loss in the last twelve-month period or any shorter period of time, including but not limited to net capital gain or loss, change in nonadmitted assets, and cash dividends paid to shareholders, is greater than fifty percent of the insurer's remaining surplus as regards to policyholders in excess of the minimum required;

(6) Whether the insurer's operating loss in the last twelve-month period or any shorter period of time, excluding net capital gains, is greater than twenty percent of the insurer's remaining surplus as regards to policyholders in excess of the minimum required;

(7) Whether a reinsurer, obligor, or any entity within the insurer's insurance holding company system, is insolvent, threatened with insolvency or delinquent in payment of its monetary or other obligations, and which in the opinion of the director may affect the solvency of the insurer;

(8) Contingent liabilities, pledges, or guaranties which either individually or collectively involve a total amount which in the opinion of the director may affect the solvency of the insurer;

(9) Whether any controlling person of an insurer is delinquent in the transmitting to, or payment of, net premiums to the insurer. As used in this subdivision, the term "controlling" shall have the same meaning assigned to it in subdivision (2) of section 382.010;

(10) The age and collectibility of receivables;

(11) Whether the management of an insurer, including officers, directors, or any other person who directly or indirectly controls the operation of the insurer, fails to possess and demonstrate the competence, fitness, and reputation deemed necessary to serve the insurer in such position;

(12) Whether management of an insurer has failed to respond to inquiries relative to the condition of the insurer or has furnished false and misleading information concerning an inquiry;

(13) Whether the insurer has failed to meet financial and holding company filing requirements in the absence of a reason satisfactory to the director;

(14) Whether management of an insurer either has filed any false or misleading sworn financial statement, or has released false or misleading financial statement to lending institutions or to the general public, or has made a false or misleading entry, or has omitted an entry of material amount in the books of the insurer;

(15) Whether the insurer has grown so rapidly and to such an extent that it lacks adequate financial and administrative capacity to meet its obligations in a timely manner;

(16) Whether the insurer has experienced or will experience in the foreseeable future cash flow or liquidity problems;

(17) Whether management has established reserves that do not comply with minimum standards established by state insurance laws, regulations, statutory accounting standards, sound actuarial principles and standards of practice;

(18) Whether management persistently engages in material underreserving that results in adverse development;

(19) Whether transactions among affiliates, subsidiaries, or controlling persons for which the insurer receives assets or capital gains, or both, do not provide sufficient value, liquidity, or diversity to assure the insurer's ability to meet its outstanding obligations as they mature;

(20) Any other finding determined by the director to be hazardous to the insurer's policyholders, creditors, or general public.

3. For the purposes of making a determination of an insurer's financial condition under this section, the director may:

(1) Disregard any credit or amount receivable resulting from transactions with a reinsurer that is insolvent, impaired, or otherwise subject to a delinquency proceeding;

(2) Make appropriate adjustments including disallowance to asset values attributable to investments in or transactions with parents, subsidiaries, or affiliates consistent with the National Association of Insurance Commissioners Accounting Policies and Procedures Manual, state laws and regulations;

(3) Refuse to recognize the stated value of accounts receivable if the ability to collect receivables is highly speculative in view of the age of the account or the financial condition of the debtor;

(4) Increase the insurer's liability in an amount equal to any contingent liability, pledge, or guarantee not otherwise included if there is a substantial risk that the insurer will be called upon to meet the obligation undertaken within the next twelve-month period.

4. If the director determines that the continued operation of the insurer licensed to transact business in this state may be hazardous to its policyholders, creditors, or the general public, then the director may, to the extent authorized by law and in accordance with any procedures required by law, issue an order requiring the insurer to:

(1) Reduce the total amount of present and potential liability for policy benefits by reinsurance;

(2) Reduce, suspend, or limit the volume of business being accepted or renewed;

(3) Reduce general insurance and commission expenses by specified methods;

(4) Increase the insurer's capital and surplus;

(5) Suspend or limit the declaration and payment of dividend by an insurer to its stockholders or to its policyholders;

(6) File reports in a form acceptable to the director concerning the market value of an insurer's assets;

(7) Limit or withdraw from certain investments or discontinue certain investment practices to the extent the director deems necessary;

(8) Document the adequacy of premium rates in relation to the risks insured;

(9) File, in addition to regular annual statements, interim financial reports on the form adopted by the National Association of Insurance Commissioners or in such format as promulgated by the director;

(10) Correct corporate governance practice deficiencies, and adopt and utilize governance practices acceptable to the director;

(11) Provide a business plan to the director in order to continue to transact business in the state;

(12) Notwithstanding any other provision of law limiting the frequency or amount of premium rate adjustments, adjust rates for any nonlife insurance product written by the insurer that the director considers necessary to improve the financial condition of the insurer.

5. An insurer subject to an order under subsection 4 of this section may request a hearing before the director in accordance with the provisions of chapter 536. The notice of hearing shall be served upon the insurer pursuant to section 536.067. The notice of hearing shall state the time and place of hearing and the conduct, condition, or ground upon which the director based the order. Unless mutually agreed between the director and the insurer, the hearing shall occur not less than ten days nor more than thirty days after notice is served and shall be either in Cole County or in some other place convenient to the parties designated by the director. The director shall hold all hearings under this subsection privately, unless the insurer requests a public hearing, in which case the hearing shall be public.

6. This section shall not be interpreted to limit the powers granted the director by any laws or parts of laws of this state, nor shall this section be interpreted to supercede any laws or parts of laws of this state, except that if the insurer is a foreign insurer, the director's order under subsection 4 of this section may be limited to the extent expressly provided by any laws or parts of laws of this state.

(L. 2010 S.B. 583)

Manner of commencing proceedings--petition, contents.

375.570. 1. Terms used in sections 375.570 to 375.750 shall mean as defined in section 375.1152.

2. A formal delinquency proceeding, or seizure as described in section 375.1164, shall be commenced by filing a verified petition in the name of the director, as plaintiff, against the insurer, proceeded against as defendant, and said petition shall contain a brief statement of the condition of the defendant, or of the causes upon which the proceeding is based; it may also contain a prayer for temporary or permanent relief, or for both, and shall conclude with a prayer for general relief, under which prayer the court may grant any relief or issue any injunction or writ, and make any decrees or orders, under and within the provisions of sections 375.1150 to 375.1246, as shall be found advisable or necessary.

3. The petition shall contain a brief statement of the grounds upon which the proceeding is based. The petition may also contain a prayer for any orders as described in section 375.640 or 375.1155.

4. If the petition prays for any preliminary order as described in section 375.580, the petition must be verified by the director or his chief deputy or assistant director. The director need not plead or prove irreparable harm or inadequate remedy at law as a requirement for the issuance of any such preliminary order. The director shall be required to give only such notice to the insurer prior to the issuance of such a preliminary order as is reasonable under the circumstances.

(RSMo 1939 § 6053, A.L. 1992 H.B. 1574)

Prior revisions: 1929 § 5942; 1919 § 6350; 1909 § 7080

Issuance, service and return of process.

375.580. 1. If any order as described in section 375.640 or 375.1155 to be issued preliminarily to the summary hearing provided by section 375.600 is prayed for:

(1) The petition shall be first presented ex parte to the court, which may issue its initial order containing the preliminary orders prayed for as though the director were the receiver, but which shall provide in its order that any such preliminary order shall not continue beyond the time and date set for the return of summons, unless the court shall expressly enter a further order at the return of summons continuing such preliminary order;

(2) The court shall note the time and date of the issuance of its initial order;

(3) The court shall set a time and date of the return of summons, at which time the defendant or defendants may appear before the court for a summary hearing. The time and date for the return of summons shall not exceed ten days from the time and date of the issuance of the initial order;

(4) After the issuance of the initial order, the director shall immediately make arrangements with the clerk of the court for prompt personal service upon the defendant or defendants of the verified petition and orders. The clerk of the court shall maintain the court's file as confidential, except for good cause shown, until personal service is made.

2. If no preliminary order is prayed for, the proceedings shall be the same as in subsection 1 of this section, except that the court's file shall be open to the public as provided by section 375.1172.

3. Any preliminary order issued pursuant to this section may be served and enforced as provided by law in injunctions issued in other cases, but the director shall not be required to give any bond as preliminary to or in the course of any proceedings to which he is a party as such director, pursuant to sections 375.570 to 375.750 and 375.1150 to 375.1246, either for costs or for any order, or in case of appeal to either the supreme court or to any appellate tribunal.

(RSMo 1939 § 6054, A.L. 1978 H.B. 1634, A.L. 1992 H.B. 1574)

Prior revisions: 1929 § 5943; 1919 § 6351; 1909 § 7081

Pleadings and proceedings, general procedures--summary hearing,purpose--effect of nonattendance by defendant.

375.600. 1. The pleadings and proceedings, insofar as not otherwise regulated by sections 375.570 to 375.750, 375.950 to 375.990 and 375.1150 to 375.1246, shall be as in other civil causes.

2. At the time and date for the return of summons, the court shall hold a summary hearing.

3. If any defendant fails to appear for the summary hearing:

(1) The court shall, if personal service has not been made as to any defendant:

(a) Make such provision for alternative service upon that defendant as is best designed to notify the defendant of the pendency of the formal delinquency proceeding before the time and date of the summary hearing as reset by the court;

(b) Reset the time and date of the summary hearing to a time and date not more than ten days from the time and date of the original summary hearing;

(c) Expressly continue any preliminary order until the reset time and date of the summary hearing; and

(d) Order any confidential file to be an open and public record;

(2) The court shall, if personal service has been made as to any defendant, grant judgment by default in favor of the director against the defendant.

4. If any defendant appears for the summary hearing, the court shall:

(1) Require the defendant to answer the petition;

(2) Consider whether to extend any preliminary orders pending final judgment; and

(3) Set the case for trial, which shall be not more than ten days from the date of the summary hearing.

5. If any defendant fails to appear for a reset summary hearing, the court shall, if honest and reasonable efforts have been made to effect personal service upon the defendant, order notice published of the petition, of the continuance of any restraining order, and of the second reset summary hearing, which shall not be less than ten nor more than twenty days after the publication of notice. If the defendant fails to appear for any second reset summary hearing, the court may grant default judgment in favor of the director and against the defendant.

(RSMo 1939 § 6055, A.L. 1992 H.B. 1574)

Prior revisions: 1929 § 5944; 1919 § 6352; 1909 § 7082

Hearing by the court, procedures--no continuances or discovery,exceptions.

375.610. 1. All pleadings shall be made up and filed at or before the day of the hearing, and the court shall, without the intervention of a jury, and without unnecessary delay, proceed to hear and determine such cause at the time and date set for trial; or on motion of the plaintiff, but in no other case, the court may, on the return day, refer the hearing of the case to a referee or master, with power to hear the testimony and report his conclusions on the same to the court.

2. To proceed without unnecessary delay, the court, or referee or master appointed by the court, shall:

(1) Grant no continuance, except for one of the following:

(a) Continuances by the court on its own motion if the court has offered to the director and the director has rejected, referral of the case to a referee or master under this section and section 375.620;

(b) A continuance only so long as absolutely necessary upon a finding by the court or referee or master, that one or more of the following has either died since the filing of the petition or currently suffers from a serious illness which makes such person unavailable to appear before the court:

a. The director or his principal trial counsel;

b. The chairman of the board of directors of defendant or such defendant's principal trial counsel;

c. The judge or referee or master before whom the case was pending; or

(c) A continuance upon the consent of all parties;

(2) Apply the following rules concerning discovery:

(a) Order or permit no discovery, unless either of the following occur:

a. The director has failed or refused to tender to the defendant, on or before the return day of the summons, * a copy of any examination report regarding the condition and affairs of the defendant as of a date not exceeding six months before the return day of the summons; or

b. The director has failed to file with the court, on or before the return day of the summons, the director's binding stipulation that his case-in-chief will consist solely of the introduction of such examination report under subsection 1 of section 375.630. Such a stipulation shall not preclude the director from introducing other evidence in rebuttal of evidence offered by the defendant;

(b) Even if either of the events described in subparagraphs a or b of paragraph (a) of this subdivision occurs, discovery shall be expedited and limited in nature and scope to those matters having direct bearing on the grounds alleged for the formal delinquency proceeding;

(3) Exclude based on a rebuttable presumption that the prejudicial effect outweighs the probative value of any of the following evidence:

(a) Evidence pertaining to the condition and affairs of any insurer not named by the director as a defendant;

(b) Testimony under subpoena or other compulsory process issued at the request of the offering party from more than two employees or agents of the director, or of each defendant. The party offering any such evidence may rebut such presumption by demonstrating that the probative value of such evidence directly related to the allegations of the petition outweighs the prejudicial effect to the objecting parties, to entities not party to the proceedings, and from the length of time necessary for the hearing.

(RSMo 1939 § 6056, A.L. 1991 H.B. 385, et al., A.L. 1992 H.B. 1574)

Prior revisions: 1929 § 5945; 1919 § 6353; 1909 § 7083

*Word "with" appears in original rolls.

Referee or master to hear and report--exceptions, filed by eitherparty.

375.620. 1. If the case is referred, the referee or master shall forthwith proceed to hear the same, and shall file his report within ten days after the conclusion of the testimony.

2. Any referee or master failing to at once proceed with the hearing, or to file his report within the time aforesaid, may be removed by the court, in which case he shall not receive any pay or allowance whatever for his services; and the court may thereupon hear the case or appoint a new referee or master. The fees of the referee or master shall be taxed and paid as costs in the case.

3. Exceptions to the report of the referee or master may be filed by either party. If no exceptions are filed within three days after the report is presented to the court, it shall be confirmed, and judgment entered thereon.

(RSMo 1939 § 6056, A.L. 1992 H.B. 1574)

Prior revisions: 1929 § 5945; 1919 § 6353; 1909 § 7083

Examinations and statements, evidentiary effect--case to be decided,when--appeals--attorney fees, paid how.

375.630. 1. In a hearing before the court, master or referee, certified copies of the statement made by the defendant, or of reports of examinations of the defendant made by the director, or persons appointed by him, shall be received as self-authenticated, if offered by the director, as:

(1) Prima facie evidence of the facts therein contained pertaining to the condition and affairs of the defendant;

(2) A rebuttable presumption of the facts contained in any such report pertaining to the condition and affairs of the defendant; and

(3) A rebuttable presumption that the facts pertaining to the condition and affairs of the defendant as of the examination date are true as of the date of the hearing, if such report is as of a date not more than one hundred eighty days preceding the filing of the petition.

2. The court shall decide the case within the earliest possible time but no later than fifteen days after the conclusion of the evidence, or ten days after the filing of objections to the report of the referee or master if the case was referred to a referee or master.

3. If the finding be for the defendant, it shall be lawful for the director to appeal the case.

4. If the finding be for the plaintiff, the court shall render such orders, decrees and judgments as are allowed by sections 375.1150 to 375.1246. Such decree or judgment shall, for all purposes of an appeal, be considered a final judgment, and the defendant may appeal from the same as in other civil cases; provided, the appeal be prayed for and perfected within five days after such judgment, and that the bond shall be for such an amount as the court may fix; and provided, that no appeal nor supersedeas bond shall operate as a dissolution of the order of the court.

5. Reasonable attorney's fees and other expenses incurred by any person on behalf of an insurer resisting any formal delinquency proceeding may be paid from the assets of the insurer as an expense of administration during the rehabilitation or liquidation, but only after the trial and only if the person making the claim for such fees and expenses shows, and if the court finds, based on the record and evidence presented at the trial, that the board of directors of the insurer incurred such expenses for the defense of the insurer based upon its* best knowledge, information and belief formed after reasonable inquiry indicating such defense was well grounded in fact and was warranted by existing law or a good faith argument for the extension, modification or reversal of existing law and it was not pursued for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the costs of litigation. Any finding or order awarding such attorney's fees and other expenses shall be appealable as a final judgment, but an appellate court reviewing such finding or order shall not accord any deference to the findings of fact or conclusions of law of the trial court.

(RSMo 1939 § 6056, A.L. 1992 H.B. 1574)

Prior revisions: 1929 § 5945; 1919 § 6353; 1909 § 7083

*Word "their" appears in original rolls.

Insurance director to take charge.

375.640. If the director shall apply, either at the time of or after the filing of the petition referred to in section 375.570, the court may, if the court deems it necessary, authorize him or a special deputy appointed for such purpose to temporarily take charge of the property of the defendant and to receive its premiums and other income until a final decree is rendered.

(RSMo 1939 § 6057, A.L. 1992 H.B. 1574)

Prior revisions: 1929 § 5946; 1919 § 6354; 1909 § 7084

Title of assets to vest in director--special deputy receiver,appointment, duties.

375.650. 1. Upon the rendition of a final judgment dissolving an insurer, or declaring it insolvent, all the general assets of such insurer shall vest in fee simple and absolutely in the director, and his successor or successors in office, who shall hold and dispose of the same in his capacity as receiver for the use and benefit of the creditors and policyholders of such insurer and such other persons as may be interested in such assets.

2. Upon the rendition of a final judgment dissolving an insurer, or declaring it insolvent, the director may appoint a special deputy receiver whose appointment is approved by the court to manage the receivership. The director in his capacity as receiver of such insurer, any special deputy receiver who is appointed by the director and whose appointment is approved by the court, all employees and agents of such receivership and all employees of the state of Missouri when acting with respect to the receivership shall be considered to be officers of the court when acting in such capacities and as such shall be subject to the orders and directions of the court with respect to their actions or omissions in connection with the receivership. The receiver, special deputy receiver, commissioners and special masters appointed by the court, the agents and employees of the receivership and the commissioners and employees of the state of Missouri when acting with respect to the receivership shall enjoy absolute judicial immunity and be immune from any claim against them personally for any act or omission while acting in good faith in the performance of their functions and duties in connection with the receivership.

3. This section shall apply only to proceedings instituted before August 28, 1991.

(RSMo 1939 § 6058, A.L. 1986 H.B. 1103, A.L. 1988 S.B. 430, A.L. 1992 H.B. 1574)

Prior revisions: 1929 § 5947; 1919 § 6355; 1909 § 7085

Disposition of assets.

375.660. 1. If the court directs the director to liquidate, settle or wind up the affairs of the defendant, said director shall take immediate possession of the assets, books and papers of the defendant, and unless disposition of the assets of the defendant is made by a reinsurance agreement as may be provided by law, he shall sell and dispose of the real estate and other property of the defendant, subject to the approval of the court, and may execute in his own name, as director, all necessary and proper conveyances of the same; he may also, in his own name as such director, maintain and defend all actions in the courts of this or any other state, or of the United States, relating to the defendant, its assets, liabilities and business.

2. This section shall apply only to proceedings instituted before August 28, 1991.

(RSMo 1939 § 6059, A.L. 1992 H.B. 1574)

Prior revisions: 1929 § 5948; 1919 § 6356; 1909 § 7086

Allowance of demands--receiver to review claims against receivership.

375.670. 1. The court, upon the application of the receiver, shall establish claims procedures and shall limit and may extend the time for the presentation of claims against the receivership, and notice thereof shall be given in such manner as said court shall direct; and any creditor neglecting to present his claim within the time so limited shall be debarred of all right to share in the assets of the insurer.

2. Claims presented against the receivership shall be reviewed by the receiver. The receiver shall either consent to the claim in whole or in part or shall contest the claim. If the receiver consents to the claim in whole or in part, he shall also classify the claim according to the priority to which it is entitled under section 375.700. A written notice of his consent shall be given to the claimant or his attorney by first class mail at the address shown in the proof of claim. Whenever the receiver objects to all or any portion of the claim, the claim shall be subject to the provisions of section 375.1214.

3. This section shall apply only to proceedings instituted before August 28, 1991.

(RSMo 1939 § 6060, A.L. 1988 S.B. 430, A.L. 1992 H.B. 1574)

Prior revisions: 1929 § 5949; 1919 § 6357; 1909 § 7087

Conflict of interests--power of court--trustees.

375.710. In case of any conflict of interests on any matter, or concerning the enforcement or settlement of any conflicting claims between two or more insurers, the settlement and winding up of whose affairs shall be under the charge of the director, it shall be the duty of the director, and the right of any person interested in any of the insurers to report the fact of conflict and the question or questions involved to the court in which any of the causes is pending, and such court, thereupon, shall have power to appoint a trustee, to have charge and control of the interests of any of the insurers as regards the settlement or enforcement of its claims in respect to the matter in controversy, or to make such other orders providing for the settlement, adjustment or enforcement of the rights of the insurer in the matter as to the court shall seem best adapted to the protection of the rights of all.

(RSMo 1939 § 6062, A. 1949 H.B. 2092, A.L. 1992 H.B. 1574)

Prior revisions: 1929 § 5951; 1919 § 6359; 1909 § 7089

Penalty for failure or refusal to deliverassets to director.

375.720. 1. Whenever, by this chapter, or by any other law of this state, the director is authorized or required to take possession of any of the general assets of any insurer, it is unlawful for any person or company to knowingly neglect or refuse to deliver to the director, on order or demand of the director, any books, papers, evidences of title or debt, or any property belonging to any such insurer in its, his or their possession, or under his, its or their control.

2. If the director determines that a person has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, the director may issue such administrative orders as authorized under section 374.046. A violation of this section is a level three violation under section 374.049. The director may also suspend or revoke the license or certificate of authority of such person for any willful violation.

3. If the director believes that a person has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, the director may maintain a civil action for relief authorized under section 374.048. A violation of this section is a level three violation under section 374.049.

4. Any person who knowingly engages in any act, practice, omission, or course of business in violation of this section is guilty of a class D felony. If the offender holds a license or certificate of authority under the insurance laws of this state, the court imposing sentence shall order the director to revoke such license.

5. The director may refer such evidence as is available concerning violations of this section to the proper prosecuting attorney, who with or without a criminal reference, or the attorney general under section 27.030, may institute the appropriate criminal proceedings.

6. Nothing in this section shall limit the power of the state to punish any person for any conduct that constitutes a crime under any other state statute.

(RSMo 1939 § 6063, A.L. 1986 H.B. 1103, A.L. 1992 H.B. 1574, A.L. 2007 S.B. 66, A.L. 2014 S.B. 491)

Prior revisions: 1929 § 5952; 1919 § 6360; 1909 § 7090

Effective 1-01-17

Payment of expenses of proceedings.

375.740. 1. In proceedings to enjoin, rehabilitate, dissolve, wind up or otherwise settle the affairs and dispose of the assets of insurers, the director shall receive no fees nor compensation for any services personally performed by him.

2. He shall have power and authority, however, in such cases, and through the course of the whole case, to employ the necessary legal counsel and assistance, and clerical and actuarial force. The compensation of legal counsel and assistance, and clerical and actuarial force shall be fixed and all expenses of taking possession of the property of the insurer and the administration thereof shall be approved by the director, all subject to the approval of the court, and shall be paid out of the funds or assets of the insurer; provided, however, that the salaries of those persons employed by the director under this section together with the expenses of such employment, may be paid out of amount appropriated to the department of insurance, financial institutions and professional registration; provided, further, that the amount paid out under this section for salaries and expenses from appropriated funds shall be repaid to the state treasury from any available funds or assets of the insurer.

3. The director shall keep a full account of all receipts and disbursements, and make report of the same to the court at least once in twelve months, and oftener if required by the court, and shall be responsible on his official bond for all assets coming into his possession.

4. The court may, in its discretion, require of the director a bond in addition to his official bond.

5. This section shall apply only to proceedings instituted prior to August 28, 1991.

(RSMo 1939 § 6065, A.L. 1971 H.B. 82, A.L. 1992 H.B. 1574)

Prior revisions: 1929 § 5954; 1919 § 6362; 1909 § 7092

Reports to court--payment of claims.

375.750. 1. The director, when charged with the winding up of the affairs of an insolvent insurer, shall make at least twice a year to the court and oftener if the court shall so order, a full report, under oath of the condition and affairs of such insurer.

2. If it shall appear to the court from such report that, after reserving an amount sufficient to pay the probable expense of winding up the insurer, there shall remain in the hands of the director enough cash to pay at least ten percent of the allowed claims, the court may order the same to be distributed according to the rights of the claimants.

3. This section shall apply only to proceedings instituted prior to August 28, 1991.

(RSMo 1939 § 6069, A.L. 1947 V. I p. 334, A. 1949 H.B. 2092, A.L. 1992 H.B. 1574)

Prior revisions: 1929 § 5958; 1919 § 6366; 1909 § 7096

Citation of law.

375.771. Sections 375.771 to 375.779 shall be referred to as the "Missouri Property and Casualty Insurance Guaranty Association Act". If any provision of sections 375.771 to 375.779 is found to be unconstitutional, the remaining provisions are to be treated as being in full force and effect.

(L. 1989 S.B. 333)

Association, created--definitions.

375.772. 1. There is created a nonprofit unincorporated legal entity to be known as the "Missouri Property and Casualty Insurance Guaranty Association", hereinafter referred to as "association". All member insurers shall be and remain members of the association as a condition of their authority to transact insurance in this state. The association shall perform its functions under a plan of operation and through a board of directors established by section 375.776.

2. As used in sections 375.771 to 375.779, the following terms mean:

(1) "Account", any one of the four accounts established by section 375.773;

(2) "Affiliate", a person who directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with another person;

(3) "Affiliate of an insolvent insurer", a person who directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with an insolvent insurer on December thirty-first of the year immediately preceding the date the insurer becomes an insolvent insurer;

(4) "Association", the Missouri property and casualty insurance guaranty association;

(5) "Claimant", any insured making a first-party claim or any person instituting a liability claim, provided that no person who is an affiliate of the insolvent insurer may be a claimant;

(6) "Control", the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with the corporate office held by the person. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds the power to vote, or holds proxies representing ten percent or more of the voting securities of any other person. Such presumption may be rebutted by a showing that control does not exist in fact;

(7) "Covered claim", an unpaid claim including those for unearned premiums, presented by a claimant within the time specified in accordance with subsection 1 and subdivision (2) of subsection 2 of section 375.775, and is for a loss arising out of and is within the coverage of an insurance policy to which sections 375.771 to 375.779 apply made by a person insured under such policy or by a person suffering injury or for which a person insured under such policy is legally liable, if:

(a) The policy is issued by a member insurer and such member insurer becomes an insolvent insurer after August 28, 2004; and

(b) The claimant or insured is a resident of this state at the time of the insured event, or the claim is a first-party claim by an insured for damage to property and the property from which the claim arises is permanently located in this state or in the case of an unearned premium, the policyholder is a resident of this state at the time the policy is issued. The residency of the claimant, insured, or policyholder, other than an individual, is the state in which its principal place of business is located at the time of the insured event;

(c) "Covered claim" shall not include:

a. Any amount awarded as punitive or exemplary damages, or which is a fine or penalty;

b. Any amount sought as a return of premium under any retrospective rating plan; or

c. Any amount due any reinsurer, insurer, insurance pool, or underwriting association, health maintenance organization, hospital plan corporation, health services corporation, or self-insurer as subrogation recoveries, reinsurance recoveries, contribution, indemnity, or otherwise. To the extent of any amount due any reinsurer, insurer, insurance pool, or underwriting association, health maintenance organization, hospital plan corporation, health services corporation, or self-insurer as subrogation recoveries or otherwise there shall be no right of recovery by any person against a tort-feasor insured of an insolvent insurer, except that such limitation shall not apply with respect to those amounts that exceed the limits of the policy issued such tort-feasor by the insolvent insurer;

d. A claim by or against an insured of an insolvent insurer, if such insured has a net worth of more than twenty-five million dollars on the later of the end of the insured's most recent fiscal year or the December thirty-first of the year next preceding the date the insurer becomes an insolvent insurer; provided that an insured's net worth on such date shall be deemed to include the aggregate net worth of the insured and all of its affiliates as calculated on a consolidated basis;

e. Any first-party claim by an insured which is an affiliate of the insolvent insurer;

f. Supplementary payment obligations incurred prior to the final order of liquidation, including but not limited to adjustment fees and expenses, fees for medical cost containment services, including but not limited to medical case management fees, attorney's fees and expenses, court costs, penalties, and bond premiums;

g. Any claims for interest;

h. Any amount that constitutes a portion of a covered claim that is within an insured's deductible or self-insured retention;

i. Any fee or other amount sought by or on behalf of an attorney or other provider of goods or services retained by an insured or claimant in connection with the assertion or prosecuting of any claim, covered or otherwise, against the association;

j. Any amount that constitutes a claim under a policy, except in the case of a claim for benefits under workers' compensation coverage, issued by an insolvent insurer with a deductible or self-insured retention of three hundred thousand dollars or more. However, such a claim shall be considered a covered claim, if, as of the deadline set forth for the filing of claims against the insolvent insurer or its liquidator, the insured is a debtor under 11 U.S.C. Section 701, et seq.;

k. Any amount to the extent that it is covered by any insurance that is available to the claimant or the insured, whether such other insurance is primary, pro rata, or excess. In all such instances, the association's obligations to the insured or claimant shall not be deemed to be other insurance;

(8) "Insolvent insurer", an insurer licensed to transact insurance in this state, either at the time the policy was issued or when the insured event occurred, and against whom a final order of liquidation with a finding of insolvency has been entered by a court of competent jurisdiction in the insurer's state of domicile or of this state under the provisions of sections 375.950 to 375.990 or sections 375.1150 to 375.1246, and which such order of liquidation has not been stayed or been the subject of a writ of supersedeas or other comparable order;

(9) "Insured", any named insured, additional insured, vendor, lessor, or any other party identified as an insured under the policy;

(10) "Member insurer", any person who writes any kind of insurance to which sections 375.771 to 375.779 apply, including the exchange of reciprocal or interinsurance contracts, and possesses a certificate of authority to transact the business of insurance in this state issued by the director of the department of insurance, financial institutions and professional registration. Whether or not approved by the director of the department of insurance, financial institutions and professional registration for the placing of lines of insurance by producers so authorized under the provisions of chapter 384, an insurance company not licensed to do business in this state shall not be a member insurer. Missouri mutual and extended Missouri mutual insurance companies doing business under chapter 380 shall be considered member insurers for the purposes of sections 375.771 to 375.779, and a special account shall be established applicable only to such companies;

(11) "Net direct written premiums", direct gross premiums written in this state on insurance policies to which sections 375.771 to 375.779 apply, less return premiums thereon and dividends paid or credited to policyholders on such direct business. "Net direct written premiums" does not include premiums on contracts between insurers or reinsurers;

(12) "Net worth", the total assets of a person less the total liabilities against those assets. Where the person is one who prepares an annual report to shareholders such report for the fiscal year immediately preceding the date of insolvency of the insurance carrier shall be used to determine net worth. If the person is one who does not prepare such an annual report, but does prepare an annual financial report for management which reflects net worth, then such report for the fiscal year immediately preceding the date of insolvency of the insurance carrier shall be used to determine net worth;

(13) "Ocean marine insurance" includes marine insurance that insures against maritime perils or risks and other related perils or risks which are usually insured against by traditional marine insurance, such as hull and machinery, marine builders' risks, and marine protection and indemnity. Such perils and risks insured against include, without limitation, loss, damage, or expense or legal liability of the insured arising out of an incident related to ownership, operation, chartering, maintenance, use, repair, or construction of any vessel, craft, or instrumentality in use in ocean or inland waters for commercial purposes, including liability of the insured for personal injury, illness, or death for loss or damage to the property of the insured or another person;

(14) "Person", any individual, corporation, partnership, association or voluntary organization, municipality, or political subdivision;

(15) "Political subdivision", the same meaning as such term is defined in section 70.210;

(16) "Self-insurer", a person that covers its liability through a qualified individual or group self-insurance program or any other formal program created for the specific purpose of covering liabilities typically covered by insurance. Self-insurer does not include the Missouri private sector individual self-insurers guaranty corporation created pursuant to section 287.860, et seq.

(L. 1989 S.B. 333, A.L. 1992 H.B. 1574, A.L. 2004 S.B. 1299, A.L. 2013 S.B. 59)

Accounts, types of insurance--applicability of law.

375.773. 1. For purposes of administration and assessment, the association shall be divided into four separate accounts:

(1) The workers' compensation insurance account;

(2) The automobile insurance account;

(3) The Missouri mutual and extended Missouri mutual insurance company account; and

(4) The account for all other insurance to which sections 375.771 to 375.779 apply.

2. Sections 375.771 to 375.779 shall apply to all kinds of direct insurance, but shall not be applicable to the following:

(1) Life, annuity, accident, and health or disability insurance;

(2) Mortgage guaranty, financial guaranty, or other forms of insurance offering protection against investment risk;

(3) Fidelity or surety bonds, or any other bonding obligations;

(4) Credit insurance, vendors' single-interest insurance, or collateral protection insurance, or any similar insurance protecting the interest of a creditor arising out of a creditor-debtor transaction;

(5) Insurance of warranties or service contracts, including insurance that provides for the repair, replacement, or service of goods or property, or indemnification for repair, replacement, or service for the operational or structural failure of the goods or property due to a defect in material, workmanship, or normal wear and tear, or provides reimbursement for the liability incurred by the issuers of agreements or service contracts that provide such benefits;

(6) Title insurance;

(7) Ocean marine insurance;

(8) Any transaction or combination of transactions between a person, including affiliates of such person, and an insurer, including affiliates of such insurer, which involves the transfer of investment or credit risk unaccompanied by the transfer of insurance risk;

(9) That portion of any insurance provided or guaranteed by any government; or

(10) Insurance written by a company formed and operating under sections 383.010 to 383.040.

(L. 1989 S.B. 333, A.L. 1993 H.B. 709, A.L. 2004 S.B. 1299)

Certificate of contribution, issued when, shown as asset by insurer,when--tax credit allowed to insurer, when--association exempt fromtaxes.

375.774. 1. The association shall issue to each insurer paying an assessment under sections 375.771 to 375.779 a certificate of contribution, in appropriate form and terms as prescribed by the director, for the amount so paid. All outstanding certificates shall be of equal dignity and priority without reference to amounts or dates of issue.

2. A certificate of contribution may be shown by the insurer in its financial statements as an admitted asset for such amount and period of time, as follows:

(1) One hundred percent for the calendar year of issuance;

(2) Sixty-six and two-thirds percent for the first calendar year after the year of issuance;

(3) Thirty-three and one-third percent for the second year after the year of issuance which shall be the last year each such certificate shall be carried as an asset.

3. The insurer shall be entitled to a credit against the premium tax liability under sections 148.310 to 148.461 for contributions paid to the association. This tax credit shall be taken over a period of the three successive tax years beginning after the year of contribution at the rate of thirty-three and one-third percent, per year, of the contribution paid to the association, and such credit shall not be subject to subsection 1 of section 375.916.

4. Any sums recovered by the association representing sums which have theretofore been written off by contributing insurers and offset against premium taxes as provided in subsection 3 of this section shall be paid by the association to the director of revenue who shall handle such funds in the same manner as provided in section 148.380.

5. The association shall be exempt from payment of all fees and all capitation or poll and excise taxes levied by this state or any of its political subdivisions and the real and personal property of the association is hereby declared to be property actually and regularly used exclusively for purposes purely charitable and not held for private or corporate profit within the meaning of subdivision (5) of section 137.100, RSMo 1986.

(L. 1989 S.B. 333, A.L. 1991 H.B. 385, et al., A.L. 2004 S.B. 1299)

Association, powers and duties.

375.775. 1. The association shall be obligated to the extent of the covered claims existing prior to the date of a final order of liquidation or a judicial determination by a court of competent jurisdiction in the insurer's domiciliary state that an insolvent insurer exists and arising within thirty days from the date or at the time of the first such order or determination, or before the policy expiration date if less than thirty days after such date, or before or at the time the insured replaces the policy or causes its cancellation, if he does so within thirty days of such date. Such obligation shall be satisfied by paying to the claimant an amount as follows:

(1) The full amount of a covered claim for benefits under workers' compensation insurance coverage;

(2) An amount not exceeding twenty-five thousand dollars per policy for a covered claim for the return of unearned premium;

(3) An amount not exceeding three hundred thousand dollars per claim for all other covered claims.

2. In no event shall the association be obligated to an insured or claimant in an amount in excess of the face amount or the limits of the policy from which a claim arises or be obligated for the payment of unearned premium in excess of the amount of twenty-five thousand dollars, or to an insured or claimant on any covered claim until it receives confirmation from the receiver or liquidator of an insolvent insurer that the claim is within the coverage of an applicable policy of the insolvent insurer, except that within the sole discretion of the association, if the association deems it has sufficient evidence from other sources, including any claim forms which may be propounded by the association, that the claim is within the coverage of an applicable policy of the insolvent insurer, it shall proceed to process the claim, pursuant to its statutory obligations, without such confirmation by the receiver or liquidator:

(1) All covered claims shall be filed with the association on the claim information form required by this subdivision no later than the final date first set by the court for the filing of claims against the liquidator or receiver of an insolvent insurer, except that if the time first set by the court for filing claims is one year or less from the date of insolvency, and an extension of the time to file claims is granted by the court, claims may be filed with the association no later than the new date set by the court or within one year of the date of insolvency, whichever first occurs. In no event shall the association be obligated on a claim filed after such date or on one not filed on the required form. A claim information form shall consist of a statement verified under oath by the claimant which includes all of the following:

(a) The particulars of the claim;

(b) A statement that the sum claimed is justly owing and that there is no setoff, counterclaim, or defense to said claim;

(c) The name and address of the claimant and the attorney who represents the claimant, if any; and

(d) If the claimant is an insured, that the insured's net worth did not exceed twenty-five million dollars on the date the insurer became an insolvent insurer.

The association may require that a prescribed form be used and may require that other information and documents be included. A covered claim shall not include any claim not described in a timely filed claim information form even though the existence of the claim was not known to the claimant at the time a claim information form was filed;

(2) In the case of claims arising from a member insurer subject to a final order of liquidation issued on or after September 1, 2000, the provisions of subdivision (1) of subsection 2 of this section shall not apply and in lieu thereof, such claims shall be governed by this subdivision. All covered claims shall be filed with the association, liquidator or receiver. Notwithstanding any other provisions of sections 375.771 to 375.779, a covered claim shall not include a claim filed after the earlier of eighteen months after the date of the order of liquidation, or the final date set by the court for the filing of claims against the liquidator or receiver of an insolvent insurer. The association may require that other information and documents be included in confirming the existence of a covered claim or in determining eligibility of any claimant. Such information may include, but is not limited to:

(a) The particulars of the claim;

(b) A statement that the sum claimed is justly owing and that there is no setoff, counterclaim, or defense to said claim;

(c) The name and address of the claimant and the attorney who represents the claimant, if any; and

(d) A verification under oath of such requested information.

In no event shall the association be obligated on a claim filed with the association, liquidator or receiver for protection afforded under the insured's policy for incurred but not reported losses. A covered claim shall not include any claim that is not filed prior to the final date for filing claims, even though the existence of the claims was not known to the claimant prior to such final date.

3. In the case of claims arising from bodily injury, sickness or disease, the amount of any such award shall not exceed the claimant's reasonable expenses incurred for necessary medical, surgical, X-ray, dental services and comparable services for individuals who, in the exercise of their constitutional rights, rely on spiritual means alone for healing in accordance with the tenets and practices of a recognized church or religious denomination by a duly accredited practitioner thereof, including prosthetic devices and necessary ambulance, hospital, professional nursing, and any amounts lost or to be lost by reason of claimant's inability to work and earn wages or salary or their equivalent, except that the association shall pay the full amount of any covered claim arising out of a workers' compensation policy. Such award may also include payments in fact made to others, not members of claimant's household, which were reasonably incurred to obtain from such other persons ordinary and necessary services for the production of income in lieu of those services the claimant would have performed for himself had he not been injured. Verdicts as respect only those civil actions as may be brought to recover damages as provided in this section shall specifically set out the sums applicable to each item in this section for which an award may be made.

4. In the case of claims arising from a member insurer subject to a final order of liquidation dated on or after August 31, 2004, the provisions of subsection 3 of this section shall not apply.

5. Notwithstanding any other provision of sections 375.771 to 375.779, except in the case of a claim for benefits under workers' compensation coverage, any obligation of the association to or on behalf of the insured and its affiliates on covered claims shall cease when ten million dollars has been paid in the aggregate by the association and any one or more associations similar to the association in any other state or states to or on behalf of such insured, its affiliates, and additional insureds on covered claims or allowed claims arising under the policy or policies of any one insolvent insurer.

6. If the association determines that there may be more than one claimant having a covered claim or allowed claim against the association, or any associations similar to the association in other states, under the policy or policies of any one solvent insurer, the association may establish a plan to allocate amounts payable by the association in such manner as the association in its discretion deems equitable.

7. The association shall be deemed the insurer only to the extent of its obligations on the covered claims and to such extent, subject to the limitations provided in sections 375.771 to 375.779, shall have all rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent, including but not limited to the right to pursue and retain salvage and subrogation recoverable on paid covered claim obligations. The association shall not be deemed the insolvent insurer for any purpose relating to the issue of whether the association is amenable to the personal jurisdiction of the courts of any states. However, any obligation to defend an insured shall cease upon:

(1) The association's payment by settlement releasing the insured or on a judgment of an amount equal to the lesser of the association's covered claim obligation limit or the applicable policy limit; or

(2) The association's tender of such amount.

8. The association shall allocate claims paid and expenses incurred among the four accounts separately, and assess member insurers separately for each account amounts necessary to pay the obligations of the association under subsection 1 of this section to an insolvency, the expenses of handling covered claims subsequent to an insolvency, the cost of examinations under subdivision (3) of subsection 9 of this section, and other expenses authorized by sections 375.771 to 375.779. The assessments of each member insurer shall be in the proportion that the net direct written premiums of the member insurer for the preceding calendar year on the kinds of insurance in the account bears to the net direct written premiums of all member insurers for the preceding calendar year of the kinds of insurance in the account. Each member insurer's assessment may be rounded to the nearest ten dollars. Each member insurer shall be notified of the assessment not later than thirty days before it is due. No member insurer may be assessed in any year on any account an amount greater than two percent of that member insurer's net direct written premiums for the preceding calendar year on the kinds of insurance in the account. If the maximum assessment, together with the other assets of the association in any account, does not provide in any one year in any account an amount sufficient to make all necessary payments from that account, the funds available shall be prorated and the unpaid portion shall be paid as soon thereafter as funds become available. The association may defer, in whole or in part, the assessment of any member insurer, if the assessment would cause the member insurer's financial statement to reflect amounts of capital or surplus less than the minimum amounts required for a certificate of authority by any jurisdiction in which the member insurer is authorized to transact insurance. Deferred assessments shall be paid when such payment will not reduce capital or surplus below required minimums. Such payments shall be refunded to those companies receiving larger assessments by virtue of such deferment, or, in the discretion of any such company, credited against future assessments. No dividends shall be paid stockholders or policyholders of a member insurer so long as all or part of any assessment against such insurer remains deferred. Each member insurer may set off against any assessment, authorized payments made on covered claims and expenses incurred in the payment of such claims by the member insurer if they are chargeable to the account for which the assessment is made. Assessments made under sections 375.771 to 375.779 and section 375.916 shall not be subject to subsection 1 of section 375.916.

9. The association shall:

(1) Handle claims through its employees or through one or more insurers or other persons designated as servicing facilities. Designation of a servicing facility is subject to the approval of the director, but such designation may be declined by a member insurer;

(2) Reimburse each servicing facility for obligations of the association paid by the facility and for actual expenses incurred by the facility while handling claims on behalf of the association and shall pay the other expenses of the association authorized by this section;

(3) Be subject to examination and regulation by the director. The board of directors shall submit, not later than March thirtieth of each year, a financial report for the preceding calendar year in a form approved by the director; and

(4) Proceed to investigate, settle, and determine covered claims.

10. The association may:

(1) Appear in, defend and appeal any action on a claim brought against the association;

(2) Employ or retain such persons as are necessary to handle claims and perform other duties of the association;

(3) Act as a servicing facility for other similar entities created by similar laws in this state or other states;

(4) Borrow funds necessary to effect the purposes of sections 375.771 to 375.779 in accord with the plan of operation;

(5) Sue or be sued. Such power to sue includes the power and right to intervene as a party before any court that has jurisdiction over an insolvent insurer as defined in section 375.772;

(6) Negotiate and become a party to such contracts as are necessary to carry out the purpose of sections 375.771 to 375.779;

(7) Perform such other acts as are necessary or proper to effectuate the purpose of sections 375.771 to 375.779;

(8) Refund to the member insurers in proportion to the contribution of each member insurer to that account that amount by which the assets of the account exceed the liabilities, if, at the end of any calendar year, the board of directors finds that the assets of the association in any account exceed the liabilities of that account as estimated by the board of directors for the coming year; and

(9) Become a member of the National Conference on Insurance Guaranty Funds.

(L. 1989 S.B. 333, A.L. 1991 H.B. 385, et al., A.L. 2002 H.B. 1468, A.L. 2004 S.B. 1299, A.L. 2013 S.B. 59)

Board of directors, selection, terms--powers and duties.

375.776. 1. The board of directors, subject to the supervision of the director, shall:

(1) Establish a plan of operation whereby the duties of the association under section 375.775 will be performed;

(2) Establish procedures for handling assets of the association;

(3) Establish regular places and times for meetings of the board of directors;

(4) Establish procedures for records to be kept of all financial transactions of the association, its agents, and the board of directors;

(5) Provide that any member insurer aggrieved by any final action or decision of the association may appeal to the director within thirty days after the action or decision;

(6) Establish the procedures whereby selections for the board of directors will be submitted to the director; and

(7) Have and exercise such additional powers necessary or proper for the execution of the powers and duties of the association.

2. The plan of operation may provide that any or all powers and duties of the association, except those under subsection 8 and subdivision (4) of subsection 10 of section 375.775, are delegated to a corporation, association, or organization which performs or will perform functions similar to those of this association, or its equivalent, in two or more states. Such a corporation, association or organization shall be reimbursed as a servicing facility would be reimbursed and shall be paid for its performance of any other functions of the association. A delegation under this section shall take effect only with the approval of both the board of directors and the director, and may be made only to a corporation, association, or organization which extends protection not substantially less favorable and effective than that provided by sections 375.771 to 375.779.

3. The board of directors of the association shall consist of not less than seven nor more than nine persons serving terms as established in the plan of operation. The members of the board shall be selected by member insurers subject to the approval of the director. Not less than four of the members shall represent domestic insurers. Vacancies on the board shall be filled for the remaining period of the term by a majority vote of the remaining board members subject to the approval of the director.

4. Members of the board shall receive no remuneration.

5. To aid in the detection and prevention of insurer insolvencies:

(1) It shall be the duty of the board of directors, upon majority vote, to notify the director of any information indicating any member insurer may be insolvent or in a financial condition hazardous to the policyholders or the public;

(2) The board of directors may, upon majority vote, make reports and recommendations to the director upon any matter germane to the solvency, liquidation, rehabilitation or conservation of any member insurer. Such reports and recommendations shall not be considered public documents; and

(3) The board of directors shall, at the conclusion of any insurer insolvency in which the association was obligated to pay covered claims, prepare a report on the history and causes of such insolvency, based on the information available to the association, and submit such report to the director.

(L. 1989 S.B. 333, A.L. 2004 S.B. 1299, A.L. 2013 S.B. 59)

Director, powers and duties.

375.777. 1. The director shall:

(1) Notify the association of the existence of an insolvent insurer not later than three days after he receives notice of the determination of the insolvency;

(2) Upon request of the board of directors, provide the association with a statement of the net direct written premiums of each member insurer; and

(3) Notify the agents of the insolvent insurer of the determination of insolvency and of the insureds' rights under sections 375.771 to 375.779. Such notification shall be by first class mail at their last known address, where available, but if sufficient information for notification by mail is not available, notice by publication in a newspaper of general circulation shall be sufficient.

2. The director may require each agent of the insolvent insurer to give prompt written notice, by first class mail, at the insured's last known address, to each insured of the insolvent insurer for whom he was agent of record, provided the agent has received the notification of subsection 1 of this section.

3. It is unlawful for any member insurer to fail to pay an assessment when due or fail to comply with the plan of operation. Every day in which the member insurer fails to pay is a separate violation.

4. If the director determines that a person has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, the director may issue such administrative orders as authorized under section 374.046. A violation of this section is a level two violation under section 374.049. The director may also suspend or revoke the license or certificate of authority of such person for any willful violation.

5. If the director believes that a person has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, the director may maintain a civil action for relief authorized under section 374.048. A violation of this section is a level two violation under section 374.049.

(L. 1989 S.B. 333, A.L. 2007 S.B. 66)

Claims of insured, recovery, procedures--assignment of rights toassociation, when, extent of--stay of proceedings against insolventinsurer, when--records of insolvent insurer, access by board, when.

375.778. 1. Any person having a claim against an insurer, regardless of whether such insurer is a member insurer, under any provision in an insurance policy, other than the policy of the insolvent insurer, which arises out of the same facts, injury, or loss that gave rise to the covered claim against the association and which is also a covered claim shall be required to first exhaust his or her right under such policy or policies of insurance. Such other policies of insurance shall include, but not be limited to, liability coverage, health and accident insurance, hospitalization and other medical expense coverage, health care coverage by a health maintenance organization or health services corporation, or any amount payable by or on behalf of a self-insured plan, workers' compensation benefits, disability insurance, uninsured motorist coverage, and underinsured motorist coverage. The association's obligation pursuant to subsection 1 of section 375.775 shall be reduced by the amount recovered or recoverable, whichever is greater under any such other insurance policy or policies. To the extent the association's obligation pursuant to subsection 1 of section 375.775 is reduced by the application of the section, the liability of the person insured by the insolvent insurer's policy for the claim shall be reduced in the same amount.

2. Any person having a claim which may be recovered under more than one insurance guaranty association or its equivalent shall first seek recovery from the association of the place of residence of the insured except that if it is a first party claim for damage to property with a permanent location, from the association of the location of the property, and if it is a workers' compensation claim, from the association of the residence of the claimant. Any recovery under sections 375.771 to 375.779 shall be reduced by the amount of the recovery from any other insurance guaranty association or its equivalent.

3. Any person having a claim or legal right of recovery against any governmental insurance or guaranty program that is also a covered claim shall be required to exhaust first such rights under that program. Any amount payable on a covered claim by the association shall be reduced by the amount of recovery under the program.

4. The association shall have no duty to provide a separate defense at its cost to an insured of an insolvent insurer as to any issue arising out of the coverage of this section.

5. (1) Any person recovering under sections 375.771 to 375.779 shall be deemed to have assigned his or her rights under the policy to the association to the extent of his or her recovery from the association. Every insured or claimant seeking the protection of sections 375.771 to 375.779 shall cooperate with the association to the same extent as such person would have been required to cooperate with the insolvent insurer.

(2) The association shall periodically file with the receiver or liquidator of the insolvent insurer statements of the covered claims paid by the association and estimates of anticipated claims on the association which shall preserve the rights of the association against the assets of the insolvent insurer.

6. All proceedings in which the insolvent insurer is a party or is obligated to defend a party in any court of this state shall, subject to waiver by the association in specific cases involving covered claims, be stayed until the last day fixed by the court for the filing of claims and such additional time thereafter as may be determined by the court from the date the insolvency is determined or an ancillary proceeding is instituted in the state, whichever is later, to permit proper defense by the association of all pending causes of action.

7. As to any covered claims arising from a judgment under any decision, verdict or finding based on the default of the insolvent insurer or its failure to defend an insured, the association, either on its own behalf or on behalf of such insured, may apply to have such judgment, order, decision, verdict or finding set aside by the same court or administrator that made such judgment, order, decision, verdict or finding and shall be permitted to defend against such claim on the merits.

8. With respect to a subrogation claim arising out of payment for property damage caused by a tort-feasor insured by an insolvent insurer, the insurer making such payment shall not be entitled to any right of recovery against such tort-feasor in excess of the proceeds recovered from the assets of the insolvent insurer of such tort-feasor; provided that, such limitation shall not apply with respect to property damage in excess of the limits of liability of the policy issued such tort-feasor by the insolvent insurer.

9. The liquidator, receiver, or statutory receiver of an insolvent member insurer covered by sections 375.771 to 375.779 shall permit access by the board of directors of the association or its authorized representative to such of the insolvent insurer's records which are necessary for the board in carrying out its functions under sections 375.771 to 375.779 with regard to covered claims. In addition, the liquidator, receiver, or statutory receiver shall provide the board or its representatives with copies of such records upon the request by the board and at the expense of the board.

(L. 1989 S.B. 333, A.L. 1992 H.B. 1574, A.L. 2004 S.B. 1299)

Immunity from liability, association and employees--unfair tradepractice, using association protection as inducement to purchasepolicy.

375.779. 1. There shall be no liability on the part of and no cause of action of any nature shall arise against any member insurer, the association or its agents, employees, or any servicing agent acting at the direction of the association, the board of directors or any person serving as a representative of any director, or the director of the department of insurance, financial institutions and professional registration or the director's representatives for any action taken by them in the performance of their powers and duties under sections 375.771 to 375.779.

2. It is an unfair trade practice for any insurer or producer to make use in any manner of the protection given policyholders by sections 375.771 to 375.779 as a reason for buying insurance from such insurer or producer. If a policy exceeds the limitations of coverage under sections 375.771 to 375.779, the insurer shall prominently inscribe on an endorsement to the insurance contract the limitations of coverage provided by the guaranty association.

(L. 1989 S.B. 333, A.L. 1991 H.B. 385, et al., A.L. 2004 S.B. 1299)

Penalties for violation of this chapter.

375.780. 1. A person commits a crime if he or she willfully violates any of the provisions of this chapter. If not otherwise specifically provided for, the crime is a class B misdemeanor.

2. The director may refer such evidence as is available concerning violations of this section to the proper prosecuting attorney, who with or without a criminal reference, or the attorney general under section 27.030, may institute the appropriate criminal proceedings.

3. Nothing in this section shall limit the power of the state to punish any person for any conduct that constitutes a crime under any other state statute.

(RSMo 1939 § 6070, A.L. 2007 S.B. 66)

Prior revisions: 1929 § 5959; 1919 § 6367; 1909 § 7097

Certificate of authorityrequired--exceptions--acts which are deemed transaction ofinsurance business--penalty for transacting business withoutcertificate of authority.

375.786. 1. It is unlawful for any insurance company to transact insurance business in this state, as set forth in subsection 2 of this section, without a certificate of authority from the director; provided, however, that this section shall not apply to:

(1) The lawful transaction of insurance as provided in chapter 384;

(2) The lawful transaction of reinsurance by insurance companies;

(3) Transactions in this state involving a policy lawfully solicited, written and delivered outside of this state covering only subjects of insurance not resident, located or expressly to be performed in this state at the time of issuance, and which transactions are subsequent to the issuance of such policy;

(4) Attorneys acting in the ordinary relation of attorney and client in the adjustment of claims or losses;

(5) Transactions in this state involving group life and group sickness and accident or blanket sickness and accident insurance or group annuities where the master policy of such groups was lawfully issued and delivered in and pursuant to the laws of a state in which the insurance company was authorized to do an insurance business, to a group organized for purposes other than the procurement of insurance, and where the policyholder is domiciled or otherwise has a bona fide situs;

(6) Transactions in this state involving any policy of insurance or annuity contract issued prior to August 13, 1972;

(7) Transactions in this state relative to a policy issued or to be issued outside this state involving insurance on vessels, craft or hulls, cargoes, marine builder's risk, marine protection and indemnity or other risk, including strikes and war risks commonly insured under ocean or wet marine forms of policy;

(8) Except as provided in chapter 384, transactions in this state involving contracts of insurance issued to one or more industrial insureds; provided that nothing herein shall relieve an industrial insured from taxation imposed upon independently procured insurance. An "industrial insured" is hereby defined as an insured:

(a) Which procures the insurance of any risk or risks other than life, health and annuity contracts by use of the services of a full-time employee acting as an insurance manager or buyer or the services of an insurance producer whose services are wholly compensated by such insured and not by the insurer;

(b) Whose aggregate annual premiums for insurance excluding workers' compensation insurance premiums total at least one hundred thousand dollars; and

(c) Which has at least twenty-five full-time employees;

(9) Transactions in this state involving life insurance, health insurance or annuities provided to educational or religious or charitable institutions organized and operated without profit to any private shareholder or individual for the benefit of such institutions and individuals engaged in the service of such institutions, provided that any company issuing such contracts under this subdivision shall:

(a) File a copy of any policy or contract issued to Missouri residents with the director;

(b) File a copy of its annual statement prepared pursuant to the laws of its state of domicile, as well as such other financial material as may be requested, with the director; and

(c) Provide, in such form as may be acceptable to the director, for the appointment of the director as its true and lawful attorney upon whom may be served all lawful process in any action or proceeding against such company arising out of any policy or contract it has issued to, or which is currently held by, a Missouri citizen, and process so served against such company shall have the same form and validity as if served upon the company;

(10) Transactions in this state involving accident, health, personal effects, liability or any other travel or auto-related products or coverages provided or sold by a rental company after January 1, 1994, to a renter in connection with and incidental to the rental of motor vehicles.

2. Any of the following acts in this state effected by mail or otherwise by or on behalf of an unauthorized insurance company is deemed to constitute the transaction of an insurance business in this state: (The venue of an act committed by mail is at the point where the matter transmitted by mail is delivered and takes effect. Unless otherwise indicated, the term "insurance company" as used in sections 375.786 to 375.790 includes all corporations, associations, partnerships and individuals engaged as principals in the business of insurance and also includes interinsurance exchanges and mutual benefit societies.)

(1) The making of or proposing to make an insurance contract;

(2) The making of or proposing to make, as guarantor or surety, any contract of guaranty or suretyship as a vocation and not merely incidental to any other legitimate business or activity of the guarantor or surety;

(3) The taking or receiving of any application for insurance;

(4) The receiving or collection of any premium, commission, membership fees, assessments, dues or other consideration for any insurance or any part thereof;

(5) The issuance or delivery of contracts of insurance to residents of this state or to persons authorized to do business in this state;

(6) Directly or indirectly acting as an agent for or otherwise representing or aiding on behalf of another any person or insurance company in the solicitation, negotiation, procurement or effectuation of insurance or renewals thereof or in the dissemination of information as to coverage or rates, or forwarding of applications, or delivery of policies or contracts, or inspection of risks, a fixing of rates or investigation or adjustment of claims or losses or in the transaction of matters subsequent to effectuation of the contract and arising out of it, or in any other manner representing or assisting a person or insurance company in the transaction of insurance with respect to subjects of insurance resident, located or to be performed in this state. The provisions of this subsection shall not operate to prohibit full-time salaried employees of a corporate insured from acting in the capacity of an insurance manager or buyer in placing insurance in behalf of such employer;

(7) The transaction of any kind of insurance business specifically recognized as transacting an insurance business within the meaning of the statutes relating to insurance;

(8) The transacting or proposing to transact any insurance business in substance equivalent to any of the foregoing in a manner designed to evade the provisions of the statutes.

3. (1) The failure of an insurance company transacting insurance business in this state to obtain a certificate of authority shall not impair the validity of any act or contract of such insurance company and shall not prevent such insurance company from defending any action at law or suit in equity in any court of this state, but no insurance company transacting insurance business in this state without a certificate of authority shall be permitted to maintain an action in any court of this state to enforce any right, claim or demand arising out of the transaction of such business until such insurance company shall have obtained a certificate of authority.

(2) In the event of failure of any such unauthorized insurance company to pay any claim or loss within the provisions of such insurance contract, any person who assisted or in any manner aided directly or indirectly in the procurement of such insurance contract shall be liable to the insured for the full amount of the claim or loss in the manner provided by the provisions of such insurance contract.

4. If the director determines that a person has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, the director may issue such administrative orders as authorized under section 374.046. A violation of this section is a level four violation under section 374.049.

5. If the director believes that a person has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, the director may maintain a civil action for relief authorized under section 374.048. A violation of this section is a level four violation under section 374.049.

6. Any person who transacts insurance business without a certificate of authority, as provided in this section, is guilty of a class D felony.

7. The director may refer such evidence as is available concerning violations of this chapter to the proper prosecuting attorney, who with or without a criminal reference, or the attorney general under section 27.030, may institute the appropriate criminal proceedings.

8. Nothing in this section shall limit the power of the state to punish any person for any conduct that constitutes a crime in any other state statute.

(L. 1972 H.B. 1264 § 375.781, A.L. 1977 S.B. 274, A.L. 1993 H.B. 709, A.L. 1998 H.B. 1160, A.L. 2007 S.B. 66, A.L. 2014 S.B. 491)

Effective 1-01-17

Complaint filed by director, when--injunction authorized.

375.787. Whenever the director believes, from evidence satisfactory to him, that any insurance company is violating or about to violate the provisions of section 375.786, the director may cause a complaint to be filed in the circuit court of Cole County, Missouri, to enjoin and restrain such insurance company from continuing such violation or engaging therein or doing any act in furtherance thereof. The court shall have jurisdiction of the proceeding and shall have the power to make and enter an order or judgment awarding such preliminary or final injunctive relief as in its judgment is proper.

(L. 1972 H.B. 1264 § 375.783)

Transaction of insurance business by unauthorized insurer, effect of.

375.788. 1. Any act of transacting an insurance business as set forth in section 375.786 by any unauthorized insurance company is equivalent to and shall constitute an irrevocable appointment by such insurance company, binding upon him, his executor or administrator, or successor in interest if a corporation, of the secretary of state or his successor in office, to be the true and lawful attorney of such insurance company upon whom may be served all lawful process in any action, suit, or proceeding in any court by the director of the department of insurance, financial institutions and professional registration or by the state, and upon whom may be served any notice, order, pleading or process in any proceeding before the director of the department of insurance, financial institutions and professional registration and which arises out of transacting an insurance business in this state by such insurance company. Any act of transacting an insurance business in this state by any unauthorized insurance company shall be signification of its agreement that any such lawful process in such court action, suit, or proceeding and any such notice, order, pleading or process in such administrative proceeding before the director of the department of insurance, financial institutions and professional registration so served shall be of the same legal force and validity as personal service of process in this state upon such insurance company.

2. Service of process in such action shall be made by delivering to and leaving with the secretary of state, or some person in apparent charge of his office, two copies thereof and by payment to the secretary of state of the fee prescribed by law. Service upon the secretary of state as such attorney shall be service upon the principal.

3. The secretary of state shall forthwith forward by certified mail one of the copies of such process or such notice, order, pleading, or process in proceedings before the director to the defendant in such court proceeding or to whom the notice, order, pleading, or process in such administrative proceeding is addressed or directed at its last known principal place of business and shall keep a record of all process so served on him which shall show the day and hour of service. Such service is sufficient, provided:

(1) Notice of such service and a copy of the court process or the notice, order, pleading, or process in such administrative proceeding are sent within ten days thereafter by certified mail by the plaintiff or the plaintiff's attorney in the court proceeding or by the director of the department of insurance, financial institutions and professional registration in the administrative proceeding to the defendant in the court proceeding or to whom the notice, order, pleading or process in such administrative proceeding is addressed or directed at the last known principal place of business of the defendant in the court or administrative proceeding.

(2) The defendant's receipt or receipts issued by the post office with which the letter is registered, showing the name of the sender of the letter and the name and address of the person or insurance company to whom the letter is addressed, and an affidavit of the plaintiff or the plaintiff's attorney in court proceeding or of the director of the department of insurance, financial institutions and professional registration in administrative proceeding, showing compliance therewith, are filed with the clerk of the court in which such action, suit, or proceeding is pending or with the director in administrative proceedings, on or before the date the defendant in the court or administrative proceeding is required to appear or respond thereto, or within such further time as the court or director of the department of insurance, financial institutions and professional registration may allow.

4. No plaintiff shall be entitled to a judgment or a determination by default in any court or administrative proceeding in which court process or notice, order, pleading or process in proceedings before the director of the department of insurance, financial institutions and professional registration is served under this section until the expiration of forty-five days from the date of filing of the affidavit of compliance.

5. Nothing in this section shall limit or affect the right to serve any process, notice, order, or demand upon any person or insurance company in any other manner now or hereafter permitted by law.

(L. 1972 H.B. 1264 § 375.785)

Unauthorized company instituting court action must file bond orsecurity and procure certificate of authority, exception.

375.789. 1. Before any unauthorized insurance company files or causes to be filed any pleading in any court action, suit or proceeding or in any notice, order, pleading, or process in such administrative proceeding before the director instituted against such person or insurance company, by services made and provided in section 375.788, such insurance company shall either:

(1) Deposit with the clerk of the court in which such action, suit, or proceeding is pending, or with the director of the department of insurance, financial institutions and professional registration in administrative proceedings before the director, cash or securities, or file with such clerk or director a bond with good and sufficient sureties, to be approved by the clerk or director in an amount to be fixed by the court or director sufficient to secure the payment of any final judgment which may be rendered in such action or administrative proceeding;

(2) Procure a certificate of authority to transact the business of insurance in this state. In considering the application of an insurance company for a certificate of authority, for the purposes of this paragraph the director need not assert the provisions of section 375.916 against such insurance company with respect to its application if he determines that such insurance company would otherwise comply with the requirements for such certificate of authority.

2. The director of the department of insurance, financial institutions and professional registration, in any administrative proceeding in which service is made as provided in section 375.788, may, in his discretion, order such postponement as may be necessary to afford the defendant reasonable opportunity to comply with the provisions of this section and to defend such action.

3. Nothing in this section shall be construed to prevent an unauthorized insurance company from filing a motion to quash a writ or to set aside service thereof made in the manner provided in section 375.788 on the ground that such unauthorized insurance company has not done any of the acts enumerated in section 375.786.

(L. 1972 H.B. 1264 § 375.787)

Enforcement--foreign decree, qualified party, reciprocal states,defined.

375.790. 1. The attorney general upon request of the director may proceed in the courts of this state or any reciprocal state to enforce an order or decision in any court proceeding or in any administrative proceeding before the director of the department of insurance, financial institutions and professional registration.

2. As used in this section:

(1) "Foreign decree" means any decree or order in equity of a court located in a "reciprocal state", including a court of the United States located therein, against any insurance company incorporated or authorized to do business in this state;

(2) "Qualified party" means a state regulatory agency acting in its capacity to enforce the insurance laws of its state;

(3) "Reciprocal state" means any state or territory of the United States the laws of which contain procedures substantially similar to those specified in this section for the enforcement of decrees or orders in equity issued by courts located in other states or territories of the United States against any insurance company incorporated or authorized to do business in said state or territory.

3. The director of the department of insurance, financial institutions and professional registration shall determine which states and territories qualify as reciprocal states and shall maintain at all times an up-to-date list of such states.

4. A copy of any foreign decree authenticated in accordance with the statutes of this state may be filed in the office of the clerk of any circuit court of this state. The clerk, upon verifying with the director of the department of insurance, financial institutions and professional registration that the decree or order qualifies as a "foreign decree", shall treat the foreign decree in the same manner as a decree of a circuit court of this state. A foreign decree so filed has the same effect and shall be deemed as a decree of a circuit court of this state, and is subject to the same procedures, defenses and proceedings for reopening, vacating or staying as a decree of a circuit court of this state and may be enforced or satisfied in like manner; provided, however, the maximum money judgment which may be enforced under this section shall be five thousand dollars.

5. (1) At the time of the filing of the foreign decree, the attorney general shall make and file with the clerk of the court an affidavit setting forth the name and last known post-office address of the defendant.

(2) Promptly upon the filing of the foreign decree and the affidavit, the clerk shall mail notice of the filing of the foreign decree to the defendant at the address given and to the director of the department of insurance, financial institutions and professional registration of this state and shall make a note of the mailing in the docket. In addition, the attorney general may mail a notice of the filing of the foreign decree to the defendant and to the director of the department of insurance, financial institutions and professional registration of this state and may file proof of mailing with the clerk. Lack of mailing notice of filing by the clerk shall not affect the enforcement proceedings if proof of mailing by the attorney general has been filed.

(3) No execution or other process for enforcement of a foreign decree filed hereunder shall issue until thirty days after the date the decree is filed.

6. (1) If the defendant shows the circuit court that an appeal from the foreign decree is pending or will be taken, or that a stay of execution has been granted, the court shall stay enforcement of the foreign decree until the appeal is concluded, the time for appeal expires, or the stay of execution expires or is vacated, upon proof that the defendant has furnished the security for the satisfaction of the decree required by the state in which it was rendered.

(2) If the defendant shows the circuit court any ground upon which enforcement of a decree of any circuit court of this state would be stayed, the court shall stay enforcement of the foreign decree for an appropriate period, upon requiring the same security for satisfaction of the decree which is required in this state.

7. Any person filing a foreign decree shall pay to the clerk of court fifty dollars. Fees for docketing, transcription or other enforcement proceedings shall be as provided for decrees of the circuit court.

8. Any unauthorized insurance company who transacts any unauthorized act of an insurance business as set forth in section 375.786 may be fined not more than five thousand dollars.

(L. 1972 H.B. 1264 § 375.788)

Foreign insurance company admitted, when.

375.791. 1. Upon complying with the provisions of this chapter, a foreign insurance company organized under the laws of any state of the United States other than this state or the laws of any foreign government as a stock company, mutual company, assessment life company, reciprocal, fraternal benefit society may be admitted to transact in this state the kind or kinds of business which a domestic company similarly organized may be authorized to transact under the laws of this state.

2. No insurance company shall transact any business in this state on an admitted basis without first obtaining a certificate of authority issued by the director of the department of insurance, financial institutions and professional registration as provided for in this chapter.

(L. 1967 p. 516)

Renewal of certificate of authority, when--notice of refusal to renew(foreign company).

375.801. 1. The director shall renew for one year the certificate of authority of a foreign insurance company on the first day of July of the calendar year following the calendar year in which it is admitted to transact business in this state and annually thereafter, upon application by the company and upon payment of the annual taxes and fees imposed by the laws of this state, if any, provided the director is satisfied that

(1) None of the facts specified in this chapter as grounds for revoking a certificate of authority exists; and

(2) The company is complying with the conditions for admission, except for surplus requirements in excess of those which similar domestic companies transacting the same kind or kinds of business are required to maintain.

2. Except in case of nonpayment of taxes, the director shall give notice of his intention to refuse to renew the certificate of authority of a foreign company and the grounds therefor at least twenty days before the end of the term for which the existing certificate was issued, and the company shall be given an opportunity for a hearing before the end of the term.

(L. 1967 p. 516)

Application for certificate of authority, contents (foreign company).

375.811. 1. A foreign insurance company in order to secure a certificate of authority to transact business in this state shall make application therefor to the director. The application shall set forth:

(1) The name of the company and the state under the laws of* which it was incorporated or organized;

(2) The date of its incorporation and the period of its duration;

(3) The address, including street and number of its principal office, in the state under the laws of which it is organized;

(4) The names of the states and countries, if any, in which it is admitted or qualified to transact business;

(5) The kinds of insurance it is authorized to write in its state of organization;

(6) The kinds of insurance it proposes to write in this state;

(7) A statement of the aggregate number of shares it has outstanding, if any, and the par value thereof and the amount of surplus as regards to policyholders; and

(8) Any additional information which the director may require to enable him to determine whether the company is entitled to a certificate of authority to transact business in this state and to determine and assess the taxes, fees and charges payable as prescribed by Missouri law.

2. The application shall be made on forms prescribed and furnished by the director and shall be executed by the company by its president or a vice president or executive officer corresponding thereto and verified by the officer, and if a corporation, the corporate seal shall be thereto affixed, attested by its secretary or other proper officer.

3. There shall be delivered to the director the application for the certificate of authority, and attached thereto shall be the following:

(1) A copy of its articles of incorporation or articles of association as amended, duly certified by the proper officer of the state under whose laws the company is organized or incorporated;

(2) A copy of its bylaws or regulations and if a fraternal benefit society, a copy of its constitution certified by its secretary or officer corresponding thereto;

(3) A certificate from the proper official of the state or country wherein the company is incorporated or organized that it is duly incorporated or organized and is authorized to write the kinds of insurance which it proposes to write in this state and is duly licensed to do business in its home state;

(4) The appointment of the Missouri director of the department of insurance, financial institutions and professional registration as attorney to accept service of legal process in Missouri executed on the forms furnished by his office as prescribed by section 375.906;

(5) A copy of the most recent annual statement of the company on the standard form prescribed by the National Association of Insurance Commissioners or a financial statement as of such later date as the director may require;

(6) A copy of the last report of examination certified to by an insurance commissioner or other proper supervisory official;

(7) Duplicate copies of all policy forms which the company proposes to use in this state;

(8) A biographical sketch of the directors and officers of the company listed on the annual statement submitted by the company; and

(9) Such other information as the director deems necessary.

(L. 1967 p. 516)

*Word "by" appears in original rolls.

Conditions to be met for certificate of authority (foreign company).

375.821. 1. Before a certificate of authority to transact business in this state shall be issued to a foreign insurance company, the company shall satisfy the director that:

(1) The company is duly organized under the laws of the state or country under whose laws it professes to be organized and authorized to do the business it is transacting or proposes to transact;

(2) Its name is not the same as or deceptively similar to the name of any insurance company organized or incorporated under the laws of the state of Missouri or of any foreign insurance company authorized to transact business in this state; provided that such company, by resolution of its board of directors, may adopt an assumed name for use in this state that is not deceptively similar;

(3) That the company is transacting and proposes to transact the kinds of business which a domestic company similarly organized may be authorized to transact under the laws of this state;

(4) That the company meets the financial requirements as relates to capital and surplus or other statutory fund as originally required for companies being incorporated or organized under the laws of this state to do the same kinds of business;

(5) That its funds are invested in accordance with the laws of its domicile;

(6) That the officers and operating personnel of the company are competent and trustworthy to transact the business of insurance in this state and that the transaction of business in this state would not be hazardous to the general public; and

(7) That the company has paid all of the fees and taxes as prescribed by the laws of this state.

2. Before issuing a certificate of authority to a foreign insurance company, the director may cause an examination to be made of the condition and affairs of the company.

(L. 1967 p. 516)

Certificate issued when all conditions met (foreign company).

375.831. When a foreign insurance company has complied with the requirements of this chapter and all other requirements imposed on the company by existing laws and has paid charges imposed by law, the director shall file in his office the documents delivered to him and shall issue to the company a certificate of authority to transact in this state the kinds of business specified therein.

(L. 1967 p. 516)

Change of name by foreign or alien company, application for amendedcertificate, how made.

375.841. 1. In the event that a foreign or alien insurance company authorized to transact business in this state changes its name or desires to transact in this state kinds of business other than those it is then authorized to transact, it shall file with the director an application for an amended certificate of authority.

2. The application shall comply as to form and manner of execution with the requirements of this chapter for an original application and shall set forth the name of the company, the respects in which the company desires its certificate of authority amended, and such other information as is necessary or appropriate to enable the director to determine whether an amended certificate of authority should be issued.

3. The director shall issue the amended certificate if he is satisfied that:

(1) The company might lawfully be authorized to transact the kinds of business it desires to transact if application for authority were made in an original application; and

(2) The conditions provided for in section 375.821 are complied with.

(L. 1967 p. 516)

Amended articles, copy to be filed with director, effect of (foreignor alien company).

375.851. Whenever the articles of incorporation or articles of association of a foreign or alien insurance company authorized to transact business in this state are amended, the company shall, within thirty days after the effective date of the amendment, file with the director a copy thereof duly authenticated by the proper officer of the state or country under the laws of which the company is organized. The filing of the copy shall not of itself enlarge the authority of the company in the transaction of business in this state, nor authorize the company to transact business in this state under any other name than the name set forth in its certificate of authority.

(L. 1967 p. 516)

Foreign company survivor of merger, documents to be filed withdirector.

375.861. 1. Whenever a foreign insurance company authorized to transact business in this state is the surviving company of a statutory merger permitted by the laws of the state or country under which it is organized, and the merger is not subject to the provisions of section 375.241, it shall forthwith file with the director:

(1) Copies of the agreement and certificate of merger duly authenticated by the proper officer of the state or country under the laws of which the statutory merger was effected; and

(2) If any of the companies party to the merger was not admitted to transact business in this state, a statement of the financial condition and business of each of the companies, as of the end of the preceding calendar year complying as to form, content and verification with the requirements for annual statements, or a financial statement as of such later date as the director may require.

2. It is not necessary for the surviving company to procure a new certificate of authority to transact business in this state nor an amended certificate unless the name of the company is changed thereby or unless the company desires to transact in this state kinds of business other than those which it is then authorized to transact.

3. Whenever a foreign insurance company authorized to transact business in this state is a party to a statutory merger and the company is not the surviving company, or if the foreign insurance company is a party to a consolidation, then the certificate of authority of the foreign company shall terminate upon the merger or consolidation, and the surviving company, if not previously authorized to transact business in this state, or the new company, in the case of consolidation, shall be subject to the same requirements for admission to transact business in this state as any other foreign company.

(L. 1967 p. 516)

Admitted foreign company may withdraw, how.

375.871. 1. Any foreign insurance company admitted to do business in this state may withdraw from this state by filing with the director a statement of withdrawal, signed and verified by a president, vice president or an executive officer corresponding thereto, or in the case of a reciprocal, by the attorney in fact, and setting forth:

(1) That the company surrenders its authority to transact business in this state and returns for cancellation its certificate of authority;

(2) Except in the case of a reciprocal, that the withdrawal of the company from this state has been duly authorized by the board of directors, trustees or other governing body of the company; and

(3) A post-office address to which the director may mail a copy of any process against the withdrawing company that may be served upon him.

2. Upon the filing of the statement together with its certificate of authority with the director and payment of any taxes or charges that may be due, the director shall cancel the certificate of authority and return the cancelled certificate to the company. The authority of the company to transact business in this state shall thereupon cease.

(L. 1967 p. 516)

Revocation or suspension of certificate of authority, when (foreigncompany).

375.881. The director may revoke or suspend the certificate of authority of a foreign insurance company under section 374.047 or issue such administrative orders as appropriate under section 374.046 whenever he finds that the company

(1) Is insolvent;

(2) Fails to comply with the requirements for admission in respect to capital, the investment of its assets or the maintenance of deposits in this or other state or fails to maintain the surplus which similar domestic companies transacting the same kinds of business are required to maintain;

(3) Is in such a financial condition that its further transaction of business in this state would be hazardous to policyholders and creditors in this state and to the public;

(4) Has refused or neglected to pay a valid final judgment against the company within thirty days after the rendition of the judgment;

(5) Has refused to submit to the jurisdiction of a court of this state upon the grounds of diversity of citizenship in a cause of action arising out of business transacted, acts done, or contracts made in this state by the foreign insurance company;

(6) Has violated any law of this state or has in this state violated its charter or exceeded its corporate powers;

(7) Has refused to submit its books, papers, accounts, records, or affairs to the reasonable inspection or examination of the director, his actuaries, deputies or examiners;

(8) Has an officer who has refused upon reasonable demand to be examined under oath touching its affairs;

(9) Fails to file its annual statement within thirty days after the date when it is required by law to file the statement;

(10) Fails to file with the director a copy of an amendment to its charter or articles of association within thirty days after the effective date of the amendment;

(11) Fails to file with the director copies of the agreement and certificate of merger and the financial statements of the merged companies, if required, within thirty days after the effective date of the merger;

(12) Fails to pay any fees, taxes or charges prescribed by the laws of this state within thirty days after they are due and payable; provided, however, that in case of objection or legal contest the company shall not be required to pay the tax until thirty days after final disposition of the objection or legal contest;

(13) Fails to file any report for the purpose of enabling the director to compute the taxes to be paid by the company within thirty days after the date when it is required by law to file the report;

(14) Has had its corporate existence dissolved or its certificate of authority revoked in the state or country in which it was organized;

(15) Has had all its risks reinsured in their entirety in another company; or

(16) Has ceased to transact the business of insurance in this state for a period of one year.

(L. 1967 p. 516, A.L. 1985 H.B. 545, A.L. 2007 S.B. 66)

Annual statement--reserves required, requirements in lieu of deposits(foreign company).

375.891. 1. Every foreign insurance company incorporated by or organized under the laws of any other state of the United States or of any foreign government and doing business in this state shall file and make such annual statement showing the condition of its affairs, maintain reserves, and make deposits at such time and in such manner as an insurance company organized and incorporated under the laws of the state of Missouri and transacting similar kind of business.

2. In lieu of such deposit or part thereof in this state of such an insurance company, the company may file with the director the current certificate in proper form of the public official having supervision over insurers in any other state to the effect that a like deposit or part thereof of such insurer is being maintained in public custody or control pursuant to law in such state in trust for the protection of the insurer's policyholders or its policyholders and creditors. If the company is authorized to transact in this state more than one kind of insurance for which a deposit is otherwise required under subsection 1, if the amount of the company's deposit so maintained in another state is not less than the aggregate amount of all such deposits so otherwise required in this state, the director shall accept a single certificate relative to such deposit in the other state without specification of the kind or kinds of insurance to which the same relates. When satisfied by such certificate that such deposit or a part thereof has been made and is being so held, the director shall accept such certificate in lieu of the deposit or part thereof required to be made in this state under subsection 1 of this section.

3. Nothing herein shall prohibit the director of the department of insurance, financial institutions and professional registration of the state of Missouri from requiring such supplemental and additional information, statements, deposits and reserves as he deems necessary for the protection of Missouri policyholders.

4. Nothing in these sections shall so be construed as to release any of the assets of any company from any liability arising against the company in this state.

(L. 1967 p. 516)

Foreign insurance companies to maintain deposits under trustagreement, amount--trust assets to be kept in UnitedStates--amendment to trust approved by director--trust agreementcontent.

375.892. 1. Any foreign insurance company organized under the laws of any foreign government entering through this state to transact insurance in the United States to qualify for authority to transact business in this state shall, in addition to deposits required of like domestic insurers, maintain deposits under trust agreements approved by the director of the department of insurance, financial institutions and professional registration. Such deposits shall be not less than the amount of liabilities with respect to the insurer's business in the United States. Such deposits shall be held for the benefit of policyholders and creditors within the United States.

2. Whenever an insurer which is organized under the laws of any foreign government is required or permitted to deposit assets with a trustee for the benefit and security of its policyholders, or of its policyholders and creditors, in the United States, the trustee of any such trust hereafter created shall be a solvent bank or trust company in the United States acceptable to the director of the department of insurance, financial institutions and professional registration and authorized to act as such trustee by the laws of any state or of the United States. All trusteed assets shall be continuously kept within the United States. Any such trust heretofore created and now existing, and any such trust hereafter created and existing when such insurer seeks to be admitted, shall be continued in accordance with the terms of the instrument creating it, unless inconsistent with the provisions of this section, in which case the instrument shall, after reasonable notice to and hearing of such insurer by the director of the department of insurance, financial institutions and professional registration, be amended to conform to the requirements of this section. No amendment to any trust agreement, whether heretofore or hereafter created, shall be effective unless approved in writing by the director of the department of insurance, financial institutions and professional registration. If the trustees of any such trust heretofore created are natural persons and if the number of such trustees is reduced by death, resignation, or from any other cause, to less than three, then the director of the department of insurance, financial institutions and professional registration shall require the substitution for such trustees of a solvent bank or trust company in the United States acceptable to him and authorized to act as such trustee by the laws of any state or of the United States. The director of the department of insurance, financial institutions and professional registration may from time to time approve modifications of, or variations in, any trust agreement which in his judgment are not prejudicial to the interests of the people of this state.

3. Such trust agreements shall:

(1) Vest the legal title to the trusteed assets in the trustee and its successors lawfully appointed, in trust for the benefit and security of all the policyholders, or of all the policyholders and creditors, of such insurer organized under the laws of any foreign government;

(2) Provide for the substitution of a new trustee in the event of a vacancy by death, resignation or from any other cause, subject to the approval of the director of the department of insurance, financial institutions and professional registration;

(3) Require that the trusteed assets shall at all times be maintained within the United States as a trust fund separate and distinct from all other assets, and that the trustee shall continuously maintain a record at all times sufficient to identify such fund;

(4) Prescribe the conditions, satisfactory to the director of the department of insurance, financial institutions and professional registration and not inconsistent with the purposes of this section, under which any or all income, earnings, dividends or interest accumulations of such fund may be paid over to the United States manager of such insurer organized under the laws of any foreign government;

(5) Prohibit the withdrawal, other than as provided in accordance with subdivision (4) of this subsection, of any trusteed assets from such fund without the written approval of the director of the department of insurance, financial institutions and professional registration, except as follows:

(a) For the purpose of making general state deposits required by law in any state;

(b) For the purpose of paying obligations due from such insurer organized under the laws of any foreign government to policyholders and creditors in the United States, and for the purpose of making special state deposits required by law in any state if such payments and deposits do not impair the insurer's assets to an amount less than the minimum capital and surplus required of like insurers organized under the laws of this state and such fact is certified to the trustee by the insurer or its United States manager duly authorized for that purpose;

(c) For the purpose of substituting other assets permitted by law and at least equal in value to those to be withdrawn, upon the specific written direction of the United States manager or an assistant United States manager or other representative in the United States of such insurer organized under the laws of any foreign government when duly empowered and acting pursuant to either general or specific written authority previously given or delegated by the board of directors thereof, except as provided in paragraph (e) of this subdivision;

(d) For the purpose of transferring such assets to an official conservator, rehabilitator, or liquidator pursuant to an order of a court of competent jurisdiction;

(e) In the case of a life insurer organized under the laws of the Dominion of Canada or of any province thereof, the provisions of this section applicable to the United States manager or an assistant United States manager or other representative in the United States of such insurer shall be deemed to refer to the president, vice president, secretary or treasurer of such insurer at its principal place of business in said dominion or province thereof, when duly authorized for such purpose.

4. The director of the department of insurance, financial institutions and professional registration may from time to time examine the trusteed assets of an insurer organized under the laws of any foreign government and may from time to time require the trustee holding trusteed assets of an admitted insurer organized under the laws of any foreign government to file with the director of the department of insurance, financial institutions and professional registration a statement, in such form as he may prescribe, certifying such trusteed assets and the amounts thereof. Refusal or neglect on the part of the trustee to comply with such requirement shall be ground for the revocation of the insurer's certificate of authority and for proceedings against it under the provisions of this chapter.

(L. 1984 H.B. 1561)

Foreign companies shall transact business through licensed agents andbrokers.

375.901. 1. Foreign companies admitted to do business in this state shall make contracts of insurance with persons in this state only by lawfully constituted and licensed agents and brokers.

2. Any insurance company who violates any provision of this section shall suffer a revocation of its authority by the director to do business in this state, in addition to the penalty prescribed in section 375.310, the revocation to be for the term of one year.

3. No countersignature of a resident agent or broker is required on policies or contracts for insurance solicited by nonresident agents or brokers licensed by this state, unless the state of residence of the nonresident agent or broker imposes a countersignature requirement on policies or contracts solicited by residents of this state. If the state of residence of the nonresident agent or broker imposes such a countersignature requirement, then the policies or contracts solicited by the nonresident agent or broker in this state must be countersigned by a licensed agent or broker who is a legal resident of Missouri.

(RSMo 1939 § 6013, A.L. 1961 p. 167, A.L. 1967 p. 516, A.L. 1981 S.B. 10, A.L. 1989 H.B. 615 & 563)

Foreign companies to appoint director to receiveservice--methods--penalty.

375.906. 1. No insurance company or association not incorporated or organized under the laws of this state shall directly or indirectly issue policies, take risks, or transact business in this state, until it shall have first executed an irrevocable power of attorney in writing, appointing and authorizing the director of the department of insurance, financial institutions and professional registration of this state to acknowledge or receive service of all lawful process, for and on behalf of the company, in any action against the company, instituted in any court of this state, or in any court of the United States in this state, and consenting that service upon the director shall be deemed personal service upon the company.

2. Service of process shall be made by delivery of a copy of the petition and summons to the director of the department of insurance, financial institutions and professional registration, the deputy director of the department of insurance, financial institutions and professional registration, or the chief clerk of the department of insurance, financial institutions and professional registration at the office of the director of the department of insurance, financial institutions and professional registration at Jefferson City, Missouri, and service as aforesaid shall be valid and binding in all actions brought by residents of this state upon any policy issued or matured, or upon any liability accrued in this state, or on any policy issued in any other state in which the resident is named as beneficiary, and in all actions brought by nonresidents of this state upon any policy issued in this state in which the nonresident is named beneficiary or which has been assigned to the nonresident, and in all actions brought by nonresidents of this state on a cause of action, other than an action on a policy of insurance, which arises out of business transacted, acts done, or contracts made in this state.

3. In case the process is issued by an associate circuit judge, the same may be directed to and served by any officer authorized to serve process in the city or county where the director of the department of insurance, financial institutions and professional registration has his office, at least fifteen days before the return thereof.

4. Every instrument of appointment executed by the company shall be attested by the seal of the company and shall recite the whole of this section, and shall be accompanied by a copy of a resolution of the board of directors or trustees of the company similarly attested, showing that the president and secretary or other chief officers of the company are authorized to execute the instruments on behalf of the company; and if any company fails, neglects, or refuses to appoint and maintain within this state an attorney or agent in the manner herein described, it shall forfeit the right to do or continue business in this state.

5. Whenever process is served upon the director of the department of insurance, financial institutions and professional registration, the deputy director of the department of insurance, financial institutions and professional registration, or the chief clerk of the department of insurance, financial institutions and professional registration under the provisions of this section, the process shall immediately be forwarded by first class mail prepaid and directed to the secretary of the company, or, in the case of an alien company, to the United States manager or last appointed general agent of the company in this country; provided, that there shall be kept in the office of the director of the department of insurance, financial institutions and professional registration a permanent record showing for all process served the name of the plaintiff and defendant, the court from which the summons issued, the name and title of the officer serving same, and the day and hour of the service.

(RSMo 1939 § 6005, A.L. 1967 p. 516, A.L. 1978 H.B. 1634)

Effective 1-2-79

CROSS REFERENCE:

For service outside this state, see Chap. 506

Nonresident insurer may become domestic insurer, procedure--directormay promulgate rules.

375.908. 1. Any insurer which is organized under the laws of any other state and is admitted to do business in this state for the purpose of writing insurance may become a domestic insurer by complying with all of the requirements of law relative to the organization and licensing of a domestic insurer of the same type and by designating its principal place of business at a place in this state. Such domestic insurer shall be entitled to like certificates and licenses to transact business in this state, and shall be subject to the authority and jurisdiction of this state.

2. Any domestic insurer may, upon the approval of the director of the department of insurance, financial institutions and professional registration, transfer its domicile to any other state in which it is admitted to transact the business of insurance, and upon such a transfer shall cease to be a domestic insurer, and shall be admitted to transact the business of insurance in this state if qualified as a foreign insurer. The director shall approve any such proposed transfer unless he shall determine such transfer is not in the interest of the policyholders of this state.

3. The certificate of authority, agent appointments and licenses, rates, and other items which the director allows, in his discretion, which are in existence at the time any insurer licensed to transact the business of insurance in this state transfers its corporate domicile to this or any other state by merger, consolidation or any other lawful method shall continue in full force and effect upon such transfer if such insurer remains duly qualified to transact the business of insurance in this state. All outstanding policies of any transferring insurer shall remain in full force and effect and need not be endorsed as to the new name of the company or its new location unless so ordered by the director. Every transferring insurer shall file new policy forms with the director on or before the effective date of the transfer, but may use existing policy forms with appropriate endorsements if allowed by, and under such conditions as approved by, the director; however, every such transferring insurer shall notify the director of the details of the proposed transfer, and shall file promptly, any* resulting amendments to corporate documents filed or required to be filed with the director.

4. The director may promulgate rules and regulations to carry out the provisions of this section.

(L. 1991 H.B. 385, et al. § 24)

*Word "and" appears in original rolls.

Service on deputy director valid, when.

375.911. In case of a vacancy in the office of the director of the department of insurance, financial institutions and professional registration or in case of the absence or inability or suspension of the director, the service upon the deputy appointed under the provisions of section 374.080 shall be valid and sufficient for the purpose of section 375.906; provided, further, that in the absence or inability of both the director and deputy or in case of a vacancy in both of the offices, service upon the chief clerk, appointed under the provisions of section 374.130, shall be valid and sufficient for the purpose of section 375.906.

(RSMo 1939 § 6006, A.L. 1967 p. 516)

(Source: 1959 § 375.220)

Retaliatory tax, how assessed and paid, exceptions--workers'compensation paid losses, how treated.

375.916. 1. When by the laws of any other state or foreign country any premium or income or other taxes, or any fees, fines, penalties, licenses, deposit requirements or other obligations, prohibitions or restrictions are imposed upon Missouri insurance companies or carriers doing business, or that might seek to do business, in the other state or country, which in the aggregate are in excess of the taxes, fees, fines, penalties, licenses, deposit requirements or other obligations, prohibitions or restrictions directly imposed upon insurance companies of the other state or foreign country under the statutes of this state, so long as the laws continue in force, the same obligations, prohibitions, and restrictions of whatever kind shall be imposed upon insurance companies or carriers of the other state or foreign country doing business in Missouri. Any tax, license or other obligation imposed by any city, county or other political subdivision of a state or foreign country on Missouri insurance companies or carriers shall be deemed to be imposed by the state or foreign country within the meaning of this section, and the director of the department of insurance, financial institutions and professional registration for the purpose of this section shall compute the burden of the tax, license or other obligations on an aggregate statewide or foreign-countrywide basis as an addition to the tax and other charges payable by similar Missouri insurance companies or carriers in the state or foreign country. The provisions of this section shall not apply to ad valorem taxes on real or personal property, personal income taxes or to assessments on or credits to insurers for the payment of claims of policyholders of insolvent insurers. An insurance company claiming a state premium tax credit or deduction shall not be required to pay any additional retaliatory tax levied pursuant to this section as a result of claiming such credit or deduction.

2. All licenses, fees, taxes, fines or penalties collectible under this section shall be paid to the director of revenue. The payment and assessment of retaliatory tax shall be made on an estimated quarterly basis in the same manner as premium insurance tax as provided in sections 148.310 to 148.461.

3. Effective January 1, 2012, notwithstanding any other provision of law to the contrary, operating assessments based upon workers' compensation paid losses that are imposed upon an insurance company by the laws of its state or foreign country of domicile shall not be considered any premium or income or other taxes or any fees, fines, penalties, licenses, deposit requirements or other obligations, prohibitions or restrictions, provided that with respect to the tax year in question the insurance company has its principal place of business within this state and receives more than three million dollars of direct insurance premiums on account of business done in this state.

(RSMo 1939 § 6046, A.L. 1945 p. 1017, A. 1949 H.B. 2092, A.L. 1951 p. 261, A.L. 1967 p. 516, A.L. 1982 S.B. 470, A.L. 1983 S.B. 125, A.L. 2011 S.B. 132)

(Source: RSMo 1959 § 375.450)

CROSS REFERENCE:

Director of the department of insurance, financial institutions and professional registration or director of revenue must make supplemental assessment, when, 374.245

Underwriting, use of credit scores, no adverse actionpermitted--definitions--disclosures.

375.918. 1. As used in this section, the following terms mean:

(1) "Adverse action", a denial, nonrenewal of, or a reduction in the amount of benefits payable or types of coverages under any contract, existing or applied for, in connection with the underwriting of insurance. An offer by an insurer to write a contract through an affiliated insurer does not constitute an adverse action;

(2) "Contract", any automobile insurance policy as defined in section 379.110, or any property insurance policy as defined in section 375.001, including such a policy on a mobile home or residential condominium unit or a policy of renters' or tenants' insurance. Contract shall not include any policy of mortgage insurance or commercial insurance;

(3) "Credit report", any written or electronic communication of any information by a consumer reporting agency that:

(a) Bears on a person's credit worthiness, credit standing, or credit capacity; and

(b) Is used or collected wholly or partly to serve as a factor in the underwriting of a contract;

(4) "Credit scoring entity", any entity that is involved in creating, compiling, or providing insurance credit scores;

(5) "Insurance credit score", a numerical representation of the insurance risk a person presents using the person's attributes derived from a credit report or credit information in a formula to assess insurance risk on an actuarial or statistical basis;

(6) "Insurer", any insurance company or entity that offers a contract;

(7) "Underwriting", the selection of the risk that will be assumed by the insurer on a contract, and specifically the decision whether to accept, deny, renew, nonrenew, reduce, or increase the amount of benefits payable or types of coverages under the contract.

2. An insurer using a credit report or insurance credit score as a factor in underwriting shall not take an adverse action based on such factor without consideration of another noncredit-related underwriting factor.

3. No insurer shall take an adverse action against an applicant or insured based on inability to compute an insurance credit score without consideration of another underwriting factor, unless the insurer can justify the credibility that the lack of an insurance credit score has in underwriting to the director of the department of insurance, financial institutions and professional registration.

4. An insurer using a credit report or insurance credit score as a factor in underwriting a contract shall disclose at the time of the original application for the contract or on the application itself that the insurer may gather credit information.

5. An insurer using a credit report or insurance credit score as a factor in underwriting of a contract shall not take an adverse action on such contract based on information that is the subject of a written dispute between the policyholder or applicant and a consumer reporting agency, as noted in such person's credit report, until such dispute has reached final determination in accordance with the federal Fair Credit Reporting Act, 15 U.S.C. Section 1681, et seq. In the event that information is the subject of a written dispute under this subsection, the sixty-day period provided by section 375.002 or section 379.110 shall be extended until fifteen days after the dispute reaches final determination. Nothing in this subsection shall be construed to require any consumer reporting agency, as defined by the federal Fair Credit Reporting Act, 15 U.S.C. Section 1681, et seq., to include any information on a credit report beyond the extent required by the federal Fair Credit Reporting Act, 15 U.S.C. Section 1681, et seq.

6. If the use of a credit report or insurance credit score on a contract results in an adverse action, the insurer shall provide the policyholder or applicant:

(1) Notice that a credit report or insurance credit score adversely affected the underwriting of the contract;

(2) The name, address, and telephone number of the consumer credit reporting agency that furnished the credit information, in compliance with the notice requirements of the federal Fair Credit Reporting Act, 15 U.S.C. Section 1681, et seq.;

(3) Notice of the right to obtain a free credit report from the consumer credit reporting agency within sixty days; and

(4) Notice of the right to lodge a dispute with the consumer credit reporting agency to have any erroneous information corrected in accordance with the federal Fair Credit Reporting Act, 15 U.S.C. Section 1681, et seq.

7. Within thirty days from the date the insurer provides notice of an adverse action pursuant to subdivision (1) of subsection 6 of this section, the applicant or insured may in writing request from the insurer a statement of reasons for such action. For purposes of determining the thirty-day period, the notice of an adverse action is deemed received three days after mailing. The statement of reasons shall be sufficiently clear and specific so that a person of average intelligence can identify the basis for the insurer's decision without further inquiry. An insurer may provide an explanation of significant characteristics of the credit history that may have impacted such person's insurance credit score to meet the requirements of this subsection. Standardized credit explanations provided by credit scoring entities comply with this subsection.

8. If an insurer bases an adverse action in part on a credit report or insurance credit score, the applicant or insured may within thirty days of such adverse action make a written request for reunderwriting following any correction relating to the credit report or insurance credit score.

9. An insurer may obtain and use a current credit report or insurance credit score on new business or renewal contracts, but shall not take an adverse action with respect to renewal contracts based upon such credit report or insurance credit score until or after the third anniversary date of the initial contract.

10. Insurance inquiries shall not directly or indirectly be used as a negative factor in any insurance credit scoring formula or in the use of a credit report in underwriting.

11. Nothing in this section shall be construed as superceding the provisions of section 375.002 and section 379.114. Nothing in this section shall be construed as prohibiting any insurer from using credit information in determining whether to offer a policyholder or applicant the option to finance or establish a payment plan for the payment of any premium for a contract. Nothing in this section shall apply to any entity not acting as an insurer or credit scoring entity as defined in subsection 1 of this section.

12. No credit scoring entity shall provide or sell to any party, other than the insurer, its insurance company affiliates or holding companies, and the producer from whom the inquiry was generated, data or lists that include any information that in whole or in part is submitted in conjunction with credit inquiries about consumers. Such information includes, but is not limited to, expiration dates, information that may identify time periods during which a consumer's insurance may expire, or other nonpublic personal information as defined under the Gramm-Leach-Bliley Act, 15 U.S.C. Sections 6801 to 6809. The provisions of this subsection shall not preclude the exchange of information specifically authorized under the federal Fair Credit Reporting Act, 15 U.S.C. Section 1681, et seq., the Gramm-Leach-Bliley Act, 15 U.S.C. Sections 6801 to 6809 and other applicable federal law. The provisions of this subsection shall not apply to data disclosed in connection with a proposed or actual sale, merger, transfer or exchange of all or a portion of an insurer's or producer's business or operating unit, including but not limited to, the sale of a portfolio of contracts, if such disclosure concerns solely consumers of the business or unit and such disclosure is not the primary reason for the sale, merger, transfer or exchange.

13. A violation of this section may be enforceable under section 374.280.

14. The provisions of this section shall apply to all contracts entered into on or after July 1, 2003.

(L. 2002 H.B. 1502 & 1821)

Use of language other than English permitted, when,disclosures--misrepresentation, penalty.

375.919. 1. An insurer, as defined in section 375.001, may provide an insurance policy, endorsement, rider and any explanatory material in a language other than English. In the event of a dispute regarding the insurance or advertising material, the English language version shall dictate the resolution. If a policy, endorsement or rider is provided in a language other than English, the insurer shall also, at the same time, provide to the policyholder a copy of such policy, endorsement or rider in English, and shall disclose on such document, in both English and the other language, the following:

(1) The translation is for informational purposes only; and

(2) The English language version of the policy will be controlling unless the language in the other language version is shown to be a fraudulent misrepresentation*.

2. Any knowing misrepresentation in providing a policy, endorsement, rider or explanatory materials in a language other than English is a violation of sections 375.930 to 375.948.

(L. 2002 H.B. 1381 merged with S.B. 656 merged with S.B. 895, subsecs. 1 and 3)

*Word "mispresentation" appears in original rolls of H.B. 1381 and S.B. 656.

Policy form approval, disapproval--procedure.

375.920. No insurer shall deliver any policy of private passenger automobile insurance, homeowner's insurance, dwelling-owner's insurance, residential fire insurance, or tenant's or renter's insurance written upon property within this state until such policy form shall have been approved as provided for in sections 375.920 to 375.923. Upon submission of any form to the director of the department of insurance, financial institutions and professional registration, such form shall be deemed approved. The director of the department of insurance, financial institutions and professional registration shall review such form within sixty days, and may have a hearing during that time. If within that time he determines the policy form is not in compliance with the insurance laws of this state and does not contain such words, phraseology, conditions and provisions which are specific, certain and unambiguous and reasonably adequate to meet the needed requirements of those insured under such policies, he may file a petition with the administrative hearing commission asking that the policy be disapproved, stating specifically the reasons why such policy form shall be disapproved.

(L. 1979 S.B. 276 & 277 § 1)

Hearing on disapproval--action pending, effect on form.

375.921. The administrative hearing commission shall hear the petition, and if it finds the policy form shall be disapproved, it shall render specific findings of fact and law disapproving the policy form in that it is not in compliance with the insurance laws of this state and does not contain such words, phraseology, conditions and provisions which are specific, certain and unambiguous and reasonably adequate to meet the needed requirement of those insured under such policies. In all other cases the policy form shall stand approved. During the pending of any action all such forms shall be deemed approved.

(L. 1979 S.B. 276 & 277 § 2)

Rules and regulations not authorized.

375.922. The director of the department of insurance, financial institutions and professional registration shall have no power to promulgate rules or regulations to implement sections 375.920 to 375.923.

(L. 1979 S.B. 276 & 277 § 3)

Exempt forms.

375.923. All forms on file with the director on or before January 1, 1980, shall be exempt from the provisions of sections 375.920 to 375.923.

(L. 1979 S.B. 276 & 277 § 4, A.L. 2008 S.B. 788)

Contracts to contain address of insurer and notice of address changeto be furnished insured, penalty, exception.

375.924. 1. Any insurer, health services corporation or health maintenance organization, subject to regulation pursuant to chapter 354 or chapters 374 to 385, which delivers or issues for delivery a policy or contract of insurance or coverage in this state shall furnish, either within such policy or contract or in written form annexed to such policy or contract, the address of the principal place of business and telephone number of such insurer, health services corporation or health maintenance organization for purposes of contact by the insured or covered person with the insurer, health services corporation or health maintenance organization.

2. Any insurer, health services corporation or health maintenance organization subject to subsection 1 of this section, other than title insurers governed by chapter 381, which changes such address or telephone number shall inform those insured or covered persons in writing of such change within thirty days of completing such change.

*3. Violation of this section shall be an unfair trade practice and shall be subject to the provisions of, and penalties provided by, sections 375.930 to 375.948 relating to unfair trade practices.

4. The provisions of subsection 3 of this section shall become effective on July 1, 1993.

(L. 1992 H.B. 1574 § 23, A.L. 1994 H.B. 1107)

*Provisions of subsection 3 effective 7-1-93

Citation of law--purpose--construction.

375.930. 1. Sections 375.930 to 375.948 may be cited as the "Unfair Trade Practice Act".

2. The purpose of sections 375.930 to 375.948 is to regulate trade practices in the business of insurance in accordance with the Act of Congress of March 9, 1945 (Public Law 15, 79th Congress), by defining, or providing for the determination of, all such practices in this state which constitute unfair methods of competition or unfair or deceptive acts or practices and by prohibiting the trade practices so defined or determined. Nothing in sections 375.930 to 375.948 shall be construed to create or imply a private cause of action for a violation of sections 375.930 to 375.948.

(L. 1959 H.B. 251 § 1, A.L. 1978 H.B. 1447, A.L. 1991 S.B. 53)

Definitions.

375.932. When used in sections 375.930 to 375.948, the following terms mean:

(1) "Consultant", an individual, partnership or corporation who, for a fee, holds himself or itself out to the public as engaged in the business of offering any advice, counsel, opinion or service with respect to the benefits, advantages or disadvantages promised under any policy of insurance that could be issued in this state;

(2) "Director", the director of the department of insurance, financial institutions and professional registration of this state;

(3) "Insurer", any person, reciprocal exchange, interinsurer, Lloyds insurer, fraternal benefit society, and any other legal entity engaged in the business of insurance, including agents, brokers, adjusters and third-party administrators. "Insurer" also includes health services corporations, health maintenance organizations, prepaid limited health care service plans, dental, optometric and other similar health service plans. For purposes of sections 375.930 to 375.948 such entities shall be deemed to be engaged in the business of insurance. "Insurer" shall also include all companies organized, incorporated or doing business under the provisions of chapters 325, 375, 376, 377, 378, 379, 381 and 383;

(4) "Person", any natural or artificial entity, including, but not limited to, individuals, partnerships, associations, trusts or corporations;

(5) "Policy", "certificate" or "contract" includes any contract of insurance, indemnity, medical, health or hospital service, suretyship, or annuity issued, proposed for issuance, or intended for issuance by any insurer.

(L. 1959 H.B. 251 § 2, A.L. 1978 H.B. 1447, A.L. 1991 S.B. 53)

Unfair trade practices--conditions.

375.934. It is an unfair trade practice for any insurer to commit any practice defined in section 375.936 if:

(1) It is committed in conscious disregard of sections 375.930 to 375.948 or of any rules promulgated under sections 375.930 to 375.948; or

(2) It has been committed with such frequency to indicate a general business practice to engage in that type of conduct.

(L. 1959 H.B. 251 § 3, A.L. 1978 H.B. 1447, A.L. 1991 S.B. 53)

Unfair practices defined.

375.936. Any of the following practices, if committed in violation of section 375.934, are hereby defined as unfair trade practices in the business of insurance:

(1) "Boycott, coercion, intimidation", entering into any agreement to commit, or by any concerted action committing any act of boycott, coercion or intimidation resulting in or tending to result in an unreasonable restraint of, or monopoly in, the business of insurance;

(2) "Defamation", making, publishing, disseminating, or circulating, directly or indirectly, or aiding, abetting or encouraging the making, publishing, disseminating or circulating of any oral or written statement or any pamphlet, circular, article or literature which is false, or maliciously critical of or derogatory to the financial condition of any insurer, and which is calculated to injure such insurer;

(3) "Failure to maintain complaint handling procedures", failure of any person to maintain a complete record of all the complaints which it has received for a period of not less than three years. This record shall indicate the total number of complaints, their classification by line of insurance, the nature of each complaint, the disposition of these complaints, and the time it took to process each complaint. For purposes of this subdivision, "complaint" shall mean any written communication primarily expressing a grievance;

(4) "False information and advertising generally", making, publishing, disseminating, circulating or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster or over any radio or television station, or in any other way, an advertisement, announcement or statement containing any assertion, representation or statement with respect to the business of insurance or with respect to any insurer in the conduct of his insurance business, which is untrue, deceptive or misleading;

(5) "False statements and entries:"

(a) Knowingly filing with any supervisory or other public official, or knowingly making, publishing, disseminating, circulating or delivering to any person, or placing before the public, or knowingly causing, directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public, any false material statement of fact as to the financial condition or dealings of an insurer;

(b) Knowingly making any false entry of a material fact in any book, report or statement of any insurer or knowingly omitting to make a true entry of any material fact pertaining to the business of such insurer in any book, report or statement of such insurer;

(6) "Misrepresentations and false advertising of insurance policies", making, issuing, circulating, or causing to be made, issued or circulated, any estimate, illustrations, circular or statement, sales presentation, omission, or comparison which:

(a) Misrepresents the benefits, advantages, conditions, or terms of any policy;

(b) Misrepresents the dividends or share of the surplus to be received on any policy;

(c) Makes any false or misleading statements as to the dividends or share of surplus previously paid on any policy;

(d) Is misleading or is a misrepresentation as to the financial condition of any insurer, or as to the legal reserve system upon which any life insurer operates;

(e) Uses any name or title of any policy or class of policies misrepresenting the true nature thereof;

(f) Is a misrepresentation for the purpose of inducing or tending to induce the purchase, lapse, forfeiture, exchange, conversion, or surrender of any policy, including any intentional misquote of a premium rate;

(g) Is a misrepresentation for the purpose of effecting a pledge or assignment of or effecting a loan against any policy; or

(h) Misrepresents any policy as being shares of stock;

(7) "Misrepresentation in insurance applications", making false or fraudulent statements or representations on or relative to an application for a policy, for the purpose of obtaining a fee, commission, money, or other benefit from any insurer, agent, agency, broker or other person;

(8) "Prohibited group enrollments", no insurer shall offer more than one group contract of insurance through any person unless such person is licensed pursuant to law; however, this prohibition shall not apply to employer-employee relationships, nor to any such enrollments;

(9) "Rebates":

(a) Except as otherwise expressly provided by law, knowingly permitting or offering to make or making any contract of life insurance, life annuity, accident and health insurance or other insurance, or agreement as to such contract other than as plainly expressed in the insurance contract issued thereon, or paying or allowing, or giving or offering to pay, allow, or give, directly or indirectly, as inducement to such insurance or annuity, any rebate of premiums payable on the contract, or any special favor or advantage in the dividends or other benefits thereon, or any valuable consideration or inducement whatever not specified in the contract; or giving, or selling, or purchasing or offering or to give, sell, or purchase as inducement to such insurance contract or annuity or in connection therewith, any stocks, bonds or other securities of any insurance company or other corporation, association, or partnership, or any dividends or profits accrued thereon, or anything of value whatsoever not specified in the contract;

(b) Nothing in subdivision (11) or paragraph (a) of this subdivision shall be construed as including within the definition of discrimination or rebates any of the following practices:

a. In the case of any contract of life insurance or life annuity, paying bonuses to nonparticipating policyholders or otherwise abating their premiums in whole or in part out of surplus accumulated from nonparticipating insurance; provided that any such bonuses or abatement of premiums shall be fair and equitable to policyholders and for the best interest of the company and its policyholders;

b. In the case of life insurance policies issued on the industrial debit plan, making allowance to policyholders who have continuously for a specified period made premium payments directly to an office of the insurer in an amount which fairly represents the saving in collection expenses;

c. Readjustment of the rate of premium for a group insurance policy based on the loss or expense experience thereunder, at the end of the first or any subsequent policy year of insurance thereunder, which may be made retroactive only for such policy year;

(10) "Stock operations and advisory board contracts", issuing or delivering or permitting agents, officers or employees to issue or deliver, agency company stock or other capital stock, or benefit certificates or shares in any common law corporation, or securities or any special or advisory board contracts or other contracts of any kind promising returns and profits as an inducement to insurance;

(11) "Unfair discrimination":

(a) Making or permitting any unfair discrimination between individuals of the same class and equal expectation of life in the rates charged for any contract of life insurance or of life annuity or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of such contract;

(b) Making or permitting any unfair discrimination between individuals of the same class and of essentially the same hazard in the amount of premium, policy fees, or rates charged for any policy or contract of accident or health insurance or in the benefits payable thereunder, or in any of the terms or conditions of such contract, or in any other manner whatever, including any unfair discrimination by not permitting the insured full freedom of choice in the selection of any duly licensed physician, surgeon, optometrist, chiropractor, dentist, psychologist, pharmacist, pharmacy, or podiatrist; except that the terms of this paragraph shall not apply to health maintenance organizations licensed pursuant to chapter 354;

(c) Making or permitting any unfair discrimination between individuals or risks of the same class and of essentially the same hazards by refusing to issue, refusing to renew, cancelling or limiting the amount of insurance coverage on a property or casualty risk because of the geographic location of the risk;

(d) Making or permitting any unfair discrimination between individuals or risks of the same class and of essentially the same hazards by refusing to issue, refusing to renew, cancelling or limiting the amount of insurance coverage on a residential property risk, or the personal property contained therein, because of the age of the residential property;

(e) Refusing to insure, refusing to continue to insure, or limiting the amount of coverage available to an individual because of the gender or marital status of the individual; however, nothing in this paragraph shall prohibit an insurer from taking marital status into account for the purpose of defining persons eligible for dependent benefits;

(f) Refusing to insure solely because another insurer has refused to issue a policy, or has cancelled or has refused to renew an existing policy for which that person was the named insured, nor shall any insurance company or its agent or representative require any applicant or policyholder to divulge in a written application or otherwise whether any insurer has cancelled or refused to renew or issue to the applicant or policyholder a policy of insurance, provided that an insurer may require the name of the prior carrier in order to verify the applicant's previous claims or medical history;

(g) Cancelling or refusing to insure or refusing to continue to insure a policy solely because of race, gender, color, creed, national origin, or ancestry of anyone who is or seeks to become insured;

(h) Terminating, or modifying coverage or refusing to issue or refusing to renew any property or casualty policy or contract of insurance solely because the applicant or insured or any employee of either is mentally or physically impaired; except that this paragraph shall not apply to accident and health insurance sold by a casualty insurer and, in addition, this paragraph shall not be interpreted to modify any other provision of law relating to the termination, modification, issuance or renewal of any insurance policy or contract;

(i) The provisions of paragraphs (c), (d), (e), (f), (g), and (h) of this subdivision shall not apply if:

a. The refusal, cancellation, limitation, termination or modification is for a business purpose which is not a mere pretext for unfair discrimination, or

b. The refusal, cancellation, limitation, termination or modification is required by law or regulatory mandate;

(12) "Unfair financial planning practices", an insurance producer, agent, broker or consultant:

(a) Holding himself out, directly or indirectly, to the public as a financial planner, investment adviser, financial consultant, financial counselor, or any other specialist engaged in the business of giving financial planning or advice relating to investments, insurance, real estate, tax matters, or trust and estate matters when such person is in fact engaged only in the sale of policies; provided, however, an insurance producer, agent, broker or consultant who has passed a professional course of study may use the symbol of the professional designation on his or her business card or stationery;

(b) Engaging in the business of financial planning without disclosing to the client prior to the execution of the agreement provided for in paragraph (c) of this subdivision or solicitation of the sale of a product or service that:

a. He is also an insurance salesperson; and

b. That a commission for the sale of an insurance product will be received in addition to a fee for financial planning, if such is the case. The disclosure requirement under this paragraph may be met by including it in any disclosure required by federal or state securities law;

(c) Charging fees, other than commissions, for financial planning by insurance agents, brokers or consultants, unless such fees are based upon a written agreement, which is signed by the party to be charged in advance of the performance of the services under the agreement. A copy of the agreement shall be provided to the party to be charged at the time the agreement is signed by the party and:

a. The services for which the fee is to be charged must be specifically stated in the agreement;

b. The amount of the fee to be charged or how it will be determined or calculated must be specifically stated in the agreement;

c. The agreement must state that the client is under no obligation to purchase any insurance product through the insurance agent, broker or consultant.

The insurance agent, broker or consultant shall retain a copy of the agreement for not less than three years after completion of services, and a copy shall be available to the director upon request;

(13) Any violation of section 375.445.

(L. 1959 H.B. 251 § 4, A.L. 1967 p. 516, A.L. 1969 p. 512, A.L. 1971 H.B. 508, A.L. 1976 S.B. 666, A.L. 1978 H.B. 1447, A.L. 1983 H.B. 127, A.L. 1991 S.B. 53)

Lenders, duties--prohibited acts.

375.937. 1. No person may require as a condition precedent to the lending of money or extension of credit, or any renewal thereof, that the person to whom such money or credit is extended or whose obligation a creditor is to acquire or finance, negotiate any contract of insurance or renewal thereof through a particular insurer or group of insurers or agent, broker or group of agents or brokers.

2. No person who lends money or extends credit may:

(1) Unreasonably reject a contract of insurance furnished by the borrower for the protection of the property securing the credit or lien. A rejection shall not be deemed unreasonable if it is based on reasonable standards, uniformly applied, relating to the extent of coverage required and the financial soundness and the services of an insurer. Such standards shall not discriminate against any particular type of insurer, nor shall such standards call for rejection of an insurance contract because the contract contains coverage in addition to that required in the credit transaction;

(2) Require that any borrower, mortgagor, purchaser, insurer, broker or agent pay a separate charge, in connection with the handling of any contract of insurance required as security for a loan on real estate, or pay a separate charge to substitute the insurance policy of one insurer for that of another. This subdivision does not include the interest which may be charged on premium loans or premium advancements in accordance with the terms of the loan or credit documents;

(3) Use or disclose, without the prior written consent of the borrower, mortgagor, or purchaser taken at a time other than the making of the loan or extension of credit, information relative to a contract of insurance which is required by the credit transaction, for the purpose of replacing such insurance;

(4) Require any procedures or conditions of duly licensed agents, brokers or insurers not customarily required of those agents, brokers or insurers affiliated or in any way connected with the person who lends money or extends credit;

(5) Solicit insurance for the protection of real property, after a person indicates interest in securing a first mortgage credit extension, until such person has received a commitment in writing from the lender as to a loan or credit extension;

(6) As a condition of financing a residential mortgage or providing other financial arrangements for residential property, require a borrower to purchase homeowners' insurance coverage in an amount exceeding the replacement value of the improvements and contents on the real property. A violation of this subdivision shall not affect the validity of the loan, note secured by a deed of trust, mortgage, or deed of trust.

3. Every person who lends money or extends credit and who solicits insurance on real and personal property subject to subsection 2 of this section must explain to the borrower in writing that the insurance related to such credit extension may be purchased from an insurer or agent of the borrower's choice, subject only to the lender's right to reject a given insurer or agent as provided in subdivision (1) of subsection 2 of this section. Compliance with disclosures as to insurance required by truth-in-lending laws or comparable state laws shall be in compliance with this subsection. This requirement for a commitment shall not apply in cases where the premium for the required insurance is to be financed as part of the loan or extension of credit involving personal property transactions. The commitment shall contain the rate or rate formula, amount and terms of the loan, subject to the creditworthiness of the borrower, valuation of the property and the insurability to value of the property.

4. The director shall have the power to examine and investigate those insurance-related activities of any person which may be in violation of this section. Any affected person may submit to the director a complaint or material pertinent to the enforcement of this section.

5. Nothing in this section shall prevent a person who lends money or extends credit from placing insurance on real or personal property in the event the mortgagor, borrower or purchaser has failed to provide required insurance in accordance with the terms of the loan or credit document.

6. Nothing contained in this section shall apply to credit life or credit accident and health insurance.

(L. 1978 H.B. 1447, A.L. 1991 S.B. 53, A.L. 2004 H.B. 1291 merged with S.B. 1086)

Director may investigate companies.

375.938. The director shall have power to examine and investigate into the affairs of every insurer in this state in order to determine whether such insurer has been or is engaged in any unfair method of competition or in any unfair or deceptive act or practice prohibited by sections 375.934 and 375.937.

(L. 1959 H.B. 251 § 5, A.L. 1978 H.B. 1447, A.L. 1991 S.B. 53)

Procedure on charges or belief of unfair practices.

375.940. Whenever the director shall have reason to believe that any person or insurer has been engaged or is engaging in this state in any unfair method of competition or any unfair or deceptive act or practice in violation of sections 375.930 to 375.948, and that a proceeding by the director in respect thereto would be to the interest of the public, the director shall issue and serve upon such person or insurer a statement of the charges under the procedures set forth in section 374.046.

(L. 1959 H.B. 251 § 6, A.L. 1978 H.B. 1447, A.L. 1991 S.B. 53, A.L. 2007 S.B. 66)

Administrative order for prohibited practices--penalty.

375.942. 1. If the director determines that an insurer has engaged, is engaging, or has taken a substantial step toward engaging in an act, practice, or course of business constituting a violation of sections 375.930 to 375.948 or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding a practice constituting a violation of sections 375.930 to 375.948 or a rule adopted or order issued pursuant thereto, the director may issue such administrative orders as authorized under section 374.046. Each practice in violation of section 375.934 is a level two violation under section 374.049. Each act as part of a trade practice does not constitute a separate violation under section 374.049. The director may also suspend or revoke the license or certificate of authority of an insurer for any willful violation.

2. If the director believes that an insurer has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of sections 375.930 to 375.948 or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business conduct constituting a violation of sections 375.930 to 375.948 or a rule adopted or order issued pursuant thereto, the director may maintain a civil action for relief authorized under section 374.048. Each practice in violation of section 375.934 is a level two violation under section 374.049. Each act as part of a trade practice does not constitute a separate violation under section 374.049.

(L. 1959 H.B. 251 § 7, A.L. 1978 H.B. 1447, A.L. 1991 S.B. 53, A.L. 2007 S.B. 66)

Judicial review--decree, order--additional evidence--finality oforder, when.

375.944. 1. Any person, including any person who has been permitted to intervene, who is aggrieved by a final order or decision of the director shall be entitled to judicial review thereof, as provided in sections 536.100 to 536.140.

2. The court shall make and enter upon the pleadings, evidence and proceedings set forth in the transcript a decree modifying, affirming or reversing the order of the director, in whole or in part. To the extent that the order of the director is affirmed, the court shall thereupon issue its own order commanding obedience to the terms of such order of the director. If either party shall apply to the court for leave to adduce additional evidence, and shall show to the satisfaction of the court that such additional evidence is material and that there were reasonable grounds for the failure to adduce such evidence in the proceeding before the director, the court may order such additional evidence to be taken before the director and to be adduced upon the hearing in such manner and upon such terms and conditions as the court may deem proper. The director may modify his findings of fact, or make new findings by reason of the additional evidence so taken, and he shall file such modified or new findings which are supported by evidence on the record and his recommendation, if any, for the modification or setting aside of his original order, with the return of such additional evidence.

3. An order issued by the director under section 375.942 shall become final:

(1) Upon the expiration of the time allowed for filing a petition for review if no such petition has been duly filed within such time; except that the director may thereafter modify or set aside his order to the extent provided in subsection 2 of section 375.942; or

(2) Upon the final decision of the court if the court directs that the order of the director be affirmed or the petition for review dismissed.

4. No order of the director under section 375.942 or order of a court to enforce the same shall in any way relieve or absolve any person affected by such order from any liability under any other laws of this state.

(L. 1959 H.B. 251 § 8, A.L. 1991 S.B 53)

Director's determination, judicial review.

375.945. 1. If after reviewing a written complaint alleging a violation of section 375.936 or 375.937 the director determines that a proceeding pursuant to section 375.940 would not be in the interest of the public, then any person who alleged commission of an unfair act or practice under section 375.936 or 375.937 shall be entitled to judicial review within thirty days of such determination as provided in section 536.140. The director's determination shall be in writing and shall state the reasons for such a determination. If the court, after reviewing such written complaint and written determination, finds under such section that a proceeding pursuant to section 375.940 would be in the interest of the public, the court may order the director to institute such proceedings. In addition, such person shall have the right pursuant to section 375.944 to request leave of court to adduce additional evidence before the court prior to the court entering an order under this subsection.

2. If after any hearing under section 375.940 or 375.946, the report of the director does not charge a violation of section 375.936 or 375.937, then any person who alleged commission of an unfair act or practice under this act* may, within thirty days after the mailing or delivery of such report, cause a petition for review to be filed in the circuit court of Cole County for a review of such report, in the manner provided in sections 536.100 to 536.140. Upon such review, the court shall have authority to issue appropriate orders and decrees in connections therewith, including, if the court finds that it is to the interest of the public, orders enjoining the restraining the continuance of any method of competitions, act or practice which it finds constitutes a violation of sections 375.930 to 375.948 and containing penalties as provided by section 375.942.

(L. 1991 S.B. 53)

*"This act" (S.B. 53, 1991) contained numerous sections. Consult Disposition of Sections table for a definitive listing.

Violation of desist order, penalty.

375.946. It is unlawful for any person to violate any provision of a cease and desist order of the director under section 375.942. The director may institute an action under sections 374.046 and 374.047 as necessary to enforce any such order.

(L. 1959 H.B. 251 § 9, A.L. 1978 H.B. 1447, A.L. 1991 S.B. 53, A.L. 2007 S.B. 66)

Additional powers of director--promulgation of rules.

375.948. 1. The powers vested in the director by sections 375.930 to 375.948 shall be additional to any other powers to enforce any penalties, fines or forfeitures authorized by law with respect to the methods, acts and practices hereby declared to be unfair or deceptive.

2. The director may, after notice and hearing, promulgate reasonable rules, regulations and orders as are necessary or proper to carry out and effectuate the provisions of sections 375.930 to 375.948.

(L. 1959 H.B. 251 § 10, A.L. 1978 H.B. 1447, A.L. 1991 S.B. 53)

Definitions.

375.950. 1. Sections 375.950 to 375.990 may be cited as the "Uniform Insurer's Liquidation Act".

2. Sections 375.950 to 375.990 shall apply only to proceedings instituted prior to August 28, 1991.

3. For the purposes of sections 375.950 to 375.990:

(1) "Ancillary state" means any state other than a domiciliary state;

(2) "Delinquency proceeding" means any proceeding commenced against an insurer for the purpose of liquidating, rehabilitating, reorganizing, or conserving such insurer;

(3) "Domiciliary state" means the state in which an insurer is incorporated or organized, or, in the case of an alien insurer, the state in which such insurer, having become authorized to do business in such state, has, at the commencement of delinquency proceedings, the largest amount of its assets held in trust and assets held on deposit for the benefit of its policyholders or policyholders and creditors in the United States; and any such insurer is deemed to be domiciled in such state;

(4) "Foreign country" means territory not in any state;

(5) "General assets" means all property, real, personal, or otherwise, not specifically mortgaged, pledged, deposited, or otherwise encumbered for the security or benefit of specified persons or a limited class or classes of persons, and as to such specifically encumbered property the term includes all such property or its proceeds in excess of the amount necessary to discharge the sum or sums secured thereby. Assets held in trust and assets held on deposit for the security or benefit of all policyholders, or all policyholders and creditors in the United States, shall be deemed general assets, except that general assets shall not mean unearned premiums due or owed the insurer by the policyholder, agent or broker at the time an insolvency or liquidation is declared by a court of competent jurisdiction, nor shall general assets mean unearned premiums held in trust or held on deposit by the agent, broker or insurer;

(6) "Insurer" means any person, firm, corporation, association, or aggregation of persons doing an insurance business under the provisions of chapter 375, 376, 377, 378, 379, 380, 381 or 383, and subject to the insurance supervisory authority of, or to liquidation, rehabilitation, reorganization, or conservation by the director of the department of insurance, financial institutions and professional registration of this state, or the equivalent insurance supervisory official of another state;

(7) "Preferred claim" means any claim with respect to which the law of a state or of the United States accords priority of payment from the general assets of the insurer;

(8) "Receiver" means receiver, liquidator, rehabilitator, or conservator as the context may require;

(9) "Reciprocal state" means any state other than this state in which in substance and effect the provisions of sections 375.950 to 375.990 are in force, including the provisions requiring that the insurance commissioner or equivalent insurance supervisory official be the receiver of a delinquent insurer;

(10) "Secured claim" means any claim secured by mortgage, trust, deed, pledge, deposit as security, escrow, or otherwise, but not including special deposit claims or claims against general assets. The term also includes claims which more than four months prior to the commencement of delinquency proceedings in the state of the insurer's domicile have become liens upon specific assets by reason of judicial process;

(11) "Special deposit claim" means any claim secured by a deposit for the security or benefit of a limited class or classes of persons, but not including any general assets;

(12) "State" means any state of the United States, and also the District of Columbia and Puerto Rico.

(L. 1976 H.B. 1479 § 1, A.L. 1986 H.B. 1103, A.L. 1992 H.B. 1574)

Director to be receiver, when--receiver has title to what, ancillaryreceivers have title to what, filing of order impartsnotice--appointment of special deputies, compensation, payment.

375.954. 1. Whenever under the laws of this state a receiver is to be appointed in delinquency proceedings for an insurer domiciled in this state, the court shall appoint the director of the department of insurance, financial institutions and professional registration as such receiver. The court shall direct the receiver forthwith to take possession of the assets of the insurer and to administer the same under the orders of the court.

2. The domiciliary receiver and his successors in office shall be vested by operation of law with the title to all of the property, contracts, and rights of action, and all of the books and records of the insurer wherever located, as of the date of entry of the order directing possession to be taken, and he shall have the right to recover the same and reduce the same to possession; except that ancillary receivers in reciprocal states shall have, as to assets located in their respective states, the rights and powers which are hereinafter prescribed for ancillary receivers appointed in this state as to assets located in this state. The filing or recording of the order directing possession to be taken, or a certified copy thereof, in the office where instruments affecting title to property are required to be filed or recorded shall impart the same notice as would be imparted by a deed, bill of sale, or other evidence of title duly filed or recorded. The court may at any time require an additional bond from him or his deputies if deemed desirable for the protection of the assets.

3. Upon taking possession of the assets of a delinquent insurer the domiciliary receiver shall, subject to the direction of the court, immediately proceed to conduct the business of the insurer or to take such other steps as are authorized by the laws of this state for the purpose of liquidating, rehabilitating, reorganizing, or conserving the affairs of the insurer. In connection with delinquency proceedings he may appoint or employ one or more special deputies to act for him, and may employ such counsel, clerks, and assistants as he deems necessary. The compensation of the special deputies, counsel, clerks, or assistants and all expenses of taking possession of the delinquent insurer and of conducting the delinquency proceedings shall be fixed by the receiver, subject to the approval of the court, and shall be paid out of the funds or assets of the insurer in accordance with section 375.740. Within the limits of the duties imposed upon them, special deputies shall possess all the powers given to, and, in the exercise of those powers, shall be subject to all of the duties imposed upon the receiver with respect to delinquency proceedings.

(L. 1976 H.B. 1479 § 2)

Effective 6-16-76

Ancillary receiver, appointed when, entitled to what property, duties.

375.958. 1. Whenever under the laws of this state an ancillary receiver is to be appointed in delinquency proceedings for an insurer not domiciled in this state, the court shall appoint the director of the department of insurance, financial institutions and professional registration as ancillary receiver. The director shall file a petition requesting the appointment if he finds that there are sufficient assets of such insurer located in this state to justify the appointment of an ancillary receiver. Notwithstanding any other provision of the insurance laws of this state, said petition may be filed in the circuit court in the county or city in which the insurer has or last had its principal or chief office or place of business in this state or in the county of Cole.

2. The domiciliary receiver of an insurer domiciled in a reciprocal state shall be vested by operation of law with the title to all of the property, contracts, and rights of action, and all of the books and records of the insurer located in this state, and he shall have the immediate right to recover balances due from local agents and to obtain possession of any books and records of the insurer found in this state. He shall also be entitled to recover the other assets of the insurer located in this state except that upon the appointment of an ancillary receiver in this state, the ancillary receiver shall during the ancillary receivership proceedings have the sole right to recover such other assets. The ancillary receiver shall, as soon as practicable, liquidate from their respective securities those special deposit claims and secured claims which are proved and allowed in the ancillary proceedings in this state, and shall pay the necessary expenses of the proceedings. All remaining assets shall be promptly transferred to the domiciliary receiver. Subject to the foregoing provisions the ancillary receiver and his deputies shall have the same powers and be subject to the same duties with respect to the administration of such assets as a receiver of an insurer domiciled in this state.

(L. 1976 H.B. 1479 § 3)

Effective 6-16-76

Delinquency proceeding in this state, claimants to file claims, withwhom, when--controverted claims, proven where--effect of judgment inancillary state.

375.962. 1. In a delinquency proceeding begun in this state against an insurer domiciled in this state, claimants residing in reciprocal states may file claims either with the ancillary receivers, if any in their respective states, or with the domiciliary receiver. All such claims must be filed on or before the last date fixed for the filing of claims in the domiciliary delinquency proceedings.

2. Controverted claims belonging to the claimants residing in reciprocal states may either (a) be proved in this state as provided by law, or (b) if ancillary proceedings have been commenced in such reciprocal states, may be proved in those proceedings. In the event a claimant elects to prove his claim in ancillary proceedings, if notice of the claim and opportunity to appear and be heard is afforded the domiciliary receiver of this state as provided in section 375.966 with respect to ancillary proceedings in this state, the final allowance of such claim by the courts in the ancillary state shall be accepted in this state as conclusive as to its amount, and shall also be accepted as conclusive as to its priority, if any, against special deposits or other security located within the ancillary state.

(L. 1976 H.B. 1479 § 4)

Effective 6-16-76

Delinquency proceeding in another state, claimants to file claims,with whom, when--controverted claims, proven where--effect ofjudgment.

375.966. 1. In a delinquency proceeding in a reciprocal state against an insurer domiciled in that state, claimants against such insurer who reside within this state may file claims either with the ancillary receiver, if any, appointed in this state, or with the domiciliary receiver. All such claims must be filed on or before the last date fixed for the filing of claims in the domiciliary delinquency proceeding.

2. Controverted claims belonging to claimants residing in this state may either (a) be proved in the domiciliary state as provided by the law of that state, or (b) if ancillary proceedings have been commenced in this state, be proved in those proceedings. In the event that any such claimant elects to prove his claim in this state, he shall file his claim with the ancillary receiver in the manner provided by the law of this state for the proving of claims against insurers domiciled in this state, and he shall give notice in writing to the receiver in the domiciliary state, either by registered mail or by personal service. The notice shall contain a concise statement of the amount of the claim, the facts on which the claim is based, and the priorities asserted, if any. The domiciliary receiver shall be entitled to appear or to be represented in any proceeding in this state involving the adjudication of the claim. The final allowance of the claim by the courts of this state shall be accepted as conclusive as to its amount, and shall also be accepted as conclusive as to its priority, if any, against special deposits or other security located within this state.

(L. 1976 H.B. 1479 § 5)

Effective 6-16-76

Preferred claims, how determined.

375.970. 1. In a delinquency proceeding against an insurer domiciled in this state, claims owing to residents of ancillary states shall be preferred claims if like claims are preferred under the laws of this state. All such claims whether owing to residents or nonresidents shall be given equal priority of payment from general assets. No law of an ancillary state providing for preferred claims against the general assets of insurers shall be recognized as against the assets of delinquent domiciliary insurers of this state regardless of where such assets may be located.

2. In a delinquency proceeding against an insurer domiciled in a reciprocal state, claims owing to residents of this state shall be preferred if like claims are preferred by the laws of that state.

(L. 1976 H.B. 1479 § 6)

Effective 6-16-76

Definitions--federal home loan bank duties and procedures upondelinquency proceedings of insurer--member--receiver dutiesduring delinquency proceedings.

375.971. 1. As used in this section, the following terms mean:

(1) "Federal home loan bank", a federal home loan bank established under the federal Home Loan Bank Act, 12 U.S.C. Section 1421, et seq.;

(2) "Insurer-member", an insurer who is a member of a federal home loan bank.

2. Notwithstanding any other provision to the contrary, no federal home loan bank shall be stayed or prohibited from exercising its rights regarding collateral pledged by an insurer-member.

3. If a federal home loan bank exercises its rights regarding collateral pledged by an insurer-member who is subject to a delinquency proceeding, the federal home loan bank shall repurchase any outstanding capital stock that is in excess of that amount of federal home loan bank stock that the insurer-member is required to hold as a minimum investment, to the extent the federal home loan bank in good faith determines the repurchase to be permissible under applicable laws, regulations, regulatory obligations, and the federal home loan bank's capital plan, and consistent with the federal home loan bank's current capital stock practices applicable to its entire membership.

4. Following the appointment of a receiver for an insurer-member, the federal home loan bank shall, within ten business days after a request from the receiver, provide a process and establish a timeline for the following:

(1) The release of collateral that exceeds the amount required to support secured obligations remaining after any repayment of loans as determined in accordance with the applicable agreements between the federal home loan bank and the insurer-member;

(2) The release of any of the insurer-member's collateral remaining in the federal home loan bank's possession following repayment of all outstanding secured obligations of the insurer-member in full;

(3) The payment of fees owed by the insurer-member and the operation of deposits and other accounts of the insurer-member with the federal home loan bank; and

(4) The possible redemption or repurchase of federal home loan bank stock or excess stock of any class that an insurer-member is required to own.

5. Upon request from a receiver, the federal home loan bank shall provide any available options for an insurer-member subject to a delinquency proceeding to renew or restructure a loan to defer associated prepayment fees, subject to market conditions, the terms of any loans outstanding to the insurer-member, the applicable policies of the federal home loan bank, and the federal home loan bank's compliance with federal laws and regulations.

6. Notwithstanding any other provision of law to the contrary, the receiver for an insurer-member shall not void any transfer of, or any obligation to transfer, money or any other property arising under or in connection with any federal home loan bank security agreement, or any pledge, security, collateral, or guarantee agreement, or any other similar arrangement or credit enhancement relating to a federal home loan bank security agreement made in the ordinary course of business and in compliance with the applicable federal home loan bank agreement. However, a transfer may be avoided under this subsection if the transfer was made with intent to hinder, delay, or defraud the insurer-member, the receiver for the insurer-member, or existing or future creditors. This subsection shall not affect a receiver's rights regarding advances to an insurer-member in delinquency proceedings under 12 CFR Part 1266.4.

(L. 2016 S.B. 932)

Owners of special deposit claims, priority.

375.974. The owners of special deposit claims against an insurer for which a receiver is appointed in this or any other state shall be given priority against their several special deposits. If there is a deficiency in any such deposit so that the claims secured thereby are not fully discharged therefrom, the claimants may share in the general assets, but such sharing shall be deferred until general creditors, and also claimants against other special deposits who have received smaller percentages from their respective special deposits, have been paid percentages of their claims equal to the percentage paid from the special deposit.

(L. 1976 H.B. 1479 § 7)

Effective 6-16-76

Secured claim, may file as general creditor, may resort to security,deficiency treated, how.

375.978. The owner of a secured claim against an insurer for which a receiver has been appointed in this or any other state may surrender his security and file his claim as a general creditor, or the claim may be discharged by resort to the security, in which case the deficiency, if any, shall be treated as a claim against the general assets of the insurer on the same basis as claims of unsecured creditors. The amount of such delinquency shall be ascertained and determined in the delinquency proceeding in the domiciliary state of such insurer.

(L. 1976 H.B. 1479 § 8)

Effective 6-16-76

Limitation on bringing proceedings, certain liens void.

375.982. During the pendency of delinquency proceedings in this or any reciprocal state no action or proceeding in the nature of an attachment, garnishment, or execution shall be commenced or maintained in the courts of this state against the delinquent insurer or its assets. Any lien obtained by any such action or proceeding within four months prior to the commencement of any such delinquency proceeding or at any time thereafter shall be void as against any rights arising in such delinquency proceeding.

(L. 1976 H.B. 1479 § 9)

Effective 6-16-76

Receiver in reciprocal state may sue.

375.986. The domiciliary receiver of an insurer domiciled in a reciprocal state may sue in this state to recover any assets of such insurer to which he may be entitled under the laws of this state.

(L. 1976 H.B. 1479 § 10)

Effective 6-16-76

Severability clause--interpretation of sections 375.950 to 375.990.

375.990. 1. If any provision of sections 375.950 to 375.990 or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of sections 375.950 to 375.990 which can be given effect without the invalid provision or application, and to this end the provisions of sections 375.950 to 375.990 are declared to be severable.

2. Sections 375.950 to 375.990 shall be so interpreted and construed as to effectuate its general purpose to make uniform the law of those states that enact it.

(L. 1976 H.B. 1479 § 11, A.L. 1992 H.B. 1574)

Fraudulent insurance act, committed,when--powers and duties of department--penalties.

375.991. 1. As used in sections 375.991 to 375.994, the term "statement" means any communication, notice statement, proof of loss, bill of lading, receipt for payment, invoice, account, estimate of damages, bills for services, diagnosis, prescription, hospital or doctor records, x-rays, test results or other evidence of loss, injury or expense.

2. For the purposes of sections 375.991 to 375.994, a person commits a "fraudulent insurance act" if such person knowingly presents, causes to be presented, or prepares with knowledge or belief that it will be presented, to or by an insurer, purported insurer, broker, or any agent thereof, any oral or written statement including computer generated documents as part of, or in support of, an application for the issuance of, or the rating of, an insurance policy for commercial or personal insurance, or a claim for payment or other benefit pursuant to an insurance policy for commercial or personal insurance, which such person knows to contain materially false information concerning any fact material thereto or if such person conceals, for the purpose of misleading another, information concerning any fact material thereto.

3. A "fraudulent insurance act" shall also include but not be limited to knowingly filing false insurance claims with an insurer, health services corporation, or health maintenance organization by engaging in any one or more of the following false billing practices:

(1) "Unbundling", an insurance claim by claiming a number of medical procedures were performed instead of a single comprehensive procedure;

(2) "Upcoding", an insurance claim by claiming that a more serious or extensive procedure was performed than was actually performed;

(3) "Exploding", an insurance claim by claiming a series of tests was performed on a single sample of blood, urine, or other bodily fluid, when actually the series of tests was part of one battery of tests; or

(4) "Duplicating", a medical, hospital or rehabilitative insurance claim made by a health care provider by resubmitting the claim through another health care provider in which the original health care provider has an ownership interest.

Nothing in sections 375.991 to 375.994 shall prohibit providers from making good faith efforts to ensure that claims for reimbursement are coded to reflect the proper diagnosis and treatment.

4. If, by its own inquiries or as a result of complaints, the department of insurance, financial institutions and professional registration has reason to believe that a person has engaged in, or is engaging in, any fraudulent insurance act or has violated any provision of chapters 375 to 385, it may administer oaths and affirmations, serve subpoenas ordering the attendance of witnesses or proffering of matter, and collect evidence. The director may refer such evidence as is available concerning violations of this chapter to the proper prosecuting attorney or circuit attorney who may, with or without such reference, initiate the appropriate criminal proceedings.

5. If the matter that the department of insurance, financial institutions and professional registration seeks to obtain by request is located outside the state, the person so requested may make it available to the department or its representative to examine the matter at the place where it is located. The department may designate representatives, including officials of the state in which the matter is located, to inspect the matter on its behalf, and it may respond to similar requests from officials of other states.

6. A fraudulent insurance act for a first offense is a class E felony. Any person who is found guilty of a fraudulent insurance act who has previously been found guilty of a fraudulent insurance act shall be guilty of a class D felony.

7. Any person who pleads guilty or is found guilty of a fraudulent insurance act shall be ordered by the court to make restitution to any person or insurer for any financial loss sustained as a result of such violation. The court shall determine the extent and method of restitution.

8. Nothing in this section shall limit the power of the state to punish any person for any conduct that constitutes a crime by any other state statute.

(L. 1990 H.B. 1739 § 3 subsecs. 1, 2, 3, A.L. 1992 S.B. 796, A.L. 1994 S.B. 732, A.L. 2005 H.B. 866, A.L. 2014 S.B. 491)

Effective 1-01-17

Fraudulent claims for benefits--form--notice to department,when--procedure.

375.992. Any company which believes that a fraudulent claim is being made shall, within sixty days of the receipt of such notice, send to the department of insurance, financial institutions and professional registration, on a form prescribed by the department, the information requested and such additional information relative to the claim and the parties claiming loss or damages because of the accident as the department may require. The department of insurance, financial institutions and professional registration shall review such reports and select such claims as, in its judgment, may require further investigation. It shall then cause an independent examination of the facts surrounding such claim to be made to determine the extent, if any, to which fraud, deceit, or intentional misrepresentation of any kind exists in the submission of the claim. The department of insurance, financial institutions and professional registration shall report any alleged violations of law which its investigations disclose to the appropriate licensing agency and prosecutive authority having jurisdiction with respect to any such violation.

(L. 1990 H.B. 1739 § 3 subsec. 4)

Department's papers, report, evidence not subject to public inspectionor subpoena if part of investigation, release, when--no civilliability for filing reports or furnishing information.

375.993. 1. The department's papers, documents, reports, or evidence relative to the subject of an investigation under this section shall not be subject to public inspection for so long as the department deems reasonably necessary to complete the investigation and any subsequent legal action. Further, such papers, documents, reports, or evidence relative to the subject of an investigation under sections 375.991 to 375.994 shall not be subject to subpoena until opened for public inspection by the department, unless the department consents, or until, after notice to the department and a hearing, the court determines the department would not be unnecessarily hindered by such subpoena. Department investigators shall not be subject to subpoena in civil actions by any court of this state to testify concerning any matter of which they have knowledge pursuant to a pending insurance fraud investigation by the department.

2. No insurer, employees or agents of any insurer, or any other person acting without malice, shall be subject to civil liability of any kind, including for libel and slander by virtue of the filing of reports or furnishing other information required by sections 375.991 to 375.994 or required by the department of insurance, financial institutions and professional registration as a result of the authority granted in sections 375.991 to 375.994. In addition, except when a person knowingly and intentionally communicates false information, no civil cause of action of any nature may arise against such person for any of the following:

(1) Any information relating to suspected or anticipated fraudulent insurance acts furnished to or received from law enforcement officials, their agents, and employees;

(2) Any information relating to suspected or anticipated fraudulent insurance acts furnished to or received from other persons subject to the provisions of sections 375.991 to 375.994 and this section;

(3) Any information relating to suspected or anticipated fraudulent insurance acts furnished in reports to a federal or state governmental agency or office, the National Association of Insurance Commissioners, the National Insurance Crime Bureau, or any other organization established to detect and prevent fraudulent insurance acts, or to their agents, employees, or designees, or a recognized comprehensive database system recognized by the department. Nothing herein is intended to abrogate or modify in any way any common law or statutory privilege or immunity heretofore enjoyed by any person.

(L. 1990 H.B. 1739 § 3 subsecs. 5, 6, A.L. 2012 H.B. 1495)

Investigators to have power of subpoena--moneys, costs or fines to bedeposited in insurance dedicated fund--powers of director forviolations, penalties.

375.994. 1. Department investigators shall have the power to serve subpoenas issued for the examination, investigation, and trial of all offenses determined by their investigations.

2. It is unlawful for any person to interfere, either by abetting or assisting such resistance or otherwise interfering, with department investigators in the duties imposed upon them by law or department rule.

3. Any moneys, or other property which is awarded to the department as costs of investigation, or as a fine, shall be credited to the insurance dedicated fund created by section 374.150.

4. If the director determines that a person has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of section 375.991 or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business constituting a violation of section 375.991 or a rule adopted or order issued pursuant thereto, the director may issue such administrative orders as authorized under section 374.046. A violation of any of these sections is a level two violation under section 374.049. The director may also suspend or revoke the license or certificate of authority of such person for any willful violation.

5. If the director believes that a person has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of section 375.991 or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business constituting a violation of section 375.991 or a rule adopted or order issued pursuant thereto, the director may maintain a civil action for relief authorized under section 374.048. A violation of any of these sections is a level two violation under section 374.049.

6. Nothing in this section shall be construed as prohibiting the department of insurance, financial institutions and professional registration from regulating unfair or fraudulent trade practices as provided for in sections 375.930 to 375.948.

7. If the director determines that a person regulated under this chapter has conducted its business fraudulently with respect to sections 375.991 to 375.994, or has as a matter of business practice abused its rights under said sections, such conduct shall constitute either an unfair trade practice under the provisions of sections 375.930 to 375.948 or an unfair claims settlement practice under the provisions of sections 375.1000 to 375.1018.

(L. 1990 H.B. 1739 § 3 subsecs. 7 to 11, A.L. 1993 H.B. 709, A.L. 2007 S.B. 66)

Sex or marital status discrimination as to benefits or coverageprohibited.

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

(1) "Contract", any insurance policy, plan, or binder, including any rider or endorsement thereto, offered by an insurer;

(2) "Insurer", any insurance company, association, reciprocal or interinsurance exchange, not-for-profit hospital plan, not-for-profit professional health service plan, health maintenance organization, fraternal benefit society, beneficial association, or health services corporation, as defined in section 354.010.

2. The purpose of this section is to eliminate the act of denying insurance benefits or coverage on the sole basis of sex or marital status in any terms or conditions of insurance contracts and in the underwriting criteria of insurance carriers.

3. This section shall apply to all contracts delivered or issued for delivery in this state by an insurer on or after October 1, 1986, and to all existing group contracts which are amended on or after October 1, 1986.

4. The availability of any insurance contract shall not be denied to any insured or prospective insured on the sole basis of the sex or marital status of such insured or prospective insured. Neither the amount of benefits payable under a contract, nor any term, condition, or type of coverage within a contract, shall be restricted, modified, excluded, or reduced solely on the basis of the sex or marital status of the insured or prospective insured except to the extent such restriction, modification, exclusion, or reduction is a result of the application of rate differentials permitted under the insurance laws of this state. Nothing in this section shall prohibit an insurer from taking the marital status of an insured or prospective insured into account for the purpose of defining persons eligible for dependents' benefits. Specific examples of practices prohibited by this section include, but are not limited to, the following:

(1) Denying coverage to females gainfully employed at home, employed part time or employed by relatives when such coverage is offered to males similarly employed;

(2) Denying policy riders to females when such riders are available to males;

(3) Denying maternity benefits to insureds or prospective insureds purchasing an individual contract when comparable family coverage contracts offer maternity benefits;

(4) Denying, under group contracts, dependent coverage to husbands of female employees, when dependent coverage is available to wives of male employees;

(5) Denying disability income contracts to employed women when such coverage is offered to men similarly employed;

(6) Treating complications of pregnancy differently from any other illness or sickness under the contract;

(7) Restricting, reducing, modifying, or excluding benefits relating to coverage involving the genital organs of only one sex;

(8) Offering lower maximum monthly benefits to women than to men who are in the same classification under a disability income contract;

(9) Offering more restrictive benefit periods and more restrictive definitions of disability to women than to men in the same classifications under a disability income contract;

(10) Establishing different conditions by sex under which the policyholder may exercise benefit options contained in the contract;

(11) Limiting the amount of coverage an insured or prospective insured may purchase based upon the insured's or prospective insured's marital status unless such limitation is for the purpose of defining persons eligible for dependents' benefits.

(L. 1985 H.B. 527 § 1)

Effective 10-1-86

Citation--purpose--construction.

375.1000. 1. Sections 375.1000 to 375.1018 may be cited as the "Unfair Claims Settlement Practices Act".

2. The purpose of sections 375.1000 to 375.1018 is to set forth standards for the investigation and disposition of claims arising under contracts or certificates of insurance. It is not intended to cover claims involving workers' compensation, fidelity, suretyship or boiler and machinery insurance. Nothing in sections 375.1000 to 375.1018 shall be construed to create or imply a private cause of action for violation of sections 375.1000 to 375.1018.

(L. 1991 S.B. 53 §§ 1, 2)

Definitions.

375.1002. As used in sections 375.1000 to 375.1018, the following terms mean:

(1) "Director", the director of the department of insurance, financial institutions and professional registration;

(2) "Insurer", any person, reciprocal exchange, interinsurer, Lloyds insurer, fraternal benefit society, and any other legal entity engaged in the business of insurance, including agents, brokers, adjusters, public adjuster and third party administrators. "Insurer" shall also mean health services corporations, health maintenance organizations, prepaid limited health care service plans, dental, optometric and other similar health service plans. For the purposes of sections 375.1000 to 375.1018, these foregoing entities shall be deemed to be engaged in the business of insurance. "Insurer" shall also include all companies organized, incorporated or doing business under the provisions of chapters 325, 375, 376, 377, 378, 379, 381 and 383;

(3) "Person", any natural or artificial entity, or aggregate of such entities, including, but not limited to, individuals, partnerships, associations, trusts or corporations;

(4) "Policy", "certificate" or "contract" includes any contract of insurance, indemnity, medical, health or hospital service, suretyship, or annuity issued, proposed for issuance, or intended for issuance by any insurer. "Policy" or "certificate", for the purposes of sections 375.1000 to 375.1018, shall not mean contracts of workers' compensation, fidelity, suretyship or boiler and machinery insurance. This definition shall include all entities and activities to the extent not preempted by the federal Employees' Retirement Income Security Act.

(L. 1991 S.B. 53 § 3)

Improper claims practice, conditions.

375.1005. It is an improper claims practice for any domestic, foreign or alien insurer transacting business in this state to commit any of the acts defined in section 375.1007 if:

(1) It is committed in conscious disregard of sections 375.1000 to 375.1018 or any rules promulgated under sections 375.1000 to 375.1018; or

(2) It has been committed with such frequency to indicate a general business practice to engage in that type of conduct.

(L. 1991 S.B. 53 § 4)

Improper claims practices.

375.1007. Any of the following acts by an insurer, if committed in violation of section 375.1005, constitutes an improper claims practice:

(1) Misrepresenting to claimants and insureds relevant facts or policy provisions relating to coverages at issue;

(2) Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its policies;

(3) Failing to adopt and implement reasonable standards for the prompt investigation and settlement of claims arising under its policies;

(4) Not attempting in good faith to effectuate prompt, fair and equitable settlement of claims submitted in which liability has become reasonably clear;

(5) Compelling insureds or beneficiaries to institute suits to recover amounts due under its policies by offering substantially less than the amounts ultimately recovered in suits brought by them;

(6) Refusing to pay claims without conducting a reasonable investigation;

(7) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed and communicated to the insurer;

(8) Attempting to settle a claim for less than the amount to which a reasonable person would believe the insured or beneficiary was entitled by reference to written or printed advertising material accompanying or made part of an application;

(9) Attempting to settle claims on the basis of an application which was materially altered without notice to, or knowledge or consent of, the insured;

(10) Making a claims payment to an insured or beneficiary without indicating the coverage under which each payment is being made;

(11) Unreasonably delaying the investigation or payment of claims by requiring both a formal proof of loss form and subsequent verification that would result in duplication of information and verification appearing in the formal proof of loss form;

(12) Failing in the case of claims denial or offers of a compromise settlement to promptly provide a reasonable and accurate explanation of the basis for such actions;

(13) Failing to provide forms necessary to present claims within fifteen calendar days of a request with reasonable explanations regarding their use;

(14) Failing to adopt and implement reasonable standards to assure that the repairs of a repairer owned by or required to be used by the insurer are performed in a workmanlike manner;

(15) Failing to promptly settle claims where liability has become reasonably clear under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.

(L. 1991 S.B. 53 § 5, A.L. 1993 H.B. 709)

Director may investigate.

375.1009. The director may examine and investigate into the affairs of every insurer in this state in order to determine whether such insurer has been or is engaged in any improper claims practice prohibited by sections 375.1005 and 375.1007.

(L. 1991 S.B. 53 § 6)

Director may initiate proceedings.

375.1010. 1. If the director determines that a person has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of sections 375.1000 to 375.1018 or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business constituting a violation of sections 375.1000 to 375.1018 or a rule adopted or order issued pursuant thereto, the director may issue such administrative orders as authorized under section 374.046. Each practice in violation of section 375.1005 is a level two violation under section 374.049. Each act as part of a claims settlement practice does not constitute a separate violation under section 374.049. The director may also suspend or revoke the license or certificate of authority of an insurer for any willful violation.

2. If the director believes that an insurer has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of sections 375.1000 to 375.1018 or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business constituting a violation of sections 375.1000 to 375.1018 or a rule adopted or order issued pursuant thereto, the director may maintain a civil action for relief authorized under section 374.048. Each practice in violation of section 375.1005 is a level two violation under section 374.049. Each act as part of a claims settlement practice does not constitute a separate violation under section 374.049.

(L. 1991 S.B. 53 § 7, A.L. 2007 S.B. 66)

Director's findings--cease and desist orders--penalty, suspension,revocation--appeal.

375.1012. 1. If, after such hearing, the director determines that the insurer charged had engaged in an improper claims practice prohibited by sections 375.1000 to 375.1018, he shall reduce his findings to writing and shall issue and cause to be served upon the person charged with the violation a copy of such findings and an order requiring such person to cease and desist from engaging in such improper claims practice, and thereafter the director may, at his discretion order one or more of the following:

(1) Payment of a monetary penalty of not more than one thousand dollars for each violation but not to exceed an aggregate penalty of one hundred thousand dollars in any twelve-month period unless the violation was committed flagrantly and in conscious disregard of sections 375.1000 to 375.1018, in which case the penalty shall be not more than twenty-five thousand dollars for each violation but not to exceed an aggregate penalty of two hundred fifty thousand dollars in any twelve-month period;

(2) Suspension or revocation of the insurer's license if such insurer knew or reasonably should have known it was in violation of sections 375.1000 to 375.1018.

2. Until the expiration of the time allowed under section 375.1016 for filing a petition for judicial review, if no such petition has been duly filed within such time, or if a petition for review has been filed within such time, then until the transcript of the record in the proceeding has been filed in the circuit court of Cole County, the director may at any time, upon such notice and in such manner as he shall deem proper, modify or set aside in whole or in part any order issued by him under this section.

3. After the expiration of the time allowed for filing such a petition for review, if no such petition has been duly filed within such time, the director may at any time, after notice and opportunity for hearing, reopen and alter, modify or set aside, in whole or in part, any order issued by him under this section, whenever in his opinion conditions of fact or of law have so changed as to require such action or if the public interest shall so require.

4. Nothing contained in sections 375.1000 to 375.1018 shall be construed to prohibit the director and the person from agreeing to a voluntary forfeiture with or without proceedings being instituted.

(L. 1991 S.B. 53 § 8)

Judicial review.

375.1014. 1. A final order issued by the director under sections 375.1000 to 375.1018 is subject to judicial review in accordance with the provisions of chapter 536 in the circuit court of Cole County.

2. No order of the director under section 375.942 or order of a court to enforce the same shall in any way relieve or absolve any person affected by such order from any liability under any other laws of this state.

(L. 1991 S.B. 53 § 9, A.L. 2007 S.B. 66)

Violation of cease and desist order.

375.1016. It is unlawful for any person to violate any provision of a cease and desist order of the director under section 375.1012, and the director may institute an action under sections 374.046 and 374.047 as necessary to enforce any such order.

(L. 1991 S.B. 53 § 10, A.L. 2007 S.B. 66)

Director's powers additional to others--rules and regulations.

375.1018. 1. The powers vested in the director by sections 375.1000 to 375.1018 shall be additional to any other powers to enforce any penalties, fines or forfeitures authorized by law with respect to the methods, acts and practices hereby declared to be improper.

2. The director may, after notice and hearing, promulgate reasonable rules, regulations and orders as are necessary or proper to carry out and effectuate the provisions of sections 375.1000 to 375.1018.

(L. 1991 S.B. 53 § 11)

Definitions.

375.1025. As used in sections 375.1025 to 375.1062, the following terms shall mean:

(1) "Accountant" or "independent certified public accountant", an independent certified public accountant or accounting firm in good standing with the American Institute of Certified Public Accountants and in all states in which they are licensed to practice. For Canadian and British companies, it means a Canadian-chartered or British-chartered accountant;

(2) "Affiliate" or "affiliated", a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified;

(3) "AICPA", the American Institute of Certified Public Accountants;

(4) "Audit committee", a committee (or equivalent body) established by the board of directors of an entity for the purpose of overseeing the accounting and financial reporting processes of an insurer or group of insurers, and audits of financial statements of the insurer or group of insurers. The audit committee of any entity that controls a group of insurers may be deemed to be the audit committee for one or more of such controlled insurers solely for the purposes of sections 375.1025 to 375.1062 at the election of the controlling person. Such election shall be exercised under subsection 5 of section 375.1053. If an audit committee is not designated by the insurer, the insurer's entire board of directors shall constitute the audit committee;

(5) "Audited financial report", includes those items specified in section 375.1032;

(6) "Department", the department of insurance, financial institutions and professional registration;

(7) "Director", the director of the department of insurance, financial institutions and professional registration;

(8) "Group of insurers", those licensed insurers included in the reporting requirements of sections 382.010 to 382.300, or a set of insurers as identified by management, for the purpose of assessing the effectiveness of internal control over financial reporting;

(9) "Indemnification", an agreement of indemnity or a release from liability where the intent or effect is to shift or limit in any manner the potential liability of the person or firm for failure to adhere to applicable auditing or professional standards, whether or not resulting in part from knowing of other misrepresentations made by the insurer or its representatives;

(10) "Independent board member", the same meaning as described in subsection 3 of section 375.1053;

(11) "Insurer", an insurer certified to do business in this state pursuant to section 375.161 or 375.831, and to companies authorized to transact business in this state pursuant to chapters 354, 376, 377, 378, 379 and 381;

(12) "Internal control over financial reporting", a process effected by an entity's board of directors, management and other personnel designed to provide reasonable assurance regarding the reliability of the financial statements, i.e., those items specified in subsections 2 to 7 of section 375.1032 and includes those policies and procedures that:

(a) Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets;

(b) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements, i.e., those items specified in subsections 2 to 7 of section 375.1032, and that receipts and expenditures are being made only in accordance with authorizations of management and directors; and

(c) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements, i.e., those items specified in subsections 2 to 7 of section 375.1032;

(13) "NAIC", the National Association of Insurance Commissioners;

(14) "SEC", the United States Securities and Exchange Commission;

(15) "Section 404", Section 404 of the Sarbanes-Oxley Act of 2002, as amended, and the SEC's rules and regulations promulgated thereunder;

(16) "Section 404 report", management's report on internal control over financial reporting, as defined by the SEC and the related attestation report of the independent certified public accountant as described in subsection 1 of section 375.1030;

(17) "SOX compliant entity", an entity that either is required to be or voluntarily is compliant with all of the following provisions of the Sarbanes-Oxley Act of 2002, as amended:

(a) The preapproval requirements of Section 201 (Section 10A(i) of the federal Securities Exchange Act of 1934);

(b) The audit committee independence requirements of Section 301 (Section 10A(m)(3) of the federal Securities Exchange Act of 1934); and

(c) The internal control over financial reporting requirements of Section 404.

(L. 1991 H.B. 385, et al. § 2, A.L. 2009 H.B. 577)

Applicability--exemptions.

375.1028. 1. Sections 375.1025 to 375.1062 shall apply to all insurers as defined by section 375.1025. Insurers having direct premiums written in this state of less than one million dollars in any calendar year and less than one thousand policyholders or certificate holders of direct written policies nationwide at the end of the calendar year shall be exempt from sections 375.1025 to 375.1062, unless the director makes a specific finding that compliance is necessary for the director to carry out statutory responsibilities; except that, insurers having assumed premiums under contracts or treaties of reinsurance of one million dollars or more shall not be so exempt.

2. Foreign or alien insurers filing audited financial reports in another state, pursuant to such other state's requirement for filing of audited financial reports which have been found by the director to be substantially similar to the requirements herein, are exempt from sections 375.1030 to 375.1050 if:

(1) A copy of the audited financial report, communication of internal control-related matters noted in an audit, and the accountant's letter of qualifications that are filed with such other state are filed with the director in accordance with the filing dates specified in sections 375.1030, 375.1047, and 375.1040, respectively. Canadian insurers may submit accountant's reports as filed with the Office of the Superintendent of Financial Institutions, Canada; and

(2) A copy of any notification of adverse financial condition report filed with such other state is filed with the director within the time specified in section 375.1045.

3. Foreign or alien insurers required to file management's report of internal control over financial reporting in another state are exempt from filing such report in this state, provided such other state has substantially similar reporting requirements and such report is filed with such other state's chief insurance regulatory official within the time specified.

4. Sections 375.1025 to 375.1062 shall not prohibit, preclude or in any way limit the director from ordering, conducting, or performing examinations of insurers under any other applicable law.

(L. 1991 H.B. 385, et al. § 3, A.L. 1992 H.B. 1574, A.L. 2009 H.B. 577)

Annual audit required, report filed, when--extensions granted,when--audit committee required, when.

375.1030. 1. All insurers shall have an annual audit by an independent certified public accountant and shall file an audited financial report with the director on or before June first for the year ended December thirty-first immediately preceding. The director may require an insurer to file an audited financial report earlier than June first with ninety days' advance notice to the insurer.

2. Extensions of the June first filing date may be granted by the director for thirty-day periods upon a showing by the insurer and its independent certified public accountant of the reasons for requesting such extension and determination by the director of good cause for an extension. The request for extension must be submitted in writing not less than ten days prior to the due date in sufficient detail to permit the director to make an informed decision with respect to the requested extension.

3. If an extension is granted in accordance with the provisions of subsection 2 of this section, a similar extension of thirty days is granted to the filing of management's report of internal control over financial reporting.

4. Every insurer required to file an annual audited financial report under sections 375.1025 to 375.1062 shall designate a group of individuals as constituting its audit committee, as defined in section 375.1025. The audit committee of an entity that controls an insurer may be deemed to be the insurer's audit committee for purposes of sections 375.1025 to 375.1062 at the election of the controlling person.

(L. 1991 H.B. 385, et al. § 4, A.L. 1992 H.B. 1574, A.L. 1993 H.B. 709, A.L. 2009 H.B. 577)

Audited financial report, contents--form.

375.1032. 1. The annual audited financial report shall report the financial condition of the insurer as of the end of the most recent calendar year and the results of its operation, cash flows and changes in capital and surplus for the previous year ended in conformity with accounting practices prescribed, or otherwise permitted, by law or rule of the department of insurance of the state of domicile of the insurer.

2. The annual audited financial report shall include the following:

(1) Report of independent certified public accountant;

(2) Balance sheet reporting admitted assets, liabilities, capital and surplus;

(3) Statement of operations;

(4) Statement of cash flow;

(5) Statement of changes in capital and surplus;

(6) Notes to financial statements. These notes shall be those required by the appropriate National Association of Insurance Commissioners' Annual Statement Instructions and* the NAIC's Accounting Practices and Procedures Manual as adopted by the director and shall include a reconciliation of differences, if any, between the audited statutory financial statements and the annual statement filed pursuant to section 375.041 and section 354.105, 354.435, 376.350, 377.100, 377.380, 378.350, 379.105, 380.051 or 380.482, with a written description of the nature of these differences.

3. The financial statements included in the audited financial report shall be prepared in a form and using language and groupings substantially the same as the relevant sections of the annual statement of the insurer filed with the director, and the financial statement shall be comparative, presenting the amounts as of December thirty-first of the current year and the amounts as of the immediately preceding December thirty-first. However, in the first year in which an insurer is required to file an audited financial report, the comparative data may be omitted.

(L. 1991 H.B. 385, et al. § 5, A.L. 1992 H.B. 1574, A.L. 2009 H.B. 577)

*Word "and" does not appear in original rolls.

Accountant, name and address to be registered--letter, filed withdirector, contents--change of accountant, notice to director.

375.1035. 1. Each insurer required by sections 375.1025 to 375.1062 to file an annual audited financial report shall, within sixty days after becoming subject to such requirement, register with the director in writing the name and address of its independent certified public accountant or accounting firm retained to conduct the annual audit set forth in sections 375.1025 to 375.1062. Any insurer not retaining an independent certified public accountant on the effective date of sections 375.1025 to 375.1062 shall register the name and address of its retained independent certified public accountant not less than six months before the date when the first audited financial report is to be filed.

2. The insurer shall obtain a letter from such accountant, and file a copy with the director stating that the accountant is aware of the provisions of the insurance laws and the rules and regulations of the department of insurance of the state of domicile that relate to accounting and financial matters and affirming that the accountant will express his or her opinion on the financial statements in terms of their conformity to the statutory accounting practices prescribed or otherwise permitted by that department of insurance, specifying such exceptions as he or she may believe appropriate.

3. If an accountant who was the accountant for the immediately preceding filed audited financial report is dismissed or resigns, the insurer shall within five business days notify the director of this event. The insurer shall also furnish the director with a separate letter within ten business days of the notification stating whether in the twenty-four months preceding such event there were any disagreements with the former accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of the former accountant, would have caused him or her to make reference to the subject matter of the disagreement in connection with his or her opinion. Disagreements required to be reported by this section include both disagreements resolved to the former accountant's satisfaction, and disagreements not resolved to the former accountant's satisfaction. Disagreements contemplated by this section are those that occur at the decision-making level, between personnel of the insurer responsible for the presentation of its financial statements and personnel of the accounting firm responsible for rendering its report. The insurer shall also in writing request such former accountant to furnish a letter addressed to the insurer stating whether the accountant agrees with the statements contained in the insurer's letter and, if not, stating the reasons for which he does not agree, and the insurer shall furnish such responsive letter from the former accountant to the director together with its own.

(L. 1991 H.B. 385, et al. § 6, A.L. 1993 H.B. 709, A.L. 2009 H.B. 577)

Qualifications of accountant--limitation of number of years,when--approval by director--dispute resolution--accountant notrecognized, when--exemption, when--preapproval for nonauditservices performed, when.

375.1037. 1. The director shall not recognize any person or firm as a qualified independent certified public accountant if such person or firm:

(1) Is not in good standing with the American Institute of Certified Public Accountants and in all states in which the accountant is licensed to practice, or, for a Canadian or British company, that is not a chartered accountant;

(2) Has either directly or indirectly entered into an indemnification with respect to the audit of the insurer.

2. Except as otherwise provided in sections 375.1025 to 375.1062, the director shall recognize an independent certified public accountant as qualified as long as he or she conforms to the standards of his or her profession, as contained in the code of professional ethics of the American Institute of Certified Public Accountants and rules and regulations and code of ethics and rules of professional conduct of the Missouri state board of accountancy, or similar code.

3. The lead or coordinating audit partner or person having primary responsibility for the audit shall not act in that capacity for more than five consecutive years. Such partner or person shall be disqualified from acting in that or a similar capacity for the same company or its insurance subsidiaries or affiliates for a period of five years. An insurer may make application to the director for relief from the above rotation requirement on the basis of unusual circumstances. Such application shall be made at least thirty days before the end of the calendar year. The insurer shall file, with its annual statement filing, the approval, if any, for relief from this subsection with the states that it is licensed in or doing business in and with the NAIC. If the nondomestic state accepts electronic filing with the NAIC, the insurer shall file the approval in an electronic format acceptable to the NAIC. The director may consider the following factors in determining if the relief should be granted:

(1) Number of partners, expertise of the partners or the number of insurance clients in the currently registered firm;

(2) Premium volume of the insurer; or

(3) Number of jurisdictions in which the insurer transacts business.

4. The director shall neither recognize as a qualified independent certified public accountant, nor accept any annual audited financial report, prepared in whole or in part by any natural person who:

(1) Has been convicted of fraud, bribery, a violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. Sections 1961 to 1968, or any dishonest conduct or practices under federal law or the laws of any state;

(2) Has been found to have violated the laws of this state with respect to any previous audited financial report submitted pursuant to sections 375.1025 to 375.1062; or

(3) Has demonstrated a pattern or practice of failing to detect or disclose material information in previous reports filed under the provisions of sections 375.1025 to 375.1062.

5. The director may hold a hearing under sections 536.100 to 536.140 to determine whether an independent certified public accountant is qualified and, considering the evidence presented, may rule that the accountant is not qualified for purposes of expressing his or her opinion on the financial statements in the annual audited financial report made pursuant to sections 375.1025 to 375.1062 and require the insurer to replace the accountant with another whose relationship with the insurer is qualified within the meaning of sections 375.1025 to 375.1062.

6. A qualified independent certified public accountant may enter into an agreement with an insurer to have disputes relating to an audit resolved by mediation or arbitration. However, in the event of a delinquency proceeding commenced against the insurer under sections 375.570 to 375.750, the mediation or arbitration provisions shall operate at the option of the statutory successor.

7. The director shall not recognize as a qualified independent certified public accountant, nor accept an annual audited financial report, prepared in whole or in part by an accountant who functions in the role of management, audits his or her own work, or serves in an advocacy role for the insurer. Without limiting the foregoing, the director shall not recognize as a qualified independent certified public accountant, nor accept an annual audited financial report, prepared in whole or in part by an accountant who provides to an insurer, contemporaneously with the audit, the following nonaudit services:

(1) Bookkeeping or other services related to the accounting records or financial statements of the insurer;

(2) Financial information systems design and implementation;

(3) Appraisal or valuation services, fairness opinions, or contribution-in-kind reports;

(4) Actuarially oriented advisory services involving the determination of amounts recorded in the financial statements. The accountant may assist an insurer in understanding the methods, assumptions, and inputs used in the determination of amounts recorded in the financial statement only if it is reasonable to conclude that the services provided will not be subject to audit procedures during an audit of the insurer's financial statements. An accountant's actuary may also issue an actuarial opinion or certification (opinion) on an insurer's reserves if the following conditions have been met:

(a) Neither the accountant nor the accountant's actuary has performed any management functions or made any management decisions;

(b) The insurer has competent personnel (or engages a third-party actuary) to estimate the reserves for which management takes responsibility; and

(c) The accountant's actuary tests the reasonableness of the reserves after the insurer's management has determined the amount of the reserves;

(5) Internal audit outsourcing services;

(6) Management functions or human resources;

(7) Broker or dealer, investment advisor*, or investment banking services;

(8) Legal services or expert services unrelated to the audit; or

(9) Any other services that the director determines, by rule, are impermissible.

8. Insurers having direct written and assumed premiums of less than one hundred million dollars in any calendar year may request an exemption from subsection 7 of this section. The insurer shall file with the director a written statement discussing the reasons why the insurer should be exempt from these provisions. If the director finds, upon review of this statement, that compliance with this requirement would constitute a financial or organizational hardship upon the insurer, an exemption may be granted.

9. A qualified independent certified public accountant who performs the audit may engage in other nonaudit services, including tax services, that are not described in and do not conflict with subsection 7 of this section, only if the activity is approved in advance by the audit committee, in accordance with subsection 10 of this section.

10. All auditing services and nonaudit services provided to an insurer by the qualified independent certified public accountant of the insurer shall be preapproved by the audit committee. The preapproval requirement is waived with respect to nonaudit services if the insurer is a SOX compliant entity or a direct or indirect wholly owned subsidiary of a SOX compliant entity or:

(1) The aggregate amount of all such nonaudit services provided to the insurer constitutes not more than five percent of the total amount of fees paid by the insurer to its qualified independent certified public accountant during the fiscal year in which the nonaudit services are provided;

(2) The services were not recognized by the insurer at the time of the engagement to be nonaudit services; and

(3) The services are promptly brought to the attention of the audit committee and approved prior to the completion of the audit by the audit committee or by one or more members of the audit committee who are the members of the board of directors to whom authority to grant such approvals has been delegated by the audit committee.

11. The audit committee may delegate to one or more designated members of the audit committee the authority to grant the preapprovals required by subsection 10 of this section. The decisions of any member to whom this authority is delegated shall be presented to the full audit committee at each of its scheduled meetings.

12. The director shall not recognize an independent certified public accountant as qualified for a particular insurer if a member of the board, president, chief executive officer, controller, chief financial officer, chief accounting officer, or any person serving in an equivalent position for that insurer was employed by the independent certified public accountant and participated in the audit of that insurer during the one-year period preceding the date that the most current statutory opinion is due.

13. Subsection 12 of this section shall only apply to partners and senior managers involved in the audit. An insurer may make application to the director for relief from subsection 12 of this section on the basis of unusual circumstances. The insurer shall file, with its annual statement filing, the approval for relief from subsection 12 of this section with the states that it is licensed in or doing business in and the NAIC. If the nondomestic state accepts electronic filing with the NAIC, the insurer shall file the approval in an electronic format acceptable to the NAIC.

(L. 1991 H.B. 385, et al. § 7, A.L. 2009 H.B. 577)

*Word "adviser" appears in original rolls.

Consolidated or combined financial statements permitted,when--worksheet , contents.

375.1038. An insurer may make written application to the director for approval to file audited consolidated or combined financial statements in lieu of separate annual audited financial statements if the insurer is part of a group of insurance companies that utilizes a pooling or one hundred percent reinsurance agreement that affects the solvency and integrity of the insurer's reserves and the insurer cedes all of its direct and assumed business to the pool. In such cases, a columnar consolidating or combining worksheet shall be filed with the report as follows:

(1) Amounts shown on the consolidated or combined audited financial report shall be shown on the worksheet;

(2) Amounts for each insurer subject to this section shall be stated separately;

(3) Noninsurance operations may be shown on the worksheet on a combined or individual basis;

(4) Explanations of consolidating and eliminating entries shall be included; and

(5) A reconciliation shall be included of any differences between the amounts shown in the individual insurer columns of the worksheet and comparable amounts shown on the annual statements of the insurers.

(L. 2009 H.B. 577)

Accountant's letter, contents.

375.1040. The accountant shall furnish the insurer in connection with, and for inclusion in, the filing of the annual audited financial report, a letter stating:

(1) Such accountant is independent with respect to the insurer and conforms to the standards of his or her profession as contained in the code of professional ethics and pronouncements of the American Institute of Certified Public Accountants, and the rules of professional conduct of the Missouri board of accountancy, or similar code;

(2) The background and experience in general, and the experience in audits of insurers, of the staff assigned to audit the financial statements of the insurer and whether each is an independent certified public accountant. Nothing within this requirement shall be construed as prohibiting the accountant from utilizing such staff as he or she deems appropriate where use is consistent with the standards prescribed by generally accepted auditing standards;

(3) That the accountant understands the annual audited financial report and his opinion thereon will be filed in compliance with sections 375.1025 to 375.1062 and that the director will be relying on this information in the monitoring and regulation of the financial position of the insurer;

(4) That the accountant consents to the requirements of section 375.1050 and that the accountant consents and agrees to make available for review by the director, the director's designee or appointed agent, the workpapers, as defined in section 375.1050;

(5) That the accountant is properly licensed by an appropriate state licensing authority and that the accountant is a member in good standing in the American Institute of Certified Public Accountants;

(6) That the accountant is in compliance with the requirements of section 375.1037.

(L. 1991 H.B. 385, et al. § 8, A.L. 1992 H.B. 1574, A.L. 2009 H.B. 577)

Audit of financial statement by independent accountant.

375.1042. Financial statements of the insurer to be filed pursuant to section 375.1030 shall be examined by an independent certified public accountant. The audit by the independent certified public accountant of the insurer's financial statements shall be conducted in accordance with generally accepted auditing standards. In accordance with AU Section 319 of the Professional Standards of the AICPA, Consideration of Internal Control in a Financial Statement Audit, the independent certified public accountant should obtain an understanding of internal control sufficient to plan the audit. To the extent required by AU 319, for those insurers required to file a Management's Report of Internal Control over Financial Reporting under section 375.1056, the independent certified public accountant should consider, as such term is defined in Statement on Auditing Standards (SAS) No. 102, Defining Professional Requirements in Statements on Auditing Standards or its replacement, the most recently available report in planning and performing the audit of the statutory financial statements. Consideration shall be given to procedures illustrated in the Financial Condition Examiner's Handbook promulgated by the National Association of Insurance Commissioners as the independent certified public accountant deems necessary.

(L. 1991 H.B. 385, et al. § 9, A.L. 2009 H.B. 577)

Report of findings of accountant to insurer, contents.

375.1045. 1. The insurer required to furnish the annual audited financial report shall require the independent certified public accountant to report, in writing, within five business days to the board of directors or its audit committee any determination by the independent certified public accountant that the insurer has materially misstated its financial condition as reported to the director as of the balance sheet date currently under audit or that the insurer does not meet the minimum capital and surplus requirement of the law as of that date. An insurer who has received a report pursuant to this subsection shall forward a copy of the report to the director within five business days of receipt of such report and shall provide the independent certified public accountant making the report with evidence of the report being furnished to the director. If the independent certified public accountant fails to receive such evidence within the required five-business-day period, the independent certified public accountant shall furnish to the director a copy of its report within the next five business days.

2. No independent public accountant shall be liable in any manner to any person for any statement made in connection with subsection 1 of this section if such statement is made in good faith in compliance with subsection 1 of this section.

3. If the accountant, subsequent to the date of the audited financial report filed under sections 375.1025 to 375.1062, becomes aware of facts which might have affected his or her report, such accountant is required to take such action as prescribed in the professional standards of the American Institute of Certified Public Accountants.

(L. 1991 H.B. 385, et al. § 10, A.L. 2009 H.B. 577)

Unremediated material weaknesses to be furnished to director,requirements--insurer to communicate remedial actions taken.

375.1047. 1. In addition to the annual audited financial report, each insurer shall furnish the director with a written communication as to any unremediated material weaknesses in its internal control over financial reporting noted during the audit. Such communication shall be prepared by the accountant within sixty days after the filing of the annual audited financial report and shall contain a description of any unremediated material weakness, as the term material weakness is defined by Statement on Auditing Standard 60, Communication of Internal Control Related Matters Noted in an Audit, or its replacement, as of December thirty-first immediately preceding in the insurer's internal control over financial reporting noted by the accountant during the course of their audit of the financial statements. If no unremediated material weaknesses were noted, the communication shall so state.

2. The insurer is required to provide a description of remedial actions taken or proposed to correct unremediated material weaknesses, if the actions are not described in the accountant's communication.

(L. 1991 H.B. 385, et al. § 11, A.L. 2009 H.B. 577)

Workpapers, defined--availability to insuranceexaminers--confidentiality of.

375.1050. 1. As used in this section, "workpapers" are the records kept by the independent certified public accountant of the procedures followed, the tests performed, the information obtained and the conclusions reached pertinent to such accountant's audit of the financial statements of an insurer. Workpapers may include audit planning documentation, work programs, analyses, memoranda, letters of confirmation and representation, abstracts of company documents, and schedules or commentaries prepared or obtained by the independent certified public accountant in the course of such accountant's audit of the financial statements of an insurer and which support such accountant's opinion.

2. Every insurer required to file an audited financial report pursuant to sections 375.1025 to 375.1062 shall require the accountant to make available for review by the examiners of the department of insurance, financial institutions and professional registration all workpapers prepared in the conduct of the accountant's audit and any communications related to the audit between the accountant and the insurer, at the offices of the insurer, at the department of insurance, financial institutions and professional registration or at any other reasonable place designated by the director. The insurer shall require that the accountant retain the audit workpapers and communications until the department has filed a report on examination covering the period of the audit, but no longer than seven years from the date of the audit report.

3. In the conduct of any examination or review by the department examiners, it shall be agreed that photocopies of pertinent audit workpapers may be made and retained by the department. Such reviews by the department examiners shall be considered investigations and all working papers and communications obtained during the course of such investigations shall be afforded the same confidentiality as other examination workpapers generated by the department.

(L. 1991 H.B. 385, et al. § 12, A.L. 1992 H.B. 1574, A.L. 1993 H.B. 709, A.L. 2009 H.B. 577)

Temporary exemption, granted when--denial of, petition for hearing,procedures--schedule of compliance--effective date ofrequirements.

375.1052. 1. Upon written application of any insurer, the director may grant a temporary exemption from compliance with sections 375.1025 to 375.1062 if the director finds, upon review of the application, that compliance with sections 375.1025 to 375.1062 would constitute a financial or organizational hardship upon the insurer. An exemption may be granted at any time and from time to time for a specified period or periods. Within ten days from a denial of an insurer's written request for an exemption from sections 375.1025 to 375.1062, such insurer may request in writing a hearing on its application for an exemption. Such hearing shall be held in accordance with the provisions of chapter 536 pertaining to administrative hearing procedures and shall be a public meeting as provided by subdivision (3) of section 610.010.

2. Domestic insurers:

(1) Retaining a certified public accountant on August 28, 2009, who qualifies as independent shall comply with sections 375.1025 to 375.1062 for the year ending December 31, 2009, and each year thereafter unless the director permits otherwise;

(2) Not retaining a certified public accountant on the effective date of this regulation who qualifies as independent shall meet the following schedule for compliance with sections 375.1025 to 375.1062 unless the director permits otherwise:

(a) As of December 31, 2009, file with the director an audited financial report;

(b) For the year ending December 31, 2010, and each year thereafter, such insurers shall file with the director all reports and communications required by sections 375.1025 to 375.1062.

3. Foreign insurers shall comply with sections 375.1025 to 375.1062 for the year ending December 31, 1992, and each year thereafter, unless the director permits otherwise.

4. The requirements of subsection 3 of section 375.1037 shall be in effect for audits of the year beginning January 1, 2010, and thereafter.

5. The requirements of section 375.1053 are to be in effect January 1, 2010. An insurer or group of insurers that is not required to have independent audit committee members or only a majority but not a supermajority of independent audit committee members, because the total written and assumed premium is below the threshold and subsequently becomes subject to one of the independence requirements due to changes in premium shall have one year following the year the threshold is exceeded, but not earlier than January 1, 2010, to comply with the independence requirements. Likewise, an insurer that becomes subject to one of the independence requirements as a result of a business combination shall have one calendar year following the date of acquisition or combination to comply with the independence requirements.

6. The requirements of sections 375.1038, 375.1054, and 375.1056 are effective beginning with the reporting period ending December 31, 2010, and each year thereafter. An insurer or group of insurers that is not required to file a report because the total written premium is below the threshold and subsequently becomes subject to the reporting requirements shall have two years following the year the threshold is exceeded to file a report. Likewise, an insurer acquired in a business combination shall have two calendar years following the date of acquisition or combination to comply with the reporting requirements.

(L. 1991 H.B. 385, et al. § 13, A.L. 1993 H.B. 709, A.L. 2009 H.B. 577)

Inapplicability of statute to foreign insurers--audit committeeresponsibilities, member qualifications--report required--waiver,when.

375.1053. 1. This section shall not apply to foreign or alien insurers licensed in this state or an insurer that is a SOX compliant entity or a direct or indirect wholly owned subsidiary of a SOX compliant entity.

2. The audit committee shall be directly responsible for the appointment, compensation, and oversight of the work of any accountant, including resolution of disagreements between management and the accountant regarding financial reporting, for the purpose of preparing or issuing the audited financial report or related work under sections 375.1025 to 375.1062. Each accountant shall report directly to the audit committee.

3. Each member of the audit committee shall be a member of the board of directors of the insurer or a member of the board of directors of an entity elected under subsection 6 of this section and subdivision (6) of section 375.1025.

4. In order to be considered independent for purposes of this section, a member of the audit committee shall not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee, accept any consulting, advisory, or other compensatory fee from the entity or be an affiliated person of the entity or any subsidiary thereof. However, if law requires board participation by otherwise nonindependent members, such law shall prevail and such members may participate in the audit committee and be designated as independent for audit committee purposes, unless they are an officer or employee of the insurer or one of its affiliates.

5. If a member of the audit committee ceases to be independent for reasons outside the member's reasonable control, that person, with notice by the responsible entity to the state, may remain an audit committee member of the responsible entity until the earlier of the next annual meeting of the responsible entity or one year from the occurrence of the event that caused the member to be no longer independent.

6. To exercise the election of the controlling person to designate the audit committee for purposes of sections 375.1025 to 375.1062, the ultimate controlling person shall provide written notice to the chief state insurance regulatory officials of the affected insurers. Notification shall be made timely prior to the issuance of the statutory audit report and include a description of the basis for the election. The election can be changed through notice to the director by the insurer, which shall include a description of the basis for the change. The election shall remain in effect for perpetuity, until rescinded.

7. (1) The audit committee shall require the accountant that performs for an insurer any audit required by sections 375.1025 to 375.1062 to timely report to the audit committee in accordance with the requirements of the auditing profession, including:

(a) All significant accounting policies and material permitted practices;

(b) All material alternative treatments of financial information within statutory accounting principles that have been discussed with management officials of the insurer, ramifications of the use of the alternative disclosures and treatments, and the treatment preferred by the accountant; and

(c) Other material written communications between the accountant and the management of the insurer, such as any management letter or schedule of unadjusted differences.

(2) If an insurer is a member of an insurance holding company system, the reports required by subdivision (1) of this subsection may be provided to the audit committee on an aggregate basis for insurers in the holding company system; provided that any substantial differences among insurers in the system are identified to the audit committee.

8. The proportion of independent audit committee members shall meet or exceed the following criteria:

(1) If the insurer wrote direct and assumed premiums of zero to three hundred million dollars during the prior calendar year, no minimum requirements are required regarding the number or proportion of audit committee members who shall be independent;

(2) If the insurer wrote direct and assumed premiums of three hundred million to five hundred million dollars during the prior calendar year, at least a majority of the members of the audit committee shall be independent; and

(3) If the insurer wrote direct and assumed premiums of five hundred million dollars or more during the prior calendar year, a supermajority of at least seventy-five percent of the members of the audit committee shall be independent.

9. An insurer with direct written and assumed premium, excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than five hundred million dollars may make application to the director for a waiver from the requirements of this section based upon hardship. The insurer shall file, with its annual statement filing, the approval for relief from this section with the states that it is licensed in or doing business in and the NAIC. If the nondomestic state accepts electronic filing with the NAIC, the insurer shall file the approval in an electronic format acceptable to the NAIC.

(L. 2009 H.B. 577)

Prohibited acts--violation, penalty.

375.1054. 1. No director or officer of an insurer shall, directly or indirectly:

(1) Make or cause to be made a materially false or misleading statement to an accountant in connection with any audit, review, or communication required under sections 375.1025 to 375.1062; or

(2) Omit to state, or cause another person to omit to state, any material fact necessary in order to make statements made, in light of the circumstances under which the statements were made, not misleading to an accountant in connection with any audit, review, or communication required under sections 375.1025 to 375.1062.

2. No officer or director of an insurer, or any other person acting under the direction thereof, shall directly or indirectly take any action to coerce, manipulate, mislead, or fraudulently influence any accountant engaged in the performance of an audit under sections 375.1025 to 375.1062 if such person knew or should have known that the action, if successful, could result in rendering the insurer's financial statements materially misleading.

3. For purposes of subsection 2 of this section, actions that, "if successful, could result in rendering the insurer's financial statements materially misleading" include, but are not limited to, actions taken at any time with respect to the professional engagement period to coerce, manipulate, mislead, or fraudulently influence an accountant:

(1) To issue or reissue a report on an insurer's financial statements that is not warranted in the circumstances, due to material violations of statutory accounting principles prescribed by the director, generally accepted auditing standards, or other professional or regulatory standards;

(2) Not to perform audit, review, or other procedures required by generally accepted auditing standards or other professional standards;

(3) Not to withdraw an issued report; or

(4) Not to communicate matters to an insurer's audit committee.

4. Any violation of any provision of this section is a level three violation under section 374.049.

(L. 2009 H.B. 577)

Report required by insurer, when, contents.

375.1056. 1. Every insurer required to file an audited financial report under sections 375.1025 to 375.1062 that has annual direct written and assumed premiums, excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, of five hundred million dollars or more shall prepare a report of the insurer's or group of insurers' internal control over financial reporting, as such terms are defined in section 375.1025. The report shall be filed with the director along with the communication of internal control-related matters noted in an audit described under section 375.1047. Management's report of internal control over financial reporting shall be as of December thirty-first immediately preceding.

2. Notwithstanding the premium threshold in subsection 1 of this section, the director may require an insurer to file management's report of internal control over financial reporting if the insurer is in any RBC level event, or meets any one or more of the standards of an insurer deemed to be in hazardous financial condition as defined in rules adopted by the director.

3. An insurer or a group of insurers that is:

(1) Directly subject to Section 404;

(2) Part of a holding company system whose parent is directly subject to Section 404;

(3) Not directly subject to Section 404 but is a SOX compliant entity; or

(4) A member of a holding company system whose parent is not directly subject to Section 404 but is a SOX compliant entity may file its or its parent's Section 404 report and an addendum in satisfaction of the requirement of this section, provided that those internal controls of the insurer or group of insurers having a material impact on the preparation of the insurer's or group of insurers' audited statutory financial statements, namely those items included in subdivisions (2) to (6) of subsection 2 of section 375.1032, were included in the scope of the Section 404 report. The addendum shall be a positive statement by management that there are no material processes with respect to the preparation of the insurer's or group of insurers' audited statutory financial statements excluded from the Section 404 report. If there are internal controls of the insurer or group of insurers that have a material impact on the preparation of the insurer's or group of insurers' audited statutory financial statements and those internal controls were not included in the scope of the Section 404 report, the insurer or group of insurers may either file a report under this section, or the Section 404 report and a report under this section for those internal controls that have a material impact on the preparation of the insurer's or group of insurers' audited statutory financial statements not covered by the Section 404 report.

4. Management's report of internal control over financial reporting shall include:

(1) A statement that management is responsible for establishing and maintaining adequate internal control over financial reporting;

(2) A statement that management has established internal control over financial reporting and an assertion, to the best of management's knowledge and belief, after diligent inquiry, as to whether its internal control over financial reporting is effective to provide reasonable assurance regarding the reliability of financial statements in accordance with statutory accounting principles;

(3) A statement that briefly describes the approach or processes by which management evaluated the effectiveness of its internal control over financial reporting;

(4) A statement that briefly describes the scope of work that is included and whether any internal controls were excluded;

(5) Disclosure of any unremediated material weaknesses in the internal control over financial reporting identified by management as of December thirty-first immediately preceding. Management is not permitted to conclude that the internal control over financial reporting is effective to provide reasonable assurance regarding the reliability of financial statements in accordance with statutory accounting principles if there is one or more unremediated material weaknesses in its internal control over financial reporting;

(6) A statement regarding the inherent limitations of internal control systems; and

(7) Signatures of the chief executive officer and the chief financial officer, or the equivalent position or title.

5. Management shall document and make available upon financial condition examination the basis upon which its assertions required in subsection 4 of this section are made. Management may base its assertions, in part, upon its review, monitoring and testing of internal controls undertaken in the normal course of its activities. Management shall have discretion as to the nature of the internal control framework used, and the nature and extent of documentation, in order to make its assertion in a cost-effective manner and, as such, may include assembly of or reference to existing documentation. Management's report on internal control over financial reporting, required by subsection 1 of this section, and any documentation provided in support thereof during the course of a financial condition examination, shall be kept confidential by the department.

6. No officer responsible for financial reporting may be a member of the audit committee.

(L. 2009 H.B. 577)

Canadian and British insurers, special requirements.

375.1057. 1. In the case of Canadian and British insurers, the "annual audited financial report" shall be defined as the annual statement of total business on the form filed by such companies with their supervision authority duly audited by an independent chartered accountant.

2. For such Canadian and British insurers, the letter required by subsection 2 of section 375.1035 shall state that the accountant is aware of the requirements relating to the annual audited financial report filed with the director pursuant to section 375.1030 and shall affirm that the opinion expressed is in conformity with such requirements.

(L. 1991 H.B. 385, et al. § 15, A.L. 2009 H.B. 577)

Certification filed with annual statement, when--director shallpromulgate rules, purpose.

375.1060. 1. Each health services corporation organized pursuant to sections 354.010 to 354.380 shall file with its annual statement required by section 354.105 and section 375.041 a certification by a member in good standing of the American Academy of Actuaries.

2. Each life insurance company organized under chapter 376 shall file with its annual statement required by section 375.041 and section 376.350 a certification by a member in good standing of the American Academy of Actuaries. Filing the opinion required by subsection 4 of section 376.380 will satisfy the requirement of this subsection if such opinion also complies with subsection 6 of this section.

3. Each insurance company other than a life insurance company, organized under chapter 379, shall file with its annual statement required by section 375.041 and section 379.105 a certification by a member in good standing of the American Academy of Actuaries.

4. Except as provided by subsection 6 of this section, the certification required of a health services corporation and a life insurance company by subsections 1 and 2 of this section must conform to the National Association of Insurance Commissioners' annual statement instructions for life and accident and health insurers.

5. Except as provided by subsection 6 of this section, the certification required of an insurance company other than life by subsection 3 of this section must conform to the National Association of Insurance Commissioners' annual statement instructions for property and casualty insurers.

6. Notwithstanding any provision of the National Association of Insurance Commissioners' annual statement instruction for life and accident and health or property and casualty insurers, the certification must be made by a member in good standing of the American Academy of Actuaries.

7. The director shall promulgate such rules as are necessary for the implementation and administration of this section.

(L. 1991 H.B. 385, et al. § 16, A.L. 1993 H.B. 709)

Severability.

375.1062. If any section or portion of a section of sections 375.1025 to 375.1062 or the applicability thereof to any person or circumstance is held invalid by a court, the remainder of such section or sections or the applicability of such provision to other persons or circumstances shall not be affected thereby, and the director shall enforce all remaining requirements of sections 375.1025 to 375.1062.

(L. 1991 H.B. 385, et al. § 17)

Inapplicability to certain insurers.

375.1070. Sections 375.1070 to 375.1078 shall not apply to an insurer organized under chapter 376.

(L. 1991 H.B. 385, et al. § 18, A.L. 2007 S.B. 66, A.L. 2015 S.B. 164)

Definitions.

375.1072. As used in sections 375.1070 to 375.1078, the following terms mean:

(1) "Admitted assets", the amount thereof as of the last day of the most recently concluded annual statement year, computed in the same manner as admitted assets in section 379.080 for insurers other than life;

(2) "Aggregate amount of medium to lower quality obligations", the aggregate statutory statement value thereof;

(3) "Institution", a corporation, a joint-stock company, an association, a trust, a business partnership, a business joint venture or similar entity;

(4) "Medium to lower quality obligations", obligations which are rated three, four, five and six by the Securities Valuation Office of the National Association of Insurance Commissioners.

(L. 1991 H.B. 385, et al. § 19, A.L. 2007 S.B. 66, A.L. 2015 S.B. 164)

Limitation on investments, domestic insurers.

375.1074. Except as otherwise specified by Missouri law, no domestic insurer shall acquire an investment directly or indirectly through an investment subsidiary if, as a result of and after giving effect to the investment, the insurer would hold more than five percent of its admitted assets in the investments of all kinds issued, assumed, accepted, insured, or guaranteed by a single person.

(L. 2015 S.B. 164)

Limitations on aggregate of medium or lower quality investments,requirements.

375.1075. 1. No domestic insurer shall acquire, directly or indirectly, any medium or lower quality obligation of any institution if, after giving effect to any such acquisition, the aggregate amount of all medium and lower quality obligations then held by the domestic insurer would exceed twenty percent of its admitted assets, and no more than ten percent of its admitted assets consists of obligations rated four, five or six by the Securities Valuation Office, and no more than three percent of its admitted assets consists of obligations rated five or six by the Securities Valuation Office, and no more than one percent of its admitted assets consists of obligations rated six by the Securities Valuation Office. Attaining or exceeding the limit of any one category shall not preclude an insurer from acquiring obligations in other categories subject to the specific and multicategory limits.

2. The provisions of this section shall not prohibit a domestic insurer from acquiring any obligations which it has committed to acquire if the insurer would have been permitted to acquire that obligation pursuant to this section on the date on which such insurer committed to purchase that obligation.

3. Notwithstanding the other provisions of this section, a domestic insurer may acquire an obligation of an institution in which the insurer already has one or more obligations, if the obligation is acquired in order to protect an investment previously made in the obligations of the institution, provided that all such acquired obligations shall not exceed one-half of one percent of the insurer's admitted assets.

4. The board of directors of any domestic insurance company which acquires or invests in, directly or indirectly, medium or lower quality obligations of any institution shall adopt a written plan for the making of such investments. The plan, in addition to guidelines with respect to the quality of the obligations invested in, shall contain diversification standards including, but not limited to, standards for issuer, industry, duration, liquidity and geographic location.

5. No investments in excess of the limitations provided by this act shall be recognized as an asset of the insurer pursuant to section 379.080.

(L. 1991 H.B. 385, et al. § 20, A.L. 2007 S.B. 66)

Limitation on Canadian investments.

375.1078. 1. No insurer shall acquire, directly or indirectly through an investment subsidiary, a Canadian investment otherwise permitted under Missouri law if, after giving effect to the investment, the aggregate amount of the investments then held by the insurer would exceed twenty-five percent of its admitted assets.

2. For any insurer that is authorized to do business in Canada or that has outstanding insurance, annuity, or reinsurance contracts on lives or risks resident or located in Canada and denominated in Canadian currency, the limitations of subsection 1 of this section shall be increased by the greater of:

(1) The amount the insurer is required by applicable Canadian law to invest in Canada or to be denominated in Canadian currency; or

(2) One hundred twenty-five percent of the amount of the insurer's reserves and other obligations under contracts on risks resident or located in Canada.

(L. 2015 S.B. 164)

Definitions.

375.1080. As used in sections 375.1080 to 375.1105, the following terms mean:

(1) "Completed operations liability", liability arising out of the installation, maintenance, or repair of any product at a site which is not owned or controlled by:

(a) Any person who performs that work; or

(b) Any person who hires an independent contractor to perform that work; but shall include liability for activities which are completed or abandoned before the date of the occurrence giving rise to the liability;

(2) "Director", the director of the department of insurance, financial institutions and professional registration;

(3) "Domicile", for purposes of determining the state in which a purchasing group is domiciled, is:

(a) For a corporation, the state in which the purchasing group is incorporated; and

(b) For an unincorporated entity, the state of its principal place of business;

(4) "Hazardous financial condition", that, based on its present or reasonably anticipated financial condition, a risk retention group, although not yet financially impaired or insolvent, is unlikely to be able:

(a) To meet obligations to policyholders with respect to known claims and reasonably anticipated claims; or

(b) To pay other obligations in the normal course of business;

(5) "Insurance", primary insurance, excess insurance, reinsurance, surplus lines insurance, and any other arrangement for shifting and distributing risk which is determined to be insurance under the laws of this state;

(6) "Liability":

(a) Legal liability for damages, including costs of defense, legal costs and fees, and other claims expenses, because of injuries to other persons, damage to their property, or other damage or loss to such other persons resulting from or arising out of:

a. Any business whether profit or nonprofit, trade, product, services, including professional services, premises, or operations; or

b. Any activity of any state or local government, or any agency or political subdivision thereof; and

(b) Does not include personal risk liability and an employer's liability with respect to its employees other than legal liability under the Federal Employers' Liability Act (45 U.S.C. 51 et seq.);

(7) "Personal risk liability", liability for damages because of injury to any person, damage to property, or other loss or damage resulting from any personal, familial, or household responsibilities or activities;

(8) "Plan of operation or a feasibility study", an analysis which presents the expected activities and results of a risk retention group including, at a minimum:

(a) Information sufficient to verify that its members are engaged in businesses or activities similar or related with respect to the liability to which such members are exposed by virtue of any related, similar or common business, trade, product, services, premises or operations;

(b) For each state in which it intends to operate, the coverages, deductibles, coverage limits, rates, and rating classification systems for each line of insurance the group intends to offer;

(c) Historical and expected loss experience of the proposed members and national experience of similar exposures to the extent that this experience is reasonably available;

(d) Pro forma financial statements and projections;

(e) Appropriate opinions by a qualified, independent casualty actuary, including a determination of minimum premium or participation levels required to commence operations and to prevent a hazardous financial condition;

(f) Identification of management, underwriting and claims procedures, marketing methods, managerial oversight methods, investment policies and reinsurance agreements;

(g) Identification of each state in which the risk retention group has obtained, or sought to obtain, a charter and license, and a description of its status in each such state; and

(h) Such other matters as may be prescribed by the commissioner of the state in which the risk retention group is chartered for liability insurance companies authorized by the insurance laws of that state;

(9) "Product liability", liability for damages because of any personal injury, death, emotional harm, consequential economic damage, or property damage, including damages resulting from the loss of use of property, arising out of the manufacture, design, importation, distribution, packaging, labeling, lease, or sale of a product, but does not include the liability of any person for those damages if the product involved was in the possession of such a person when the incident giving rise to the claim occurred;

(10) "Purchasing group", any group which:

(a) Has as one of its purposes the purchase of liability insurance on a group basis;

(b) Purchases such insurance only for its group members and only to cover their similar or related liability exposure, as described in paragraph (c) of this subdivision;

(c) Is composed of members whose businesses or activities are similar or related with respect to the liability to which members are exposed by virtue of any related, similar or common business, trade, product, services, premises or operations; and

(d) Is domiciled in any state;

(11) "Risk retention group", any corporation or other limited liability association:

(a) Whose primary activity consists of assuming and spreading all, or any portion, of the liability exposure of its group members;

(b) Which is organized for the primary purpose of conducting the activity described under paragraph (a) of this subdivision;

(c) Which:

a. Is chartered and licensed as a liability insurance company and authorized to engage in the business of insurance under the laws of any state; or

b. Before January 1, 1985, was chartered or licensed and authorized to engage in the business of insurance under the laws of Bermuda or the Cayman Islands and, before such date, had certified to the insurance commissioner of at least one state that it satisfied the capitalization requirements of such state, except that any such group shall be considered to be a risk retention group only if it has been engaged in business continuously since such date and only for the purpose of continuing to provide insurance to cover product liability or completed operations liability;

(d) Which does not exclude any person from membership in the group solely to provide for members of such a group a competitive advantage over such a person;

(e) Which:

a. Has as its owners only persons who comprise the membership of the risk retention group and who are provided insurance by such group; or

b. Has as its sole owner an organization which has as its members only persons who comprise the membership of the risk retention group and has as its owners only persons who comprise the membership of the risk retention group and who are provided insurance by such group;

(f) Whose members are engaged in businesses or activities similar or related with respect to the liability of which such members are exposed by virtue of any related, similar or common business trade, product, services, premises or operations;

(g) Whose activities do not include the provision of insurance other than:

a. Liability insurance for assuming and spreading all or any portion of the liability of its group members; and

b. Reinsurance with respect to the liability of any other risk retention group or any members of such other group which is engaged in businesses or activities so that such group or member meets the requirement described in paragraph (f) of this subdivision from membership in the risk retention group which provides such reinsurance; and

(h) The name of which includes the phrase "risk retention group";

(12) "State", any state of the United States or the District of Columbia.

(L. 1991 H.B. 385, et al. § 25)

Type of insurance allowed--annual statement, form--requirements forcharter, contents of application.

375.1082. 1. A risk retention group shall be chartered and licensed to write only liability insurance pursuant to sections 375.1080 to 375.1105 and, except as provided elsewhere in sections 375.1080 to 375.1105, shall comply with all of the laws, rules, regulations and requirements applicable to such insurers chartered and licensed in this state and with section 375.1085 to the extent such requirements are not a limitation on laws, rules, regulations or requirements of this state. Notwithstanding any other provision to the contrary, all risk retention groups chartered in this state shall file with the department and the National Association of Insurance Commissioners an annual statement in a form prescribed by the National Association of Insurance Commissioners, and in disketted form if required by the director, and completed in accordance with its instructions and the National Association of Insurance Commissioners Accounting Practices and Procedures Manual.

2. Before it may offer insurance in any state, each risk retention group shall also submit for approval to the director a plan of operation or feasibility study. The risk retention group shall submit an appropriate revision in the event of any subsequent material change in any item of the plan of operation or feasibility study, within ten days of any such change. The group shall not offer any additional kinds of liability insurance, in this state or in any other state, until a revision of such plan or study is approved by the director.

3. At the time of filing its application for charter, the risk retention group shall provide to the director in summary form the following information: the identity of the initial members of the group, the identity of those individuals who organized the group or who will provide administrative services or otherwise influence or control the activities of the group, the amount and nature of initial capitalization, the coverages to be afforded, and the states in which the group intends to operate. Upon receipt of this information, the director shall forward such information to the National Association of Insurance Commissioners. Providing notification to the National Association of Insurance Commissioners is in addition to and shall not be sufficient to satisfy the requirements of sections 375.1080 to 375.1105.

(L. 1991 H.B. 385, et al. § 26, A.L. 1992 H.B. 1574)

Nonresidents, requirements--requirements prior to operation--premiumtaxes, liability for--examination by director--policy application,required provisions--prohibited acts--penalties.

375.1085. 1. Risk retention groups chartered and licensed in states other than this state and seeking to do business as a risk retention group in this state shall comply with the laws of this state as provided in this section.

2. Before offering insurance in this state, a risk retention group shall submit to the director on the forms prescribed by the National Association of Insurance Commissioners for such purposes:

(1) A statement identifying the state or states in which the risk retention group is chartered and licensed as a liability insurance company, charter date, its principal place of business, and such other information, including information on its membership, as the director of this state may require to verify that the risk retention group is qualified under subdivision (1) of section 375.1080;

(2) A copy of its plan of operations or feasibility study and revisions of such plan or study submitted to the state in which the risk retention group is chartered and licensed, except that the provision relating to the submission of a plan of operation or feasibility study shall not apply with respect to any line or classification of liability insurance which was defined in the Product Liability Risk Retention Act of 1981 before October 27, 1986, and was offered before such date by any risk retention group which had been chartered and operating for not less than three years before such date.

3. The risk retention group shall submit a statement of registration, for which a filing fee shall be determined by the director, which designates the commissioner as its agent for the purpose of receiving service of legal documents or process.

4. The risk retention group shall submit a copy of any revision to its plan of operation or feasibility study required by subsection 2 of section 375.1082 at the same time that the revision is submitted to the chief insurance regulatory official of its chartering state.

5. Any risk retention group doing business in this state shall submit to the director:

(1) A copy of the group's financial statement submitted to the state in which the risk retention group is chartered and licensed which shall be certified by an independent public accountant and contain a statement of opinion on loss and loss adjustment expense reserves made by a member of the American Academy of Actuaries or a qualified loss reserve specialist;

(2) A copy of each examination of the risk retention group as certified by the director or public official conducting the examination;

(3) Upon request by the director, a copy of any information or document pertaining to any outside audit performed with respect to the risk retention group; and

(4) Such information as may be required to verify its continuing qualification as a risk retention group under subdivision (11) of section 375.1080.

6. Each risk retention group shall be liable for the payment of premium taxes and taxes on premiums of direct business for risks resident or located within this state, and shall report to the director the net premiums written for risks resident or located within this state. Such risk retention group shall be subject to taxation, and any applicable fines and penalties related thereto, on the same basis as a foreign admitted insurer. To the extent licensed agents or brokers are used pursuant to section 375.1102, they shall report to the director the premiums for direct business for risks resident or located within this state which such licensees have placed with or on behalf of a risk retention group not chartered in this state. To the extent that insurance agents or brokers are used pursuant to section 375.1102, such agent or broker shall keep a complete and separate record of all policies procured from each such risk retention group, which record shall be open to examination by the director. These records shall, for each policy and each kind of insurance provided thereunder, include the following:

(1) The limit of liability;

(2) The time period covered;

(3) The effective date;

(4) The name of the risk retention group which issued the policy;

(5) The gross premium charged; and

(6) The amount of return premiums, if any.

7. Any risk retention group, its agents and representatives shall comply with sections 375.1000 to 375.1018.

8. Any risk retention group must submit to an examination by the director to determine its financial condition if the commissioner of the jurisdiction in which the group is chartered and licensed has not initiated an examination or does not initiate an examination within sixty days after a request by the director of this state. Any such examination shall be coordinated to avoid unjustified repetition and conducted in an expeditious manner and in accordance with the NAIC's Examiner Handbook.

9. Every application form for insurance from a risk retention group, and every policy, on its front and declaration pages, issued by a risk retention group, shall contain in ten point type the following notice: "NOTICE

This policy is issued by your risk retention group. Your risk retention group may not be subject to all of the insurance laws and regulations of your state. State insurance insolvency guaranty funds are not available for your risk retention group."

10. The following acts by a risk retention group are hereby prohibited:

(1) The solicitation or sale of insurance by a risk retention group to any person who is not eligible for membership in such group; and

(2) The solicitation or sale of insurance by, or operation of, a risk retention group that is in hazardous financial condition or financially impaired.

11. No risk retention group shall be allowed to do business in this state if an insurance company is directly or indirectly a member or owner of such risk retention group, other than in the case of a risk retention group all of whose members are insurance companies.

12. The terms of any insurance policy issued by any risk retention group shall not provide, or be construed to provide, coverage prohibited generally by statute of this state or declared unlawful by the highest court of this state whose law applies to such policy.

13. A risk retention group not chartered in this state and doing business in this state shall comply with a lawful order issued in a voluntary dissolution proceeding or in a delinquency proceeding commenced by the director if there has been a finding of financial impairment after an examination under subsection 8 of this section.

14. A risk retention group that violates any provision of sections 375.1080 to 375.1105 will be subject to fines and penalties including revocation of its right to do business in this state, applicable to licensed insurers generally.

15. In addition to complying with the requirements of this section, any risk retention group operating in this state prior to enactment of sections 375.1080 to 375.1105 shall, within thirty days after August 28, 1991, comply with the provisions of subsection 2 of this section.

(L. 1991 H.B. 385, et al. § 27, A.L. 1992 H.B. 1574)

Contributions to guaranty fund prohibited--guaranty fund to coveronly specified risks.

375.1087. 1. No risk retention group shall be required or permitted to join or contribute financially to any insurance insolvency guaranty fund, or similar mechanism, in this state, nor shall any risk retention group, or its insureds or claimants against its insureds, receive any benefit from any such fund for claims arising under the insurance policies issued by such risk retention group.

2. When a purchasing group obtains insurance covering its members' risks from an insurer not authorized in this state or a risk retention group, no such risks, wherever resident or located, shall be covered by any insurance guaranty fund or similar mechanism in this state.

3. When a purchasing group obtains insurance covering its members' risks from an authorized insurer, only risks resident or located in this state shall be covered by any applicable state guaranty funds.

4. The director may require or exempt a risk retention group from participation in any mechanism established or authorized under the laws of this state for the equitable apportionment among insurers of liability insurance losses and expenses incurred on policies written through such mechanism, and such risk retention group shall submit sufficient information to the director to enable the director to apportion on a nondiscriminatory basis the risk retention group's proportionate share of such losses and expenses.

(L. 1991 H.B. 385, et al. § 28)

Purchasing group subject to insurance laws, exceptions.

375.1090. A purchasing group and its insurer or insurers shall be subject to all applicable laws of this state, except that a purchasing group and its insurer or insurers shall be exempt, in regard to liability insurance for the purchasing group, from any law that would:

(1) Prohibit the establishment of a purchasing group;

(2) Make it unlawful for an insurer to provide or offer to provide insurance on a basis providing, to a purchasing group or its members, advantages based on their loss and expense experience not afforded to other persons with respect to rates, policy forms, coverages or other matters;

(3) Prohibit a purchasing group or its members from purchasing insurance on a group basis described in subdivision (2) of this section;

(4) Prohibit a purchasing group from obtaining insurance on a group basis because the group has not been in existence for a minimum period of time or because any member has not belonged to the group for a minimum period of time;

(5) Require that a purchasing group must have a minimum number of members, common ownership or affiliation, or certain legal form;

(6) Require that a certain percentage of a purchasing group must obtain insurance on a group basis;

(7) Otherwise discriminate against a purchasing group or any of its members; or

(8) Require that any insurance policy issued to a purchasing group or any of its members be countersigned by an insurance agent or broker residing in this state.

(L. 1991 H.B. 385, et al. § 29)

Purchasing group to notify director, contents--designation ofdirector as agent for service of process, exceptions.

375.1092. 1. A purchasing group which intends to do business in this state shall, prior to doing business, furnish notice to the director, on the forms prescribed by the National Association of Insurance Commissioners for such purpose, which shall:

(1) Identify the state in which the group is domiciled;

(2) Identify all other states in which the group intends to do business;

(3) Specify the lines and classifications of liability insurance which the purchasing group intends to purchase;

(4) Identify the insurance company or companies from which the group intends to purchase its insurance and the domicile of such company;

(5) Specify the method by which, and the person or persons, if any, through whom insurance will be offered to its members whose risks are resident or located in this state;

(6) Identify the principal place of business of the group; and

(7) Provide such other information as may be required by the director to verify that the purchasing group is qualified under subdivision (10) of section 375.1080.

2. A purchasing group shall, within ten days, notify the director of any changes in any of the items set forth in subsection 1 of this section.

3. The purchasing group shall register with and designate the director as its agent solely for the purpose of receiving service of legal documents or process, except that such requirements shall not apply in the case of a purchasing group which only purchases insurance that was authorized under the federal Products Liability Risk Retention Act of 1981; and

(1) Which in any state of the United States was domiciled before April 1, 1986, and is domiciled on and after October 27, 1986;

(2) Which before October 27, 1986, purchased insurance from an insurance carrier licensed in any state, and since October 27, 1986, purchased its insurance from an insurance carrier licensed in any state; or

(3) Which was a purchasing group under the requirements of the Product Liability Risk Retention Act of 1981 before October 27, 1986.

4. Each purchasing group that is required to give notice pursuant to subsection 1 of this section shall also furnish such information as may be required by the director to:

(1) Verify that the entity qualifies as a purchasing group;

(2) Determine where the purchasing group is located; and

(3) Determine appropriate tax treatment.

5. Any purchasing group which was doing business in this state prior to August 28, 1991, shall, within thirty days after August 28, 1991, furnish notice to the director pursuant to the provisions of subsection 1 of this section and furnish such information as may be required pursuant to subsections 2 and 3 of this section.

(L. 1991 H.B. 385, et al. § 30, A.L. 1992 H.B. 1574)

Insurance purchased by purchasing group, requirements.

375.1095. 1. A purchasing group may not purchase insurance from a risk retention group that is not chartered in a state or from an insurer not admitted in the state in which the purchasing group is located, unless the purchase is effected through a licensed agent or broker acting pursuant to the surplus lines laws and regulations of such state.

2. A purchasing group which obtains liability insurance from an insurer not admitted in this state or a risk retention group shall inform each of the members of such group which has a risk resident or located in this state that such risk is not protected by an insurance insolvency guaranty fund in this state, and that such risk retention group or such insurer may not be subject to all insurance laws and regulations of this state.

3. No purchasing group may purchase insurance providing for a deductible or self-insured retention applicable to the group as a whole; however, coverage may provide for a deductible or self-insured retention applicable to individual members.

4. Purchases of insurance by purchasing groups are subject to the same standards regarding aggregate limits which are applicable to all purchases of group insurance.

(L. 1991 H.B. 385, et al. § 31)

Premium taxes, payment of.

375.1097. Premium taxes and taxes on premiums paid for coverage of risks resident or located in this state by a purchasing group or any members of the purchasing groups shall be:

(1) Imposed at the same rate and subject to the same interest, fines and penalties as that applicable to premium taxes and taxes on premiums paid for similar coverage from a similar insurance source by other insureds; and

(2) Paid first by such insurance source, and if not by such source by the agent or broker for the purchasing group, and if not by such agent or broker then by the purchasing group, and if not by such purchasing group then by each of its members.

(L. 1991 H.B. 385, et al. § 32)

Powers of director.

375.1100. The director may make use of any of the powers established under chapters 374 to 385 to enforce the laws of this state not specifically preempted by the Risk Retention Act of 1986, including the director's administrative authority to investigate, issue subpoena, conduct depositions and hearings, issue orders, impose penalties and seek injunctive relief. With regard to any investigation, administrative proceedings or litigation, the director can rely on the procedural laws of this state. The injunctive authority of the director, in regard to risk retention groups, is restricted by the requirement that any injunction be issued by a court of competent jurisdiction.

(L. 1991 H.B. 385, et al. § 33)

Broker required for purchase of insurance--nonresident brokeracceptable--notice to insured, contents.

375.1102. 1. No person, firm, association or corporation shall act or aid in any manner in soliciting, negotiating or procuring liability insurance in this state from a risk retention group unless such person, firm, association or corporation is licensed as an insurance agent or broker in accordance with this chapter.

2. No person, firm, association or corporation shall act or aid in any manner in soliciting, negotiating or procuring liability insurance in this state for a purchasing group from an authorized insurer or a risk retention group chartered in a state unless such person, firm, association or corporation is licensed as an insurance agent or broker in accordance with this chapter. No person, firm, association or corporation shall act or aid in any manner in soliciting, negotiating or procuring liability insurance coverage in this state for any member of a purchasing group under a purchasing group's policy unless such person, firm, association or corporation is licensed as an insurance agent or broker in accordance with this chapter. No person, firm, association or corporation shall act or aid in any manner in soliciting, negotiating or procuring liability insurance from an insurer not authorized to do business in this state on behalf of a purchasing group located in this state unless such person, firm, association or corporation is licensed as a surplus lines agent or excess line broker in accordance with this chapter.

3. For purposes of acting as a surplus lines agent or broker for a risk retention group or purchasing group pursuant to subsections 1 and 2 of this section, the requirement of residence in this state shall not apply.

4. Every person, firm, association or corporation licensed pursuant to the provisions of chapters 374 to 385, on business placed with risk retention groups or written through a purchasing group, shall inform each prospective insured of the provisions of the notice required by subsection 7 of section 375.1085 in the case of a risk retention group and subsection 3 of section 375.1095 in the case of a purchasing group.

(L. 1991 H.B. 385, et al. § 34)

Hazardous financial condition of group, prohibited from sellinginsurance, when--director may establish rules.

375.1105. 1. An order issued by any district court of the United States enjoining a risk retention group from soliciting or selling insurance, or operating in any state, or in all states or in any territory or possession of the United States, upon a finding that such a group is in hazardous financial or financially impaired condition shall be enforceable in the courts of the state.

2. The director may establish and from time to time amend such rules relating to risk retention groups as may be necessary or desirable to carry out the provisions of sections 375.1080 to 375.1105.

(L. 1991 H.B. 385, et al. § 35)

Citation of law.

375.1110. Sections 375.1110 to 375.1140 may be cited as the "Reinsurance Intermediary Act".

(L. 1991 H.B. 385, et al. § 37)

Effective 7-1-92

Definitions.

375.1112. As used in sections 375.1110 to 375.1140, the following terms mean:

(1) "Actuary", a person who is a member in good standing of the American Academy of Actuaries;

(2) "Controlling person", any person, firm, association or corporation who directly or indirectly has the power to direct or cause to be directed, the management, control or activities of the reinsurance intermediary;

(3) "Director", the director of the department of insurance, financial institutions and professional registration;

(4) "Insurer", any person, firm, association or corporation duly licensed in this state pursuant to the laws of this state as an insurer;

(5) "Licensed producer", an agent, broker or reinsurance intermediary licensed pursuant to the applicable laws of this state;

(6) "Qualified United States financial institution", an institution that:

(a) Is organized, or is licensed, under the laws of the United States or any state thereof;

(b) Is regulated, supervised and examined by United States federal or state authorities having regulatory authority over banks and trust companies; and

(c) Has been determined by either the director, or the Securities Valuation Office of the National Association of Insurance Commissioners, to meet such standards of financial condition and standing as are considered necessary and appropriate to regulate the quality of a financial institution whose letter of credit will be acceptable to the director;

(7) "Reinsurance intermediary", a reinsurance intermediary-broker or a reinsurance intermediary-manager, as these terms are defined in subdivisions (8) and (9) of this section;

(8) "Reinsurance intermediary-broker" or "RB", any person, other than an officer or employee of the ceding insurer, firm, association or corporation who solicits, negotiates or places reinsurance cessions or retrocessions on behalf of a ceding insurer without the authority or power to bind reinsurance on behalf of such insurer;

(9) "Reinsurance intermediary-manager" or "RM", any person, firm, association or corporation who has authority to bind or manages all or part of the assumed reinsurance business of a reinsurer, including the management of a separate division, department or underwriting office, and acts as an agent for such reinsurer whether known as an RM, manager or other similar term. The following persons shall not be considered an RM, with respect to such reinsurer, for the purposes of sections 375.1110 to 375.1140:

(a) An employee of the reinsurer;

(b) A United States manager of the United States branch of an alien reinsurer;

(c) An underwriting manager which, pursuant to contract, manages all the reinsurance operations of the reinsurer, is under common control with the reinsurer, subject to chapter 382, and whose compensation is not based on the volume of premiums written;

(d) The manager of a group, association, pool or organization of insurers which engages in joint underwriting or joint reinsurance and who is subject to examination by the insurance regulatory agency of the state in which the manager's principal business office is located;

(10) "Reinsurer", any person, firm, association or corporation duly licensed in this state pursuant to the laws of this state as an insurer with the authority to assume reinsurance;

(11) "To be in violation", the reinsurance intermediary, insurer or reinsurer for whom the reinsurance intermediary was acting failed to substantially comply with the provisions of sections 375.1110 to 375.1140.

(L. 1991 H.B. 385, et al. § 38)

Effective 7-1-92

Reinsurance intermediary, license issued bydirector--requirements--attorneys exempt from requirements.

375.1115. 1. No person, firm, association or corporation shall act as an RB in this state if the RB maintains an office either directly or as a member or employee of a firm or association, or an officer, director or employee of a corporation:

(1) In this state, unless such RB is a licensed insurance agent in this state;

(2) In another state, unless such RB is a licensed producer in this state or another state having a law substantially similar to this law or such RB is licensed in this state as a nonresident reinsurance intermediary.

2. No person, firm, association or corporation shall act as an RM:

(1) For a reinsurer domiciled in this state, unless such RM is a licensed insurance agent in this state;

(2) In this state, if the RM maintains an office either directly or as a member or employee of a firm or association, or an officer, director or employee of a corporation in this state, unless such RM is a licensed producer in this state;

(3) In another state for a nondomestic insurer, unless such RM is a licensed insurance agent in this state or another state having a law substantially similar to this law or such person is a licensed insurance agent in this state as a nonresident reinsurance intermediary.

3. The director may require an RM subject to subsection 2 of this section to:

(1) File a bond, in an amount and from an insurer acceptable to the director, for the protection of each reinsurer represented; and

(2) Maintain an errors and omissions policy in an amount acceptable to the director.

4. (1) The director may issue a reinsurance intermediary license to any person, firm, association or corporation who has complied with the requirements of sections 375.1110 to 375.1140. Any such license issued to a firm or association shall authorize all the members of such firm or association and any designated employees to act as reinsurance intermediaries under the license, and all such persons shall be named in the application and any supplements thereto. Any such license issued to a corporation shall authorize all of the officers, and any designated employees and directors thereof, to act as reinsurance intermediaries on behalf of such corporation, and all such persons shall be named in the application and any supplements thereto.

(2) If the applicant for a reinsurance intermediary license is a nonresident, such applicant as a condition precedent to receiving or holding a license shall designate the director as agent for service of process in the manner, and with the same legal effect, provided for by sections 375.1110 to 375.1140, for designation of service of process upon unauthorized insurers, and also shall furnish the director with the name and address of a resident of this state upon whom notices or orders of the director or process affecting such nonresident reinsurance intermediary may be served. Such licensee shall promptly notify the director in writing of every change in its designated agent for service of process, and such change shall not become effective until acknowledged by the director.

5. The director may refuse to issue a reinsurance intermediary license if, in his judgment, the applicant, any one name on the application, or any member, principal, officer or director of the applicant, is not trustworthy, or that any controlling person of such applicant is not trustworthy to act as a reinsurance intermediary, or that any of the foregoing has given cause for revocation or suspension of such license, or has failed to comply with a prerequisite for the issuance of such license.

6. Licensed attorneys at law of this state when acting in this professional capacity as such shall be exempt from this section.

(L. 1991 H.B. 385, et al. § 39)

Effective 7-1-92

Transactions between insurer and broker, written authorizationrequired--contents.

375.1117. Transactions between an RB and the insurer it represents in such capacity shall only be entered into pursuant to a written authorization, specifying the responsibilities of each party. The authorization shall, at a minimum, contain provisions that:

(1) The insurer may terminate the RB's authority at any time;

(2) The RB shall render accounts to the insurer accurately detailing all material transactions, including information necessary to support all commissions, charges and other fees received by or owing to the RB, and remit all funds due to the insurer within thirty days of receipt;

(3) All funds collected for the insurer's account shall be held by the RB in a fiduciary capacity in a bank which is a qualified United States financial institution;

(4) The RB shall comply with section 375.1120;

(5) The RB shall comply with the written standards established by the insurer for the cession or retrocession of all risks;

(6) The RB shall disclose to the insurer any relationship with any reinsurer to which business will be ceded or retroceded.

(L. 1991 H.B. 385, et al. § 40)

Effective 7-1-92

Records to be maintained by broker, duration--contents.

375.1120. 1. For at least twenty-three years after expiration of each contract of reinsurance of medical malpractice insurance and transacted by the RB, and for at least ten years after expiration of each contract of reinsurance or any other insurance transacted by the RB, the RB shall keep a complete record for each transaction showing:

(1) The type of contract, limits, underwriting restrictions, classes or risks and territory;

(2) Period of coverage, including effective and expiration dates, cancellation provisions and notice required of cancellation;

(3) Reporting and settlement requirements of balances;

(4) Rate used to compute the reinsurance premium;

(5) Names and addresses of assuming reinsurers;

(6) Rates of all reinsurance commissions, including the commissions on any retrocessions handled by the RB;

(7) Related correspondence and memoranda;

(8) Proof of placement;

(9) Details regarding retrocessions handled by the RB including the identity of retrocessionaires and percentage of each contract assumed or ceded;

(10) Financial records, including, but not limited to, premium and loss accounts; and

(11) When the RB procures a reinsurance contract on behalf of a licensed ceding insurer:

(a) Directly from any assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk; or

(b) If placed through a representative of the assuming reinsurer, other than an employee, written evidence that such reinsurer has delegated binding authority to the representative.

2. The insurer shall have access and the right to copy and audit all accounts and records maintained by the RB related to its business in a form usable by the insurer.

(L. 1991 H.B. 385, et al. § 41)

Effective 7-1-92

Insurer's use of broker, restrictions--financial condition statementrequired.

375.1122. 1. An insurer shall not engage the services of any person, firm, association or corporation to act as an RB on its behalf, unless such person is licensed as required by subsection 1 of section 375.1115.

2. An insurer may not employ an individual who is employed by an RB with which it transacts business, unless such RB is under common control with the insurer and subject to the provisions of chapter 382.

3. The insurer shall annually obtain a copy of statements of the financial condition of each RB with which it transacts business.

(L. 1991 H.B. 385, et al. § 42)

Effective 7-1-92

Transactions between manager and insurer, written contract required,contents--records to be maintained by manager, contents.

375.1125. Transactions between an RM and the reinsurer it represents in such capacity shall only be entered into pursuant to a written contract, specifying the responsibilities of each party, which shall be approved by the reinsurer's board of directors. At least thirty days before such reinsurer assumes or cedes business through such producer, a true copy of such approved contract shall be filed with the director for approval. The contract shall, at a minimum, contain provisions that:

(1) The reinsurance may terminate the contract for cause upon written notice to the RM. The reinsurance may suspend the authority of the RM to assume or cede business during the pendency of any dispute regarding the cause for termination;

(2) The RM shall render accounts to the reinsurer accurately detailing all material transactions, including information necessary to support all commissions, charges and other fees received by, or owing to, the RM, and remit all funds due under the contract to the reinsurer on not less than a monthly basis;

(3) All funds collected for the reinsurer's account shall be held by the RM in a fiduciary capacity in a bank which is a qualified United States financial institution. The RM may retain no more than three months' estimated claims payments and allocated loss adjustment expenses. The RM shall maintain a separate bank account for each reinsurer that it represents;

(4) For at least twenty-three years after expiration of each contract of reinsurance of medical malpractice insurance transacted by the RM, and for at least ten years after expiration of each contract of reinsurance or any other insurance transacted by the RM, the RM shall keep a complete record for each transaction showing:

(a) The type of contract, limits, underwriting restrictions, classes or risks and territory;

(b) The period of coverage including effective and expiration dates, cancellation provisions and notice required of cancellation, and disposition of outstanding reserves on covered risks;

(c) Reporting and settlement requirements of balances;

(d) The rate used to compute the reinsurance premium;

(e) Names and addresses of reinsurers;

(f) Rates of all reinsurance commissions, including the commissions on any retrocessions handled by the RM;

(g) Related correspondence and memoranda;

(h) Proof of placement;

(i) Details regarding retrocessions handled by the RM, as permitted by subsection 4 of section 375.1130, including the identity of retrocessionaires and percentage of each contract assumed or ceded;

(j) Financial records, including, but not limited to, premium and loss accounts; and

(k) When the RM places a reinsurance contract on behalf of a ceding insurer:

a. Directly from any assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk; or

b. If placed through a representative of the assuming reinsurer, other than an employee, written evidence that such reinsurer has delegated binding authority to the representative;

(5) The reinsurer shall have access and the right to copy all accounts and records maintained by the RM related to its business in a form usable by the reinsurer;

(6) The contract cannot be assigned in whole or in part by the RM;

(7) The RM shall comply with the written underwriting and rating standards established by the insurer for the acceptance, rejection or cession of all risks;

(8) Sets forth the rates, terms and purposes of commissions, charges and other fees which the RM may levy against the reinsurer;

(9) If the contract permits the RM to settle claims on behalf of the reinsurer:

(a) All claims will be reported to the reinsurer in a timely manner;

(b) A copy of claim file will be sent to the reinsurer at its request or as soon as it becomes known that the claim:

a. Has the potential to exceed the lesser of an amount determined by the director or the limit set by the reinsurer;

b. Involves a coverage dispute;

c. May exceed the RM's claims settlement authority;

d. Is open for more than six months; or

e. Is closed by payment of the lesser of an amount set by the director or an amount set by the reinsurer;

(c) All claim files will be joint property of the reinsurer and RM; however, upon an order of liquidation of the reinsurer such files shall become the sole property of the reinsurer or its estate; the RM shall have reasonable access to and the right to copy the files on a timely basis;

(d) Any settlement authority granted to the RM may be terminated for cause upon the reinsurer's written notice to the RM or upon the termination of the contract. The reinsurer may suspend the settlement authority during the pendency of the dispute regarding the cause of termination;

(10) If the contract provides for a sharing of interim profits by the RM, that such interim profits will not be paid until one year after the end of each underwriting period for property business and five years after the end of each underwriting period for casualty business or a later period set by the director for specified lines of insurance, and not until the adequacy of reserves on remaining claims has been verified pursuant to subsection 3 of section 375.1130;

(11) The RM shall annually provide the reinsurer with a statement of its financial condition prepared by an independent certified accountant;

(12) The reinsurer shall periodically, and at least semiannually, conduct an on-site review of the underwriting and claims processing operations of the RM;

(13) The RM shall disclose to the reinsurer any relationship it has with any insurer prior to ceding or assuming any business with such insurer pursuant to this contract; and

(14) The acts of the RM shall be deemed to be the acts of the reinsurer on whose behalf it is acting.

(L. 1991 H.B. 385, et al. § 43)

Effective 7-1-92

Reinsurance manager, prohibited acts.

375.1127. The RM shall not:

(1) Bind retrocessions on behalf of the reinsurer, except that the RM may bind facultative retrocessions pursuant to obligatory facultative agreements if the contract with the reinsurer contains reinsurance underwriting guidelines for such retrocessions. Such guidelines shall include a list of reinsurers with which such automatic agreements are in effect, and for each such reinsurer, the coverages and amounts or percentages that may be reinsured, and commission schedules;

(2) Commit the reinsurer to participate in reinsurance syndicates;

(3) Appoint any producer without assuring that the producer is lawfully licensed to transact the type of reinsurance for which he is appointed;

(4) Without prior approval of the reinsurer, pay or commit the reinsurer to pay a claim, net of retrocessions, that exceeds the lesser of an amount specified by the reinsurer or one percent of the reinsurer's policyholder's surplus as of December thirty-first of the last complete calendar year;

(5) Collect any payment from a retrocessionaire or commit the reinsurer to any claim settlement with a retrocessionaire, without prior approval of the reinsurer. If prior approval is given, a report must be promptly forwarded to the reinsurer;

(6) Jointly employ an individual who is employed by the reinsurer; or

(7) Appoint a subRM.

(L. 1991 H.B. 385, et al. § 44)

Effective 7-1-92

Insurer's use of manager, restrictions--financial conditionstatement required.

375.1130. 1. The reinsurer shall not engage the services of any person, firm, association or corporation to act as an RM on its behalf unless such person is licensed as required by subsection 2 of section 375.1115.

2. The reinsurer shall annually obtain a copy of statements of the financial condition of each RM which such reinsurer has engaged prepared by an independent certified accountant in a form acceptable to the director.

3. If an RM establishes loss reserves, the reinsurer shall annually obtain the opinion of an actuary attesting to the adequacy of loss reserves established for losses incurred and outstanding on business produced by the RM. This opinion shall be in addition to any other required loss reserve certification.

4. Binding authority for all retrocessional contracts or participation in reinsurance syndicates shall rest with an officer of the reinsurer who shall not be affiliated with the RM.

5. Within thirty days of termination of a contract with an RM, the reinsurer shall provide written notification of such termination to the director.

6. A reinsurer shall not appoint to its board of directors, any officer, director, employee, controlling shareholder or subproducer of its RM. This subsection shall not apply to relationships governed by chapter 382.

(L. 1991 H.B. 385, et al. § 45)

Effective 7-1-92

Examination of reinsurance manager, director may conduct.

375.1132. 1. A reinsurance intermediary shall be subject to examination by the director. The director shall have access to all books, bank accounts and records of the reinsurance intermediary in a form usable to the director.

2. An RM may be examined as if it were the reinsurer.

(L. 1991 H.B. 385, et al. § 46)

Effective 7-1-92

Penalties, director may assess, procedures.

375.1135. 1. If the director determines that a reinsurance intermediary, insurer, or reinsurer has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of sections 375.1110 to 375.1140 or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business constituting a violation of sections 375.1110 to 375.1140 or a rule adopted or order issued pursuant thereto, the director may issue such administrative orders as authorized under section 374.046. A violation of any of these sections is a level two violation under section 374.049. The director may also suspend or revoke the license or certificate of authority of a reinsurance intermediary, insurer, or reinsurer for any willful violation.

2. If the director believes that a reinsurance intermediary, insurer, or reinsurer has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of sections 375.1110 to 375.1140 or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business constituting a violation of sections 375.1110 to 375.1140 or a rule adopted or order issued pursuant thereto, the director may maintain a civil action for relief authorized under section 374.048. A violation of any of these sections is a level two violation under section 374.049.

3. In addition to any other relief authorized by sections 374.046 and 374.047, if a violation was committed by the reinsurance intermediary, such reinsurance intermediary shall make restitution to the insurer, reinsurer, rehabilitator or liquidator of the insurer or reinsurer for the net losses incurred by the insurer or reinsurer attributable to such violation.

4. Nothing contained in sections 375.1110 to 375.1140 is intended to or shall in any manner limit or restrict the rights of policyholders, claimants, creditors or other third parties or confer any rights to such persons.

(L. 1991 H.B. 385, et al. § 47, A.L. 2007 S.B. 66)

Application fee, reinsurance intermediary license--renewal.

375.1137. The initial application fee for a reinsurance intermediary license is one hundred dollars. The license shall be renewed annually on the anniversary date of issuance and continue in effect until refused, revoked or suspended by the director in accordance with sections 375.1110 to 375.1140, except that if the annual renewal fee for the license is not paid on or before the anniversary date, the license terminates.

(L. 1991 H.B. 385, et al. § 48)

Effective 7-1-92

Effective date.

375.1140. Sections 375.1110 to 375.1140 shall take effect on July 1, 1992. No insurer or reinsurer may continue to use the services of a reinsurance intermediary on and after July 1, 1992, unless such use is in compliance with sections 375.1110 to 375.1140.

(L. 1991 H.B. 385, et al. § 49)

Effective 7-1-92

Citation of law--applicability.

375.1150. 1. Sections 375.1150 to 375.1246 shall be cited as the "Insurers Supervision, Rehabilitation and Liquidation Act".

2. The proceedings authorized by sections 375.1150 to 375.1246 may be applied to:

(1) All insurers conducting business which are doing, or have done, an insurance business in this state, and against whom claims arising from that business may exist now or in the future except companies covered by chapter 380;

(2) All insurers which propose to do an insurance business in this state;

(3) All insurers which have insureds resident in this state;

(4) All prepaid health care delivery plans, prepaid dental plans, health services corporations and health maintenance organizations;

(5) All nonprofit service plans and all fraternal benefit societies and beneficial societies;

(6) All malpractice associations operating pursuant to an assessment plan;

(7) All other persons organized or in the process of organizing with the intent to do an insurance business in this state; and

(8) All title insurance companies.

(L. 1991 H.B. 385, et al. § 50)

Definitions.

375.1152. For purposes of sections 375.570 to 375.750 and 375.1150 to 375.1246, the following words and phrases shall mean:

(1) "Allocated loss adjustment expenses", those fees, costs or expenses reasonably chargeable to the investigation, negotiation, settlement or defense of an individual claim or loss or to the protection and perfection of the subrogation rights of any insolvent insurer arising out of a policy of insurance issued by the insolvent insurer. "Allocated loss adjustment expenses" shall include all court costs, fees and expenses; fees for service of process; fees to attorneys; costs of undercover operative and detective services; fees of independent adjusters or attorneys for investigation or adjustment of claims beyond initial investigation; costs of employing experts for preparation of maps, photographs, diagrams, chemical or physical analysis or for advice, opinion or testimony concerning claims under investigation or in litigation; costs for legal transcripts or testimony taken at coroner's inquests, criminal or civil proceedings; costs for copies of any public records; costs of depositions and court-reported or -recorded statements. "Allocated loss adjustment expenses" shall not include the salaries of officials, administrators or other employees or normal overhead charges such as rent, postage, telephone, lighting, cleaning, heating or similar expenses;

(2) "Ancillary state", any state other than a domiciliary state;

(3) "Creditor", a person having any claim, whether matured or unmatured, liquidated or unliquidated, secured or unsecured, absolute, fixed or contingent;

(4) "Delinquency proceeding", any proceeding instituted against an insurer for the purpose of liquidating, rehabilitating, reorganizing or conserving such insurer, and any summary proceeding under sections 375.1160, 375.1162 and 375.1164;

(5) "Director", the director of the department of insurance, financial institutions and professional registration;

(6) "Doing business" includes any of the following acts, whether effected by mail or otherwise:

(a) The issuance or delivery of contracts of insurance to persons resident in this state;

(b) The solicitation of applications for such contracts, or other negotiations preliminary to the execution of such contracts;

(c) The collection of premiums, membership fees, assessments, or other consideration for such contracts;

(d) The transaction of matters subsequent to execution of such contracts and arising out of them; or

(e) Operating under a license or certificate of authority, as an insurer, issued by the department of insurance, financial institutions and professional registration;

(7) "Domiciliary state", the state in which an insurer is incorporated or organized or, in the case of an alien insurer, its state of entry;

(8) "Fair consideration" is given for property or obligation:

(a) When in exchange for such property or obligation, as a fair equivalent thereof, and in good faith, property is conveyed or services are rendered or an obligation is incurred or an antecedent debt is satisfied; or

(b) When such property or obligation is received in good faith to secure a present advance or antecedent debt in an amount not disproportionately small as compared to the value of the property or obligation obtained;

(9) "Foreign country", any jurisdiction not in the United States;

(10) "Formal delinquency proceeding", any liquidation or rehabilitation proceeding;

(11) "General assets", all property, real, personal, or otherwise, not specifically mortgaged, pledged, deposited or otherwise encumbered for the security or benefit of specified persons or classes of persons. As to specifically encumbered property, "general assets" includes all such property or its proceeds in excess of the amount necessary to discharge the sum or sums secured thereby. Assets held in trust and on deposit for the security or benefit of all policyholders or all policyholders and creditors, in more than a single state, shall be treated as general assets;

(12) "Guaranty association", the Missouri property and casualty insurance guaranty association created by sections 375.771 to 375.779, as amended, the Missouri life and health insurance guaranty association created by sections 376.715 to 376.758, as amended, and any other similar entity now or hereafter created by the laws of this state for the payment of claims of insolvent insurers. "Foreign guaranty association" means any similar entities now in existence or hereafter created by the laws of any other state;

(13) "Insolvency" or "insolvent" means:

(a) For an insurer issuing only assessable fire insurance policies:

a. The inability to pay an obligation within thirty days after it becomes payable; or

b. If an assessment be made within thirty days after such date, the inability to pay such obligation thirty days following the date specified in the first assessment notice issued after the date of loss;

(b) For any other insurer, that it is unable to pay its obligations when they are due, or when its admitted assets do not exceed its liabilities plus the greater of:

a. Any capital and surplus required by law for its organization; or

b. The total par or stated value of its authorized and issued capital stock;

(c) As to any insurer licensed to do business in this state as of August 28, 1991, which does not meet the standards established under paragraph (b) of this subdivision, the term "insolvency" or "insolvent" shall mean, for a period not to exceed three years from August 28, 1991, that it is unable to pay its obligations when they are due or that its admitted assets do not exceed its liabilities plus any required capital contribution ordered by the director under any other provisions of law;

(d) For purposes of this subdivision "liabilities" shall include but not be limited to reserves required by statute or by the department of insurance, financial institutions and professional registration regulations or specific requirements imposed by the director upon a subject company at the time of admission or subsequent thereto;

(e) For purposes of this subdivision, an obligation is payable within ninety days of the resolution of any dispute regarding the obligation;

(14) "Insurer", any person who has done, purports to do, is doing or is licensed to do insurance business as described in section 375.1150, and is or has been subject to the authority of, or to liquidation, rehabilitation, reorganization, supervision, or conservation by, any insurance department of any state. For purposes of sections 375.1150 to 375.1246, any other persons included under section 375.1150 shall be deemed to be insurers;

(15) "Netting agreement":

(a) A contract or agreement (including terms and conditions incorporated by reference therein), including a master settlement agreement (which master settlement agreement, together with all schedules, confirmations, definitions and addenda thereto and transactions under any thereof, shall be treated as one netting agreement), that documents one or more transactions between the parties to the agreement for or involving one or more qualified financial contracts and that provides for the netting, liquidation, setoff, termination, acceleration, or close out under or in connection with one or more qualified financial contracts or present or future payment or delivery obligations or payment or delivery entitlements thereunder (including liquidation or close-out values relating to such obligations or entitlements) among the parties to the netting agreement;

(b) Any master agreement or bridge agreement for one or more master agreements described in paragraph (a) of this subdivision; or

(c) Any security agreement or arrangement or other credit enhancement or guarantee or reimbursement obligation related to any contract or agreement described in paragraph (a) or (b) of this subdivision; provided that any contract or agreement described in paragraph (a) or (b) of this subdivision relating to agreements or transactions that are not qualified financial contracts shall be deemed to be a netting agreement only with respect to those agreements or transactions that are qualified financial contracts;

(16) "Preferred claim", any claim with respect to which the terms of sections 375.1150 to 375.1246 accord priority of payment from the general assets of the insurer;

(17) "Qualified financial contract", any commodity contract, forward contract, repurchase agreement, securities contract, swap agreement, and any similar agreement that the director determines by rule to be a qualified financial contract for purposes of sections 375.1150 to 375.1246. For purposes of this subdivision, the following terms shall mean:

(a) "Commodity contract":

a. A contract for the purchase or sale of a commodity for future delivery on or subject to the rules of the board of trade or contract market under the Commodity Exchange Act, 7 U.S.C. Section 1, et seq., or a board of trade outside the United States;

b. An agreement that is subject to regulation under Section 19 of the Commodity Exchange Act, 7 U.S.C. Section 1, et seq., and that is commonly known to the commodities trade as a margin account, margin contract, leverage account, or leverage contract;

c. An agreement or transaction that is subject to regulation under Section 4c(b) of the Commodity Exchange Act, 7 U.S.C. Section 1, et seq., and that is commonly known to the commodities trade as a commodity option;

d. Any combination of the agreements or transactions referred to in this paragraph; or

e. Any option to enter into an agreement or transaction referred to in this paragraph;

(b) "Forward contract", "repurchase agreement", "securities contract", and "swap agreement", the same meaning as set forth in the Federal Deposit Insurance Act, 12 U.S.C. Section 1821(e)(8)(D), as amended;

(18) "Receiver", a receiver, liquidator, administrative supervisor, rehabilitator or conservator, as the context requires;

(19) "Reciprocal state", any state other than this state in which in substance and effect, provisions substantially similar to subsection 1 of section 375.1176 and sections 375.1235, 375.1236, 375.1240, 375.1242 and 375.1244 have been enacted and are in force, and in which laws are in force requiring that the director of the state department of insurance, financial institutions and professional registration or equivalent official be the receiver of a delinquent insurer, and in which some provision exists for the avoidance of fraudulent conveyances and preferential transfers;

(20) "Secured claim", any claim secured by mortgage, trust deed, pledge, deposit as security, escrow, or otherwise, including a pledge of assets allocated to a separate account established pursuant to section 376.309; but not including special deposit claims or claims against general assets. The term also includes claims which have become liens upon specific deposit claims or claims against general assets. The term also includes claims which have become liens upon specific assets by reason of judicial process;

(21) "Special deposit claim", any claim secured by a deposit made pursuant to statute for the security or benefit of a limited class or classes of persons, but not including any claim secured by general assets;

(22) "State", any state, district, or territory of the United States and the Panama Canal Zone;

(23) "Transfer" shall include the sale and every other and different mode, direct or indirect, of disposing of or of parting with property or with an interest therein, or with the possession thereof, or of fixing a lien upon property or upon an interest therein, absolutely or conditionally, voluntarily, by or without judicial proceedings. The retention of a security title to property delivered to a debtor shall be deemed a transfer suffered by the debtor.

(L. 1991 H.B. 385, et al. § 51, A.L. 1992 H.B. 1574, A.L. 1993 H.B. 709, A.L. 2010 S.B. 583)

Delinquency proceeding, director to initiate--law to governproceedings--situs of insurer and property this state, when--venue.

375.1154. 1. No delinquency proceeding shall be commenced after August 28, 1991, by anyone other than the director and no court shall have jurisdiction to entertain, hear or determine any proceedings commenced by any other person.

2. No court of this state shall have jurisdiction to entertain, hear or determine any complaint praying for the dissolution, liquidation, rehabilitation, sequestration, supervision, conservation or receivership of any insurer; or praying for an injunction or restraining order or other relief preliminary to, incidental to or relating to such proceedings other than in accordance with sections 375.1150 to 375.1246.

3. All assets of or owing to an insurer which was incorporated under the laws of this state and which is subject to a formal delinquency proceeding shall be deemed to have a situs within the jurisdiction of the court supervising such proceeding, and jurisdiction and venue of any action by the receiver to collect such assets shall be proper in such court.

4. In addition to other grounds for jurisdiction provided by the law of this state, a court of this state having jurisdiction of the subject matter has jurisdiction over a person served pursuant to applicable laws or supreme court rule in an action brought by the receiver of a domestic insurer or an alien insurer domiciled in this state:

(1) If the person served is an agent, broker, or other person who has at any time written policies of insurance for or has acted in any manner whatsoever on behalf of an insurer against which a delinquency proceeding has been instituted, in any action resulting from or incident to such a relationship with the insurer; or

(2) If the person served is a reinsurer who has at any time entered into a contract of reinsurance with an insurer against which a delinquency proceeding has been instituted, or is an agent or broker of or for the reinsurer, in any action on or incident to the reinsurance contract; or

(3) If the person served is or has been an officer, director, manager, trustee, organizer, promoter, or other person in a position of comparable authority or influence over an insurer against which a delinquency proceeding has been instituted, in any action resulting from or incident to such a relationship with the insurer; or

(4) If the person served is or was at the time of the institution of the delinquency proceeding against the insurer holding assets in which the receiver claims an interest on behalf of the insurer, in any action concerning the assets; or

(5) If the person served is obligated to the insurer in any way whatsoever, in any action on or incident to the obligation.

5. If the court on motion of any party finds that any action should as a matter of substantial justice be tried in a forum outside this state, the court may enter an appropriate order to stay further proceedings on the action in this state.

6. All actions herein authorized shall be brought in the circuit court of Cole County or of any county where the principal office of the insurer is or was last located, and venue of all proceedings and cases ancillary or related to such actions shall be proper in said court.

(L. 1991 H.B. 385, et al. § 52)

Receiver may petition for injunctions, restrainingorders--purposes--delinquency proceeding does not stay otherrights and enforcement.

375.1155. 1. Any receiver appointed in a proceeding under sections 375.1150 to 375.1246 may at any time apply for, and any court of general jurisdiction may grant, such restraining orders, preliminary and permanent injunctions, and other orders as may be deemed necessary and proper to prevent:

(1) The transaction of further business;

(2) The transfer of property;

(3) Interference with the receiver or with a proceeding under sections 375.1150 to 375.1246;

(4) Waste of the insurer's assets;

(5) Dissipation and transfer of bank accounts;

(6) The institution or further prosecution of any actions or proceedings;

(7) The obtaining of preferences, judgments, attachments, garnishments or liens against the insurer, its assets or its policyholders;

(8) The levying of execution against the insurer, its assets or its policyholders;

(9) The making of any sale or deed for nonpayment of taxes or assessments that would lessen the value of the assets of the insurer;

(10) The withholding from the receiver of books, accounts, documents, or other records relating to the business of the insurer; or

(11) Any other threatened or contemplated action that might lessen the value of the insurer's assets or prejudice the rights of policyholders, creditors or shareholders, or the administration of any proceeding under this act.

2. The receiver may apply to any court outside of the state for the relief described in subsection 1 of this section.

3. Notwithstanding any other provision of this section to the contrary, the commencement of a delinquency proceeding under sections 375.1150 to 375.1246 does not operate as a stay or prohibition of any right to cause of netting, liquidation, setoff, termination, acceleration or close out of obligations, or enforcement of any security agreement or arrangement or other credit enhancement or guarantee or reimbursement obligation under or in connection with any netting agreement or qualified financial contract as provided for in section 375.1191.

(L. 1991 H.B. 385, et al. § 53, A.L. 1992 H.B. 1574, A.L. 2010 S.B. 583)

Cooperation with receiver and director required--penalty.

375.1156. 1. Any officer, manager, director, trustee, owner, employee or agent of any insurer, or any other persons with authority over or in charge of any segment of the insurer's affairs, shall cooperate with the director or any receiver in any proceeding under sections 375.1150 to 375.1246 or any investigation preliminary to the proceeding. The term "person" as used in this section, shall include any person who exercises control directly or indirectly over activities of the insurer through any holding company or other affiliate of the insurer. "To cooperate" shall include, but shall not be limited to, the following:

(1) To reply promptly in writing to any inquiry from the director requesting such a reply; and

(2) To make available to the director any books, accounts, documents, or other records or information or property of or pertaining to the insurer and in its possession, custody or control.

2. It is unlawful for any person included in subsection 1 of this section to obstruct or interfere with the director in the conduct of any delinquency proceeding or any investigation preliminary or incidental thereto.

3. This section shall not be construed to abridge otherwise existing legal rights, including the right to resist a petition for liquidation or other delinquency proceedings, or other orders.

4. In any proceeding under sections 375.1150 to 375.1246, the director and his deputies shall be responsible on their official bonds for the faithful performance of their duties. If the court deems it desirable for the protection of the assets, it may at any time require an additional bond from the director or his deputies, and such bonds shall be paid for out of the assets of the insurer as a cost of administration.

(L. 1991 H.B. 385, et al. § 54, A.L. 1992 H.B. 1574, A.L. 2007 S.B. 66)

Provisions apply prospectively, exceptions--restrictions on insurerin delinquency proceeding.

375.1158. 1. Unless otherwise provided, the portions of sections 375.1150 to 375.1246 which substantively affect the rights of any person shall be only applicable prospectively. The provisions of sections 375.650 to 375.700, sections 375.740 and 375.750, and sections 375.950 to 375.990 shall be effective and apply only to proceedings instituted pursuant to those sections prior to August 28, 1991. The provisions of sections 375.1150 to 375.1246 which are procedural in nature and which do not conflict with any provision of sections 375.570 to 375.750 and sections 375.950 to 375.990 applicable to any proceeding instituted prior to August 28, 1991, shall be applicable to proceedings instituted prior to August 28, 1991; provided that the provisions of this subsection shall not affect any final order entered by a court of competent jurisdiction prior to August 28, 1991.

2. No insurer that is subject to any delinquency proceedings, whether formal or informal, administrative or judicial, shall:

(1) Be released from such proceeding, unless such proceeding is converted into a judicial rehabilitation or liquidation proceeding;

(2) Be permitted to solicit or accept new business or request or accept the restoration of any suspended or revoked license or certificate of authority;

(3) Be returned to the control of its shareholders or private management; or

(4) Have any of its assets returned to the control of its shareholders or private management.

Until all payments of or on account of the insurer's contractual obligations by all guaranty associations and all expenses on account of such delinquency proceedings, along with all expenses thereof and interest on all such payments and expenses, shall have been repaid to the department of insurance, financial institutions and professional registration and guaranty associations or a plan of repayment by the insurer shall have been approved by the director. Moneys collected by the director pursuant to this section shall be transferred to the state treasurer and deposited to the general revenue fund.

3. In any delinquency proceeding under sections 375.1150 to 375.1246, certified copies of the statement made by the company proceeded against, or of reports of examinations of the company made by the director or persons appointed by him, shall be received, if offered by the director, as prima facie evidence of the facts therein contained pertaining to the condition and affairs of the insurer.

(L. 1991 H.B. 385, et al. § 55, A.L. 1992 H.B. 1574)

Administrative supervision by director, procedures, allowedwhen--proceedings confidential, exceptions--powers ofadministrative supervisor--penalties for violations--director mayadopt rules--immunity from liability for director and employees.

375.1160. 1. As used in this section:

(1) "Exceeded its powers" means one or more of the following conditions:

(a) The insurer has refused to permit examination of its books, papers, accounts, records or affairs by the director, his deputy, employees or duly commissioned examiners;

(b) A domestic insurer has unlawfully removed from this state or is unable to produce books, papers, accounts or records necessary for an examination of the insurer;

(c) The insurer has failed to promptly comply with the applicable financial reporting statutes or rules and requests relating thereto;

(d) The insurer has neglected or refused to observe an order of the director to make good, within the time prescribed by law, any prohibited deficiency in its capital, capital stock or surplus;

(e) The insurer is continuing to transact insurance or write business after its license has been revoked or suspended by the director;

(f) The insurer, by contract or otherwise, has unlawfully or has in violation of an order of the director or has without first having obtained written approval of the director if approval is required by law:

a. Totally reinsured its entire outstanding business, or

b. Merged or consolidated substantially its entire property or business with another insurer;

(g) The insurer engaged in any transaction in which it is not authorized to engage under the laws of this state;

(h) A domestic insurer has committed or engaged in, or is about to commit or engage in, any act, practice or transaction that would subject it to delinquency proceedings under sections 375.1150 to 375.1246; or

(i) The insurer refused to comply with a lawful order of the director;

(2) "Consent" means agreement to administrative supervision by the insurer.

2. (1) An insurer may be subject to administrative supervision by the director if upon examination or at any other time it appears in the director's discretion that:

(a) The insurer's condition renders the continuance of its business hazardous to the public or to its insureds;

(b) The insurer exceeded its powers granted under its certificate of authority and applicable law;

(c) The insurer has failed to comply with the laws of this state relating to insurance;

(d) The business of the insurer is being conducted fraudulently; or

(e) The insurer gives its consent.

(2) If the director determines that the conditions set forth in subdivision (1) of this subsection exist, the director shall:

(a) Notify in writing the insurer of his determination;

(b) Furnish to the insurer a written list of his requirements to rescind his determination; and

(c) Notify the insurer that it is under the supervision of the director and that the director is applying and effectuating the provisions of this section.

(3) The notice of supervision under this subsection and any order issued pursuant to this section shall be served upon the insurer in writing by registered mail. The notice of supervision shall state the conduct, condition or ground upon which the director bases his order.

(4) If placed under administrative supervision, the insurer shall have sixty days, or another period of time as designated by the director, to comply with the requirements of the director subject to the provisions of this section. In the event of such insurer's failure to comply with such time periods, the director may institute proceedings under section 375.1165 or 375.1175 to have a rehabilitator or liquidator appointed, or to extend the period of supervision.

(5) If it is determined that none of the conditions giving rise to the supervision exist, the director shall release the insurer from supervision.

3. (1) Except as set forth in this subsection, all proceedings, hearings, notices, orders, correspondence, reports, records and other information in the possession of the director or the department relating to the supervision of any insurer are confidential except as provided by this section.

(2) Personnel of the department shall have access to these proceedings, hearings, notices, orders, correspondence, reports, records or information as permitted by the director.

(3) The director may open the proceedings or hearings or disclose the notices, orders, correspondence, reports, records or information to a department, agency or instrumentality of this or another state or the United States if the director determines that the disclosure is necessary or proper for the enforcement of the laws of this or another state of the United States.

(4) The director may open the proceedings or hearings or make public the notices, orders, correspondence, reports, records or other information if the director deems that it is in the best interest of the public or in the best interest of the insurer, its insureds, creditors or the general public.

(5) This subsection does not apply to hearings, notices, correspondence, reports, records or other information obtained upon the appointment of a receiver for the insurer by a court of competent jurisdiction.

4. During the period of supervision, the director or his designated appointee shall serve as the administrative supervisor. The director may provide that the insurer shall not do any of the following things during the period of supervision, without the prior approval of the director or the appointed supervisor:

(1) Dispose of, convey or encumber any of its assets or its business in force;

(2) Withdraw any of its bank accounts;

(3) Lend any of its funds;

(4) Invest any of its funds;

(5) Transfer any of its property;

(6) Incur any debt, obligation or liability;

(7) Merge or consolidate with another company;

(8) Approve new premiums or renew any policies;

(9) Enter into any new reinsurance contract or treaty;

(10) Terminate, surrender, forfeit, convert or lapse any insurance policy, certificate or contract, except for nonpayment of premiums due;

(11) Write any new or renewal business;

(12) Release, pay or refund premium deposits, accrued cash or loan values, unearned premiums, or other reserves on any insurance policy, certificate or contract;

(13) Make any material change in management; or

(14) Increase salaries and benefits of officers or directors or the preferential payment of bonuses, dividends or other payments deemed preferential.

5. Any insurer subject to a supervision order under this section may seek review pursuant to section 536.150 of that order within thirty days of the entry of the order of supervision. Such a request for a hearing shall not stay the effect of the order.

6. During the period of supervision the insurer may contest an action taken or proposed to be taken by the administrative supervisor specifying the manner in which the action being complained of would not result in improving the condition of the insurer. An insurer may request review pursuant to section 536.150 of written denial of the insurer's request to reconsider pursuant to this subsection.

7. If any person has violated any supervision order issued under this section which as to him was still in effect, the director may initiate an action under section 375.1161.

8. In the event that any person, subject to the provisions of sections 375.1150 to 375.1246, including those persons described in subsection 1 of section 375.1156, shall knowingly violate any valid order of the director issued under the provisions of this section and, as a result of such violation, the net worth of the insurer shall be reduced or the insurer shall suffer loss it would not otherwise have suffered, said person shall become personally liable to the insurer for the amount of any such reduction or loss. The director or administrative supervisor is authorized under subsection 1 of section 375.1161 to bring an action on behalf of the insurer in any court of competent jurisdiction to recover the amount of reduction or loss together with any costs.

9. Nothing contained in sections 375.1150 to 375.1246 shall preclude the director from initiating judicial proceedings to place an insurer in conservation, rehabilitation or liquidation proceedings or other delinquency proceedings, however designated under the laws of this state, regardless of whether the director has previously initiated administrative supervision proceedings under this section against the insurer.

10. The director may adopt reasonable rules necessary for the implementation of this section.

11. Notwithstanding any other provision of law, the director may meet with an administrative supervisor appointed under this section and with the attorney or other representative of the administrative supervisor, without the presence of any other person, at the time of any proceeding or during the pendency of any proceeding held under authority of this section to carry out his duties under this section or for the administrative supervisor to carry out his duties under this section.

12. There shall be no liability on the part of, and no cause of action of any nature shall arise against, the director or the department of insurance, financial institutions and professional registration or its employees or agents for any action taken by them in the performance of their powers and duties under this section.

(L. 1991 H.B. 385, et al. § 56, A.L. 1992 H.B. 1574, A.L. 2007 S.B. 66)

Violations, penalties.

375.1161. 1. If the director determines that a person has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of sections 375.1150 to 375.1246 or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business constituting a violation of sections 375.1150 to 375.1246 or a rule adopted or order issued pursuant thereto, the director may issue such administrative orders as authorized under section 374.046. A violation of any of these sections is a level four violation under section 374.049. The director may also suspend or revoke the license or certificate of authority of such person for any willful violation.

2. If the director believes that a person has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of sections 375.1150 to 375.1246 or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business constituting a violation of sections 375.1150 to 375.1246 or a rule adopted or order issued pursuant thereto, the director may maintain a civil action for relief authorized under section 374.048. A violation of any of these sections is a level four violation under section 374.049.

(L. 2007 S.B. 66)

Director may order activities to prevent delinquency proceeding.

375.1162. Whenever the director has reasonable cause to believe, and determines that any domestic insurer has committed or engaged in, or is about to commit or engage in, any act, practice, or transaction that would subject it to delinquency proceedings under sections 375.1150 to 375.1246, he may make and serve upon the insurer and any other persons involved, such orders as are reasonably necessary to correct, eliminate or remedy such conduct, condition or ground. Any such order of the director may be appealed as provided by section 536.150.

(L. 1991 H.B. 385, et al. § 57)

Seizure order, director may petition for, when--effects.

375.1164. 1. The director may file in a court of this state a petition alleging, with respect to a domestic insurer:

(1) That there exist any grounds that would justify a court order for a formal delinquency proceeding against an insurer under sections 375.1150 to 375.1246;

(2) That the interest of policyholders, creditors or the public will be endangered by delay.

2. Upon the filing under subsection 1 of this section, the court may issue forthwith, ex parte and without a hearing, an order which shall direct the director to secure and take immediate possession and control of the property, books, accounts, documents, and other records of an insurer, and of the premises occupied by it for transaction of its business; and until further order of the court enjoin the insurer and its officers, managers, agents, and employees from disposition of its property and from the transaction of its business except with the written consent of the director.

3. The court shall specify within the order its duration, which shall be such time as the court deems necessary for the director to ascertain the condition of the insurer. On motion of either party or on its own motion, the court may from time to time hold such hearings after such notice as it deems appropriate, and may extend, shorten, or modify the terms of the seizure order. The court shall vacate the seizure order if the director fails to commence a formal proceeding under the act* after having had a reasonable opportunity to do so. An order of the court made pursuant to a formal proceeding under sections 375.1150 to 375.1246 shall vacate the seizure order.

4. Entry of a seizure order under this section shall not constitute an anticipatory breach of contract of the insurer.

5. An insurer subject to an ex parte order under this section may petition the court at any time after the issuance of such order for a hearing and review of the order. The court shall hold such a hearing and review not more than fifteen days after the request.

6. If, at any time after the issuance of such an order, it appears to the court that any person whose interest is or will be substantially affected by the order did not appear at the hearing and has not been served, the court may order that notice be given. An order that notice be given shall not stay the effect of any order previously issued by the court.

(L. 1991 H.B. 385, et al. § 58, A.L. 1992 H.B. 1574)

*"The act" (H.B. 1574, 1992) contained numerous sections. Consult Disposition of Sections table for a definitive listing.

Rehabilitation of insurer, director may petition, when--grounds.

375.1165. The director may apply by petition to the court for an order authorizing him to rehabilitate a domestic insurer or an alien insurer domiciled in this state on any one or more of the following grounds:

(1) The insurer is in such condition that the further transaction of business would be hazardous financially to its policyholders, creditors or the public;

(2) There is reasonable cause to believe that there has been embezzlement from the insurer, wrongful sequestration or diversion of the insurer's assets, forgery or fraud affecting the insurer, or other illegal conduct in, by, or with respect to the insurer that if established would endanger assets in an amount threatening the solvency of the insurer;

(3) The insurer has failed to remove any person who in fact has executive authority in the insurer, whether an officer, manager, general agent, employee, or other person, if the person has been found after notice and hearing by the director to be dishonest or untrustworthy in a way affecting the insurer's business;

(4) Control of the insurer, whether by stock ownership or otherwise, and whether direct or indirect, is in a person or persons found after notice and hearing to be untrustworthy;

(5) Any person who in fact has executive authority in the insurer, whether an officer, manager, general agent, director or trustee, employee, or other person, has refused to be examined under oath by the director concerning its affairs, whether in this state or elsewhere; and after reasonable notice of the fact, the insurer has failed promptly and effectively to terminate the employment and status of the person and all his influence on management;

(6) After request by the director pursuant to section 374.190 or pursuant to the provisions of sections 375.1150 to 375.1246, the insurer has failed to promptly make available for examination any of its own property, books, accounts, documents, or other records, or those of any subsidiary or related company within* the control of the insurer, or those of any person having executive authority in the insurer so far as they pertain to the insurer;

(7) Without first obtaining the written consent of the director, the insurer has transferred, or attempted to transfer in a manner contrary to section 375.241 or sections 382.040 to 382.060, substantially its entire property or business, or has entered into any transaction the effect of which is to merge, consolidate, or reinsure substantially its entire property or business in or with the property or business of any other person;

(8) The insurer or its property has been or is the subject of an application for the appointment or a receiver, trustee, custodian, conservator or sequestrator or similar fiduciary of the insurer or its property otherwise than as provided under the insurance laws of this state, or such appointment has been made or is imminent;

(9) Within the previous three years the insurer has willfully violated its charter or articles of incorporation, its bylaws, any insurance law of this state, or any valid order of the director under section 375.1160 or 375.1162;

(10) The insurer has failed to pay within sixty days after due date any obligation to any state or any subdivision thereof or any judgment entered in any state, if the court in which such judgment was entered had jurisdiction over such subject matter except that such nonpayment shall not be a ground until sixty days after any good faith effort by the insurer to contest the obligation has been terminated, whether it is before the director or in the courts, or the insurer has systematically attempted to compromise or renegotiate previously agreed settlements with its creditors on the ground that it is financially unable to pay its obligations in full;

(11) The insurer has failed to file its annual report or other financial report required by law within the time allowed by law;

(12) The board of directors or the holders of a majority of the shares entitled to vote, or a majority of those individuals entitled to the control of the insurer request or consent to rehabilitation under sections 375.1150 to 375.1246.

(L. 1991 H.B. 385, et al. § 59)

*Word "with" appears in original rolls.

Director to serve as rehabilitator--duties--periodic accountingrequired--immunity, when.

375.1166. 1. An order to rehabilitate the business of a domestic insurer, or an alien insurer domiciled in this state, shall appoint the director and his successors as rehabilitator, and shall direct the rehabilitator forthwith to take possession pursuant to the supervision of the court. The filing or recording of the order with the clerk of the circuit court or recorder of deeds of the county in which the principal office or place of business is located shall impart the same notice as a deed, bill of sale, or other evidence of title duly filed or recorded to the insurer and shall by operation of law vest title to all assets of the insurer in the rehabilitator.

2. Any order issued under this section shall require periodic accounting to the court by the rehabilitator. Accountings shall be at such intervals as the court specifies in its order, but no less frequently than semiannually. Each accounting shall include a report concerning the rehabilitator's opinion as to the likelihood that a plan under subsection 4 of section 375.1168 will be prepared by the rehabilitator and the timetable for doing so.

3. Entry of an order of rehabilitation shall not constitute an anticipatory breach of any contracts of the insurer, nor shall it be grounds for retroactive revocation or retroactive cancellation of any contracts of the insurer, unless such revocation or cancellation is made by the rehabilitator pursuant to section 375.1168.

4. The director as rehabilitator, any special deputy, all employees, agents, and attorneys of the rehabilitator and the special deputy, and all employees of the state of Missouri when acting with respect to the rehabilitation shall enjoy official immunity and be immune from any claim against them personally for any act or omission while acting in good faith in the performance of their functions and duties in connection with the rehabilitation during the period of rehabilitation. This subsection shall be applicable to any rehabilitation proceeding instituted on or after August 28, 1991.

(L. 1991 H.B. 385, et al. § 60, A.L. 1992 H.B. 1574)

Director may appoint special deputies, powers--rehabilitationprocedures--criminal conduct of party, power of director--advisorycommittee may be appointed, when.

375.1168. 1. The director as rehabilitator may appoint one or more special deputies, who shall have all the powers and responsibilities of the rehabilitator granted under this section, and the director may employ such counsel, clerks and assistants as deemed necessary. The compensation of the special deputy, counsel, clerks and assistants and all expenses of taking possession of the insurer and of conducting the proceedings shall be fixed by the director with the approval of the court and shall be paid out of the funds or assets of the insurer. The persons appointed under this section shall serve at the pleasure of the director. In the event that the property of the insurer does not contain sufficient cash or liquid assets to defray the costs incurred, the director may advance the costs so incurred out of any appropriation to the department for such purpose. Any amounts so advanced for expenses or administration shall be repaid to the director out of the first available money of the insurer, and shall be paid by the director to the state treasurer for deposit to the general revenue fund.

2. The rehabilitator may take such action as he deems necessary or appropriate to reform and revitalize the insurer. He shall have all the powers of the directors, officers, and managers, whose authority shall be suspended, except as they are redelegated by the rehabilitator. He shall have full power to direct and manage, to hire and discharge employees subject to any contract rights they may have, and to deal with property and business of the insurer.

3. If it appears to the rehabilitator that there has been criminal or tortious conduct, or breach of any contractual or fiduciary obligation detrimental to the insurer by any officer, manager, agency, employee or other person, the rehabilitator may pursue all appropriate legal remedies on behalf of the insurer.

4. If the rehabilitator determines that reorganization, consolidation, conversion, reinsurance, merger or other transformation of the insurer is appropriate, he shall prepare a plan to effect such changes. Upon application of the rehabilitator for approval of the plan, and after such notice and hearings as the court may prescribe, the court may either approve or disapprove the plan proposed, or may modify it and approve it as modified. Any plan approved under this section shall be, in the judgment of the court, fair and equitable to all parties concerned. If the plan is approved, the rehabilitator shall carry out the plan. In the case of a life insurer, the plan proposed may include the imposition of liens upon the policies of the company, if all rights of shareholders are first relinquished. A plan for a life insurer may also propose imposition of a moratorium upon loan and cash surrender rights under policies, for such period and to such an extent as may be necessary.

5. The rehabilitator shall have all powers provided by law to avoid fraudulent transfers.

6. The rehabilitator, with the approval of the court, may appoint an advisory committee of policyholders, claimants, or other creditors should such a committee be deemed necessary. Such committee shall serve at the pleasure of the rehabilitator and shall serve without compensation other than reimbursement for reasonable travel and other expenses. No other committee of any nature shall be appointed by the rehabilitator or the court in rehabilitation proceedings conducted under this section.

(L. 1991 H.B. 385, et al. § 61)

Stay of other pending actions, duration--statute of limitations notto run.

375.1170. 1. Any court in this state before which any action or proceeding in which the insurer is a party, or is obligated to defend a party, is pending when a rehabilitation order against the insurer is entered shall stay the action or proceeding for ninety days and such additional time as is necessary for the rehabilitator to obtain proper representation and prepare for further proceedings. The rehabilitator shall take such action respecting the pending litigation as he deems necessary in the interests of justice and for the protection of creditors, policyholders, and the public. The rehabilitator shall immediately consider all litigation pending outside this state and shall petition the courts having jurisdiction over that litigation for stays whenever necessary to protect the estate of the insurer.

2. No statute of limitations or defense of laches shall run with respect to any action by or against an insurer between the filing of a petition for appointment of a rehabilitator for that insurer and the order granting or denying that petition. Any action against the insurer that might have been commenced when the petition was filed may be commenced for at least one hundred twenty days after the order of rehabilitation is entered or the petition is denied. The rehabilitator may, upon an order for rehabilitation, within one year or such other longer time as applicable law may permit, institute an action or proceeding on behalf of the insurer upon any cause of action against which the period of limitation fixed by applicable laws has not expired at the time of the filing of the petition upon which such order is entered.

3. Any guaranty association or foreign guaranty association shall have standing to appear in any court proceeding concerning the rehabilitation of an insurer if such association is or has a reasonable probability of becoming liable to act as a result of the rehabilitation.

(L. 1991 H.B. 385, et al. § 62)

Records deemed public, when--exceptions.

375.1172. In all proceedings and judicial reviews thereof under sections 375.1164 to 375.1170, all records of the insurer, other documents, and all department of insurance, financial institutions and professional registration files and court records and papers, so far as they pertain to or are a part of the record of the proceedings, shall be and remain open and public records until the termination of such proceedings; except as is necessary to obtain compliance therewith, unless and until the court, upon motion of the receiver, and after hearing arguments from the parties, shall determine that preservation of the assets and claims of the insurer require confidentiality as to specific records or documents, and shall enter an order of such findings.

(L. 1991 H.B. 385, et al. § 63, A.L. 1992 H.B. 1574)

Director may petition for liquidation, grounds--termination ofrehabilitation proceedings, when, effect.

375.1174. 1. Whenever the director believes further attempts to rehabilitate an insurer would substantially increase the risk of loss to creditors, policyholders or the public, or would be futile, the director may petition the court for an order of liquidation. A petition under this subsection shall have the same effect as a petition under section 375.1175. The court shall permit the directors of the insurer to take such actions as are reasonably necessary to defend against the petition and may order payment from the estate of the insurer of such reasonable costs and other expenses of defense as justice may require.

2. If the payment of policy obligations is suspended in substantial part for a period of six months at any time after the appointment of the rehabilitator and the rehabilitator has not filed an application for approval of a plan under subsection 4 of section 375.1168, the rehabilitator shall petition the court for an order of liquidation on grounds of insolvency.

3. The rehabilitator may at any time petition the court for an order terminating rehabilitation of an insurer. The court shall also permit the directors of the insurer to petition the court for an order terminating rehabilitation of the insurer and may order payment from the estate of the insurer of such costs and other expenses of such petition as justice may require. If the court finds that grounds for rehabilitation under section 375.1165 no longer exist, it shall order that the insurer be restored to possession of its property and the control of the business. The court may also make that finding and issue that order at any time upon its own motion.

(L. 1991 H.B. 385, et al. § 64)

Grounds for liquidation--voluntary dissolution and liquidation,conditions.

375.1175. 1. The director may petition the court for an order directing him to liquidate a domestic insurer or an alien insurer domiciled in this state on the basis:

(1) Of any ground for an order of rehabilitation as specified in section 375.1165, whether or not there has been a prior order directing the rehabilitation of the insurer;

(2) That the insurer is insolvent;

(3) That the insurer is in such condition that the further transaction of business would be hazardous, financially or otherwise, to its policyholders, its creditors or the public;

(4) That the insurer is found to be in such condition after examination that it could not meet the requirements for incorporation and authorization specified in the law under which it was incorporated or is doing business; or

(5) That the insurer has ceased to transact the business of insurance for a period of one year.

2. Notwithstanding any other provision of this chapter, a domestic insurer organized as a stock insurance company may voluntarily dissolve and liquidate as a corporation under* sections 351.462 to 351.482, provided that:

(1) The director, in his or her sole discretion, approves the articles of dissolution prior to filing such articles with the secretary of state. In determining whether to approve or disapprove the articles of dissolution, the director shall consider, among other factors, whether:

(a) The insurer's annual financial statements filed with the director show no written insurance premiums for five years; and

(b) The insurer has demonstrated that all policyholder claims have been satisfied or have been transferred to another insurer in a transaction approved by the director; and

(c) An examination of the insurer pursuant to sections 374.202 to 374.207 has been completed within the last five years; and

(2) The domestic insurer files with the secretary of state a copy of the director's approval, certified by the director, along with articles of dissolution as provided in section 351.462 or 351.468.

(L. 1991 H.B. 385, et al. § 65, A.L. 1992 H.B. 1574, A.L. 2010 S.B. 583 with S.B. 834, A.L. 2010 H.B. 1764 referendum, Adopted August 3, 2010)

Effective 8-03-10 (H.B. 1764)

8-28-10 (S.B. 583)

8-28-10 (S.B. 834)

*Words "pursuant to" appear in original rolls of S.B. 834.

Director to be liquidator--powers andduties--special deputy may be appointed, powers--effect ofliquidation--order for, issued when--plan for continued operationduring appeal, contents--penalty for interference with records orproperty.

375.1176. 1. An order to liquidate the business of a domestic insurer shall appoint the director and his successors as liquidator and shall direct the liquidator forthwith to take immediate possession of the assets of the insurer and to administer them subject to the supervision of the court until the liquidator is discharged by the court. The liquidation of any insurer shall be considered to be the business of insurance for purposes of application of any law of this state. The liquidator shall be vested by operation of law with the title to all of the property, contracts and rights of action, and all of the books and records of the insurer ordered liquidated, wherever located, as of the entry of the order of liquidation. The order shall require the liquidator to take immediate possession of and to secure all of the records and property of the insurer wherever it is located, and to take all measures necessary to preserve the integrity of the insurer's records. The filing or recording of the order with the clerk of the court and the recorder of deeds of the county in which its principal office or place of business is located or, in the case of real estate, with the recorder of deeds of the county where the property is located, shall impart the same notice as a deed, bill of sale or other evidence of title duly filed or recorded with that recorder of deeds would have imparted.

2. With the approval of the court, the director as liquidator may appoint a special deputy or deputies to act for him under sections 375.1175 to 375.1230. The special deputy shall not be an employee of the department of insurance, financial institutions and professional registration. The special deputy shall have all powers of the liquidator granted by sections 375.1175 to 375.1230. The special deputy shall administer and liquidate the insolvent insurer subject to the general supervision of the director and the specific supervision of the court as provided in sections 375.1175 to 375.1230.

3. Upon issuance of the order of liquidation, the rights and liabilities of any such insurer and of its creditors, policyholders, shareholders, members and any other persons interested in its estate shall become fixed and the termination of any period fixed by any statute of limitations provided by law shall be suspended as of the date of entry of the order of liquidation, except as provided in sections 375.1178, 375.1206 and 375.1210. Rights of shareholders provided by any law other than as provided by sections 375.1150 to 375.1246 shall be suspended upon issuance of the order of liquidation.

4. An order to liquidate the business of an alien insurer domiciled in this state shall be in the same terms and have the same legal effect as an order to liquidate a domestic insurer, except that the assets and the business in the United States shall be the only assets and business included therein.

5. At the time of petitioning for an order of liquidation, or at any time thereafter, the director, after making determination of an insurer's insolvency, may petition the court for a judicial declaration of such insolvency. After providing such notice and hearing as it deems proper, the court may make the declaration.

6. (1) Any order issued under this section shall require periodic financial reports to the court by the liquidator. Financial reports shall include, at a minimum, the assets and liabilities of the insurer and all funds received or disbursed by the liquidator during the current period. Financial reports shall be filed within one year of the liquidation order and at least annually thereafter.

(2) After an order of liquidation has been entered, the liquidator of such insurer shall file with the director a statement which shall reflect the claims reserves, including losses incurred but not reported, and unearned premium reserves which have been established by the liquidator and which shall also set forth the amounts of such reserves that are allocable to particular reinsurers of the insolvent company. A similar statement shall be filed by each liquidator not less frequently than annually and shall be considered for all intents and purposes as the annual statement which was required to be filed by the insurer with the director prior to the liquidation proceedings. To the extent that any reinsurer of an insurer in liquidation would have been required under any agreement pertaining to reinsurance to post letters of credit or other security prior to an order of liquidation to cover such reserves reflected upon a statement filed with a regulatory authority, such reinsurer shall be required to post letters of credit or other security to cover such reserves after an insurer has been placed in liquidation. If a reinsurer shall fail to post letters of credit or other security required by a reinsurance agreement or the provisions of this section, the director may issue an order barring such reinsurer from thereafter reinsuring any insurer which is incorporated under the laws of the state of Missouri.

7. (1) Within five days after the initiation of an appeal of an order of liquidation, the liquidator shall present for the court's approval a plan for the continued performance of the defendant company's policy claims obligations, including the duty to defend insureds under liability insurance policies, during the pendency of an appeal. Such plan shall provide for the continued performance and payment of policy claims obligations in the normal course of events, notwithstanding the grounds alleged in support of the order of liquidation including the ground of insolvency. In the event the defendant company's financial condition, in the judgment of the liquidator, will not support the full performance of all policy claims obligations during the appeal pendency period, the plan may prefer the claims of certain policyholders and claimants over creditors and interested parties as well as other policyholders and claimants, as the liquidator finds to be fair and equitable considering the relative circumstances of such policyholders and claimants. The court shall examine the plan submitted by the liquidator and if it finds the plan to be in the best interests of the parties, the court shall approve the plan. No action shall lie against the liquidator or any of his deputies, agents, clerks, assistants or attorneys by any party based on preference in an appeal pendency plan approved by the court.

(2) The appeal pendency plan shall not supersede or affect the obligations of any insurance guaranty association.

(3) Any such plans shall provide for equitable adjustments to be made by the liquidator to any distributions of assets to guaranty associations, in the event that the liquidator pays claims from assets of the estate, which would otherwise be the obligations of any particular guaranty association but for the appeal of the order of liquidation, such that all guaranty associations equally benefit on a pro rata basis from the assets of the estate. Further, in the event an order of liquidation is set aside upon any appeal, the company shall not be released from delinquency proceedings unless and until all funds advanced by any guaranty association, including reasonable allocated loss adjustment expenses in connection therewith relating to obligations of the company, shall be repaid in full, together with interest at the judgment rate of interest or unless an arrangement for repayment thereof has been made with the consent of all applicable guaranty associations.

8. Any person who shall knowingly destroy, conceal, convert or alter any records or property of an insurer after entry of an order of liquidation, without having received prior written permission of the liquidator or of the court, or who shall knowingly neglect or refuse, upon the order or demand of the liquidator, to deliver to the liquidator any records or property of an insurer in his possession or control, shall be guilty of a class D felony.

(L. 1991 H.B. 385, et al. § 66, A.L. 1992 H.B. 1574, A.L. 2014 S.B. 491)

Effective 1-01-17

Life and health policies, termination of, when.

375.1178. 1. Policies of life or health insurance or annuities shall continue in force for such period and under such terms as is provided for by any applicable guaranty association or foreign guaranty association.

2. Policies of life or health insurance or annuities or any period or coverage of such policies not covered by a guaranty association or foreign guaranty association shall terminate under subsections 3 and 4 of this section.

3. All policies, including bonds and other noncancelable business, other than life and health insurance or annuities, in effect at the time of issuance of an order of liquidation shall continue in force only for the lesser of:

(1) A period of thirty days from the date of entry of the liquidation orders;

(2) The expiration of the policy coverage;

(3) The date when the insured has replaced the insurance coverage with equivalent insurance with another insurer or otherwise terminated the policy;

(4) The liquidator has effected a transfer of the policy obligation pursuant to subdivision (8) of subsection 1 of section 375.1182; or

(5) The date proposed by the liquidator and approved by the court to cancel coverage.

4. An order of liquidation under section 375.1176 shall terminate coverages at the time specified in subsection 1 of this section notwithstanding any other section of law.

(L. 1991 H.B. 385, et al. § 67)

Dissolution order, director may petition for--effect.

375.1180. The director may petition for an order dissolving the corporate existence of a domestic insurer or the United States branch of an alien insurer domiciled in this state at the time he applies for a liquidation order. The court may order dissolution of the corporation upon petition by the director upon or after the granting of a liquidation order. If the dissolution has not previously been ordered, it shall be effected by operation of law upon the discharge of the liquidator if the insurer is insolvent but may be ordered by the court upon the discharge of the liquidator if the insurer is under a liquidation order for some other reason. The court ordering such dissolution shall continue to supervise the dissolution until the discharge of the liquidator.

(L. 1991 H.B. 385, et al. § 68)

Powers of liquidator--insureds may purchase extended period to reportclaims, when, limitations--liquidator and employees deemed officersof the court.

375.1182. 1. The liquidator shall have the power:

(1) To employ employees and agents, legal counsel, actuaries, accountants, appraisers, consultants and such other personnel as he may deem necessary to assist in the liquidation;

(2) To fix the reasonable compensation of employees and agents, legal counsel, actuaries, accountants, appraisers and consultants with the approval of the court;

(3) To pay reasonable compensation to persons appointed and to defray from the funds or assets of the insurer all expenses of taking possession of, conserving, conducting, liquidating, disposing of, or otherwise dealing with the business and property of the insurer. In the event that the property of the insurer does not contain sufficient cash or liquid assets to defray the costs incurred, the director may advance the costs so incurred out of funds appropriated for that purpose. Any amounts so advanced for expenses of administration shall be repaid to the director out of the first available moneys of the insurer and such funds repaid shall be transferred by the director to the state treasurer for deposit to the general revenue fund;

(4) To hold hearings, to subpoena witnesses to compel their attendance, to administer oaths, to examine any persons under oath, and to compel any person to subscribe to his testimony after it has been correctly reduced to writing; and in connection therewith to require the production of any books, papers, records or other documents which he deems relevant to the inquiry;

(5) To audit the books and records of all agents of the insurer insofar as those records relate to the business activities of the insurer;

(6) To collect all debts and moneys due and claims belonging to the insurer, wherever located, and for this purpose:

(a) To institute timely action in other jurisdictions, in order to forestall garnishment and attachment proceedings against such debts;

(b) To do such other acts as are necessary or expedient to collect, conserve or protect its assets or property, including the power to sell, compound, compromise or assign debts for purposes of collection upon such terms and conditions as he deems best; and

(c) To pursue any creditor's remedies available to enforce his claims;

(7) To conduct public and private sales of the property of the insurer;

(8) To use assets of the estate of an insurer under a liquidation order to transfer policy obligations to a solvent assuming insurer, if the transfer can be arranged without prejudice to applicable priorities under section 375.1218;

(9) To acquire, hypothecate, encumber, lease, improve, sell, transfer, abandon or otherwise dispose of or deal with, any property of the insurer at its market value or upon such terms and conditions as are fair and reasonable. He shall also have power to execute, acknowledge and deliver any and all deeds;

(10) To borrow money on the security of the insurer's assets or without security and to execute and deliver all documents necessary to that transaction for the purpose of facilitating the liquidation. Any such funds borrowed may be repaid as an administrative expense and have priority over any other claims in class 1 under the priority of distribution;

(11) To enter into such contracts as are necessary to carry out the order to liquidate, and to affirm or disavow any contracts to which the insurer is a party;

(12) To continue to prosecute and to institute in the name of the insurer or in his own name any and all suits and other legal proceedings, in this state or elsewhere, and, with the approval of the supervising court, to abandon the prosecution of claims he deems unprofitable to pursue further. If the insurer is dissolved under section 375.1180, he shall have the power to apply to any court in this state or elsewhere for leave to substitute himself for the insurer as plaintiff;

(13) To prosecute any action which may exist on behalf of the creditors, members, policyholders or shareholders of the insurer against any officer of the insurer, or any other person;

(14) To institute proceedings in the same case for receivership for any organization or corporation having the exclusive or dominant right to manage or control the insurer which is the subject of the main case, when it appears that a receiver is necessary for the preservation of the assets of the insurer or that a receiver is necessary to determine the assets of the insurer held by the organization or corporation. The duration of the receivership and the duties of the receiver shall be in the discretion of the court;

(15) To remove any or all records and property of the insurer to the offices of the director or to such other place as may be convenient for the purposes of efficient and orderly execution of the liquidation. Guaranty associations and foreign guaranty associations shall have such reasonable access to the records of the insurer as is necessary for them to carry out their legal obligations;

(16) To deposit in one or more banks in this state such sums as are required for meeting current administration expenses and dividend distributions and to invest all sums not currently needed, unless the court orders otherwise; provided that, at the election of the supervising court, funds held by the liquidator of the insurer's estate shall be deposited and invested by the liquidator pursuant to either of the following standards as the court shall order:

(a) The standards specified by law for the deposit and investment of state funds by the state treasurer, as such standards are determined to be applicable by the court;

(b) The standards specified by law for the investment of money and property of the Missouri state employees' retirement system, as such standards are determined to be applicable by the court;

(17) To file any necessary documents for record in the office of any recorder of deeds or other office in this state or elsewhere where property of the insurer is located;

(18) To assert all defenses available to the insurer as against third persons, including statutes of limitation, statutes of frauds, and the defense of usury. A waiver of any defense by the insurer after a petition in liquidation has been filed shall not bind the liquidator. Whenever a guaranty association or foreign guaranty association has an obligation to defend any suit, the liquidator shall give precedence to such obligation and may defend only in the absence of a defense by such guaranty associations;

(19) To exercise and enforce all the rights, remedies, and powers of any creditor, shareholder, policyholder or member, including any power to avoid any transfer or lien that may be given by the general law and that is not included within* sections 375.1192 to 375.1195, except for any right of distribution pursuant to section 375.1218;

(20) To intervene in any proceeding wherever instituted that might lead to the appointment of a receiver or trustee, and to act as the receiver or trustee whenever the appointment is offered;

(21) To enter into agreements with any receiver or director of any other state relating to the rehabilitation, liquidation, conservation or dissolution of an insurer doing business in both states; and

(22) To exercise all powers now held or hereafter conferred upon receivers by the laws of this state not inconsistent with the provisions of sections 375.1150 to 375.1246.

2. (1) If an insurer being liquidated issued liability policies on a claims-made basis, which provided an option to purchase an extended period to report claims, then the liquidator may make available to holders of such policies, for a charge, an extended period to report claims as stated herein. The extended reporting period shall be made available only to those insureds who have not secured substitute coverage. The extended period made available by the liquidator shall begin upon termination of any extended period to report claims in the basic policy and shall end at the earlier of the final date for filing of claims in the liquidation proceeding or eighteen months from the entry of the order of liquidation.

(2) The extended period to report claims made available by the liquidator shall be subject to the terms of the policy to which it relates. The liquidator shall make available such extended period within sixty days after the order of liquidation at a charge to be determined by the liquidator subject to approval of the court. Such offer shall be deemed rejected unless the offer is accepted in writing and the charge is paid within ninety days after the order of liquidation. No commissions, premium taxes, assessments or other fees shall be due on the charges paid by policyholders pertaining to the extended period to report claims.

3. The enumeration in this section of the powers and authority of the liquidator shall not be construed as a limitation upon him, nor shall it exclude in any manner his right to do such other acts not herein specifically enumerated, or otherwise provided for, as may be necessary or appropriate for the accomplishment of or in aid of the purpose of liquidation.

4. Notwithstanding the powers of the liquidator as stated in this section, the liquidator shall have no obligation to defend claims or to continue to defend claims subsequent to the discharge of the liquidator.

5. The director as liquidator, any special deputy, all employees, agents and attorneys of the liquidator and the special deputy, and all employees of the state of Missouri when acting with respect to the liquidation shall be considered to be officers of the court when acting in such capacities and as such shall be subject to the orders and directions of the court with respect to their actions or omissions in connection with the liquidation. The liquidator, special deputy, commissioners and referees appointed by the court, the agents, attorneys and employees of the liquidator and employees of the state of Missouri when acting with respect to the liquidation shall enjoy absolute judicial immunity and be immune from any claim against them personally for any act or omission committed in the performance of their functions and duties in connection with the liquidation.

6. Notwithstanding the provisions of section 375.1158, subdivision (16) of subsection 1 of this section shall apply to and govern delinquency proceedings commenced before and after August 28, 1991.

(L. 1991 H.B. 385, et al. § 69, A.L. 1992 H.B. 1574)

*Word "with" appears in original rolls.

Contracts and leases of insurer, liquidator maydisaffirm--procedures--liability of liquidator, how calculated.

375.1184. 1. The liquidator may disaffirm or repudiate any contract or lease:

(1) To which the insurer is a party;

(2) The performance of which the liquidator, in his sole discretion, determines to be burdensome; and

(3) The disaffirmance or repudiation of which the liquidator determines, in his sole discretion, will promote the orderly administration of the affairs of the insurer.

2. The liquidator shall determine whether or not to exercise the right of repudiation under this section within a reasonable period following the entry of the order of liquidation. In the sole discretion of the liquidator, the contract shall be repudiated as of either:

(1) The date of the entry of the order of liquidation; or

(2) Some other date subsequent to the entry of the order of liquidation selected by the liquidator for the disaffirmance or repudiation of such contract or agreement.

3. The liability of the liquidator for the disaffirmance or repudiation of any contract pursuant to subsection 1 of this section shall be calculated as of the date of repudiation, and shall be limited to actual direct compensatory damages. Any such damages shall be submitted as a claim to the liquidator pursuant to sections 375.1206 to 375.1222. For purposes of this subsection, the term "actual direct compensatory damages" does not include:

(1) Punitive or exemplary damages;

(2) Damages for lost profits or opportunity; or

(3) Damages for pain and suffering.

4. An agreement which tends to diminish or defeat the interest of the liquidator in any asset acquired by him under section 375.1176, whether acquired before or subsequent to the entry of the order of liquidation, shall not be valid against the liquidator unless such agreement:

(1) Is in writing;

(2) Was executed by the insurer and any person claiming an adverse interest thereunder, including the obligor, contemporaneously with the acquisition of the asset by the insurer;

(3) Was approved by the board of directors of the insurer, which approval shall be reflected in the minutes of said board; and

(4) Has been, continuously, from the time of its execution, an official record of the insurer maintained and readily available to the director or examiners of the department of insurance, financial institutions and professional registration.

(L. 1991 H.B. 385, et al. § 70)

Notices provided by liquidator, procedures.

375.1185. 1. Unless the court otherwise directs, the liquidator shall give or cause to be given notice of the liquidation order as soon as possible:

(1) By first class mail and either by telegram or telephone to the director of the department of insurance, financial institutions and professional registration of each state in which the insurer is doing business;

(2) By first class mail to any guaranty association or foreign guaranty association which is or may become obligated as a result of the liquidation;

(3) By first class mail to all known insurance agents of the insurer;

(4) By first class mail to all persons known or reasonably expected to have claims against the insurer including all policyholders, at their last known address as indicated by the records of the insurer; and

(5) By publication in a newspaper of general circulation in the county in which the insurer has its principal place of business and in such other locations as the liquidator deems appropriate.

2. Notice under subsection 1 of this section to agents of the insurer and to potential claimants who are policyholders shall include, where applicable, notice that coverage by state guaranty associations may be available for all or part of policy benefits in accordance with applicable state guaranty laws.

3. The liquidator shall promptly provide to the guaranty association such information concerning the identities and addresses of such policyholders and their policy coverages as may be within the liquidator's possession or control, and otherwise cooperate with guaranty associations to assist them in providing to such policyholders timely notice of the guaranty associations' coverage of policy benefits including, as applicable, coverage of claims and continuation or termination of coverage.

(L. 1991 H.B. 385, et al. § 71)

Agent of insurer, duty to provide information to liquidator--penalty.

375.1186. 1. Every person who receives notice in the form prescribed in section 375.1185 that an insurer which he represents as an agent is the subject of a liquidation order, within thirty days of such notice, shall provide to the liquidator, in addition to the information he may be required to provide pursuant to section 375.1156, the information in the agent's records related to any policy issued by the insurer through the agent and, if the agent is a general agent, the information in the general agent's records related to any policy issued by the insurer through any agent under contract to him, including the name and address of such subagent. Such information shall include information relating to premiums collected and held by the agent and all commissions relating to such policies, whether earned or unearned. A policy shall be deemed issued through an agent if the agent has a property interest in the expiration of the policy, or if the agent has had in his possession a copy of the declarations of the policy at any time during the life of the policy, except where the ownership of the expiration of the policy has been transferred to another person.

2. Any agent failing to provide information to the liquidator as required in subsection 1 of this section may be subject to payment of an administrative penalty of not more than one thousand dollars for each day that the agent refuses to provide the information requested and the department of insurance, financial institutions and professional registration may suspend any license issued by the department to the agent. Any penalty provided by this subsection may be imposed after a hearing conducted by the director. Any moneys collected by the department of insurance, financial institutions and professional registration pursuant to imposition of such administrative penalties shall be paid to the state treasurer for deposit to the general revenue fund.

(L. 1991 H.B. 385, et al. § 72)

Stay of other actions--liquidator may bring certain actions,when.

375.1188. 1. Upon issuance of an order appointing a liquidator of a domestic insurer or of an alien insurer domiciled in this state, no action at law or equity or in arbitration shall be brought against the insurer or liquidator, whether in this state or elsewhere, nor shall any such existing actions be maintained or further presented after issuance of such order. The courts of this state shall give full faith and credit to injunctions against the liquidator or the company or the continuation of existing actions against the liquidator or the company, when such injunctions are included in an order to liquidate an insurer issued pursuant to corresponding provisions in other states. Whenever, in the liquidator's judgment, protection of the estate of the insurer necessitates intervention in an action against the insurer that is pending outside this state, he may intervene in the action. The liquidator may defend any action in which he intervenes pursuant to this section at the expense of the estate of the insurer.

2. The liquidator may, upon or after an order for liquidation, within ten years or such other longer time as applicable law may permit, institute an action or proceeding on behalf of the estate of the insurer upon any cause of action against which a period of limitation fixed by applicable law has not expired at the time of the filing of the petition upon which such order is entered. Where, by any agreement, a period of limitation is fixed for instituting a suit or proceeding upon any claim, or for filing any claims, proof of claim, proof of loss, demand, notice, or the like, or where in any proceeding, judicial or otherwise, a period of limitation is fixed, either in the proceeding or by applicable law, for taking any action, filing any claim or pleading, or doing any act, and where in any such case the period had not expired at the date of the filing of the petition, the expiration of such periods shall be stayed and the liquidator may, for the benefit of the estate, take any such action or do any such act, required of or permitted to the insurer, within a period of ten years subsequent to the entry of an order for liquidation, or within such further period as is shown to the satisfaction of the court not to be unfairly prejudicial to the other party.

3. No statute of limitation or defense of laches shall run with respect to any action against an insurer between the filing of a petition for liquidation against an insurer and the denial of the petition. Any action against the insurer that might have been commenced when the petition was filed may be commenced for at least sixty days after the petition is denied.

(L. 1991 H.B. 385, et al. § 73)

List of insurer's assets to be prepared--filing--not needed, when.

375.1190. 1. As soon as practicable after the liquidation order but not later than one hundred twenty days thereafter, the liquidator shall prepare in duplicate a list of the insurer's assets. The list shall be amended or supplemented from time to time as the liquidator may determine. One copy shall be filed with the clerk of the court and one copy shall be retained for the liquidator's files. All amendments and supplements shall be similarly filed.

2. The liquidator may reduce the assets to a degree of liquidity that is consistent with the effective execution of the liquidation.

3. A submission to the court for disbursement of assets in accordance with section 375.1205 fulfills the requirements of subsection 1 of this section.

(L. 1991 H.B. 385, et al. § 74)

Netting agreements and qualified financial contracts, exercise ofcertain rights and acts not to be prohibited--termination ofnetting agreement, transfer of amount owed, receiver'sduties--applicability of statute.

375.1191. 1. Notwithstanding any other provision of sections 375.1150 to 375.1246, including any provision permitting the modification of contracts, or other law of a state, no person shall be stayed or prohibited from exercising:

(1) A contractual right to cause the termination, liquidation, or acceleration or close out of obligations under or in connection with any netting agreement or qualified financial contract with an insurer because of:

(a) The insolvency, financial condition, or default of the insurer at any time; provided that the right is enforceable under applicable law other than sections 375.1150 to 375.1246; or

(b) The commencement of a formal delinquency proceeding under sections 375.1150 to 375.1246;

(2) Any right under a pledge, security, collateral, reimbursement, or guarantee agreement or arrangement or any similar security agreement or arrangement or other credit enhancement relating to one or more netting agreements or qualified financial contracts;

(3) Subject to any provision of section 375.1198, any right to set off or net out any termination value, payment amount, or other transfer obligation arising under or in connection with one or more qualified financial contracts where the counterparty or its guarantor is organized under the laws of the United States or a foreign jurisdiction approved by the Securities Valuation Office (SVO) of the NAIC as eligible for netting; or

(4) If a counterparty to a master netting agreement or qualified financial contract with an insurer subject to a proceeding under sections 375.1150 to 375.1246 terminates, liquidates, closes out, or accelerates the agreement or contract, damages shall be measured as of the date or dates of termination, liquidation, close out, or acceleration. The amount of a claim for damages shall be actual direct compensatory damages calculated in accordance with subsection 6 of this section.

2. (1) Upon termination of a netting agreement or qualified financial contract, the net or settlement amount, if any, owed by a nondefaulting party to an insurer against which an application or petition has been filed under sections 375.1150 to 375.1246 shall be transferred to or on the order of the receiver for the insurer, even if the insurer is the defaulting party, notwithstanding any walkaway clause in the netting agreement or qualified financial contract.

(2) For purposes of this subsection, "walkaway clause" means a provision in a netting agreement or qualified financial contract that, after calculation of a value of a party's position or an amount due to or from one of the parties in accordance with its terms upon termination, liquidation, or obligation of a party or extinguishes a payment obligation of a party in whole or in part solely because of the party's status as a nondefaulting party.

(3) Any limited two-way payment or first method provision in a netting agreement or qualified financial contract with an insurer that has defaulted shall be deemed to be a full two-way payment or second method provision as against the defaulting insurer. Any such property or amount shall, except to the extent it is subject to one or more secondary liens or encumbrances or rights of netting or setoff, be a general asset of the insurer.

3. In making any transfer of a netting agreement or qualified financial contract of an insurer subject to a proceeding under sections 375.1150 to 375.1246, the receiver shall either:

(1) Transfer to one party, other than an insurer subject to a proceeding under sections 375.1150 to 375.1246, all netting agreements and qualified financial contracts between a counterparty or any affiliate of the counterparty and the insurer that is the subject of the proceeding, including:

(a) All rights and obligations of each party under each netting agreement and qualified financial contract; and

(b) All property, including any guarantees or other credit enhancement, securing any claims of each party under each netting agreement and qualified financial contract; or

(2) Transfer none of the netting agreements, qualified financial contracts, rights, obligations, or property referred to in subdivision (1) of this subsection with respect to the counterparty and any affiliate of the counterparty.

4. If a receiver for an insurer makes a transfer of one or more netting agreements or qualified financial contracts, the receiver shall use its best efforts to notify any person who is party to the netting agreements or qualified financial contracts of the transfer by noon, the receiver's local time, on the business day following the transfer. For purposes of this subsection, "business day" means a day other than a Saturday, Sunday, or any day on which either the New York Stock Exchange or the Federal Reserve Bank of New York is closed.

5. Notwithstanding any other provision of sections 375.1150 to 375.1246, a receiver shall not avoid a transfer of money or other property arising under or in connection with a netting agreement or qualified financial contract, or any pledge, security, collateral, or guarantee agreement or any other similar security arrangement or credit support document relating to a netting agreement or qualified financial contract, that is made before the commencement of a formal delinquency proceeding under sections 375.1150 to 375.1246. However, a transfer may be avoided under section 375.1182 if the transfer was made with actual intent to hinder, delay, or defraud the insurer, a receiver appointed for the insurer, or existing or future creditors.

6. (1) In exercising the rights of disaffirmance or repudiation of a receiver with respect to any netting agreement or qualified financial contract to which an insurer is a party, the receiver for the insurer shall either:

(a) Disaffirm or repudiate all netting agreements and qualified financial contracts between a counterparty or any affiliate of the counterparty and the insurer that is the subject of the proceeding; or

(b) Disaffirm or repudiate none of the netting agreements and qualified financial contracts referred to in paragraph (a) of this subdivision with respect to the person or any affiliate of the person.

(2) Notwithstanding any other provision of sections 375.1150 to 375.1246, any claim of a counterparty against the estate arising from the receiver's disaffirmance or repudiation of a netting agreement or qualified financial contract that has not been previously affirmed in the liquidation or immediately preceding conservation or rehabilitation case shall be determined and shall be allowed or disallowed as if the claim had arisen before the date of the filing of the petition for liquidation or, if a conservation or rehabilitation proceeding is converted to a liquidation proceeding, as if the claim had arisen before the date of the filing of the petition for conservation or rehabilitation. The amount of the claim shall be the actual direct compensatory damages determined as of the date of the disaffirmance or repudiation of the netting agreement or qualified financial contract. Actual direct compensatory damages do* not include punitive or exemplary damages, damages for lost profit or lost opportunity or damages for pain and suffering, but do* include normal and reasonable costs of cover or other reasonable measures of damages utilized in the derivatives, securities, or other market for the contract and agreement claims.

7. "Contractual right", as used in this section, includes any right set forth in a rule or bylaw of a derivatives clearing organization as defined in the Commodity Exchange Act, a multilateral clearing organization as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991, a national securities exchange, a national securities association, a securities clearing agency, a contract market designated under the Commodity Exchange Act, a derivatives transaction execution facility registered under the Commodity Exchange Act, or a board of trade as defined in the Commodity Exchange Act, or in a resolution of the governing board thereof and any right, whether or not evidenced in writing, arising under statutory or common law, or under law merchant, or by reason of normal business practice.

8. The provisions of this section shall not apply to persons who are affiliates of the insurer that is the subject of the proceeding.

9. All rights of counterparties under sections 375.1150 to 375.1246 shall apply to netting agreements and qualified financial contracts entered into on behalf of the general account or separate accounts if the assets of each separate account are available only to counterparties to netting agreements and qualified financial contracts entered into on behalf of such separate account.

(L. 2010 S.B. 583)

* Word "does" appears in original rolls.

Fraudulent and voidable transfers--requirements--effects.

375.1192. 1. Every transfer made or suffered and every obligation incurred by an insurer within one year prior to the filing of a successful petition for rehabilitation or liquidation under sections 375.1150 to 375.1246 is fraudulent as to then existing and future creditors if made or incurred without fair consideration, or with actual intent to hinder, delay or defraud either existing or future creditors. A transfer made or an obligation incurred by an insurer ordered to be rehabilitated or liquidated under this act*, which is fraudulent under this section, may be avoided by the receiver, except as to a person who in good faith is a purchaser, lienor, or obligee for a present fair market value. The court may, on due notice, order any such transfer or obligation to be preserved for the benefit of the estate, and in that event, the receiver shall succeed to and may enforce the rights of the purchaser, lienor, or obligee.

2. (1) A transfer of property other than real property shall be deemed to be made or suffered when it becomes perfected to the extent that no subsequent lien obtainable by legal or equitable proceedings on a simple contract could become superior to the rights of the transferee under subsection 3 of section 375.1195;

(2) A transfer of real property shall be deemed to be made or suffered when it becomes perfected to the extent that no subsequent bona fide purchaser from the insurer could obtain rights superior to the rights of the transferee;

(3) A transfer which creates an equitable lien shall not be deemed to be perfected if there are available means by which a legal lien could be created;

(4) The provisions of this subsection apply whether or not there are or were creditors who might have obtained any liens or persons who might have become bona fide purchasers.

3. Any transaction of the insurer with a reinsurer shall be deemed fraudulent and may be avoided by the receiver under subsection 1 of this section if:

(1) The transaction consists of the termination, adjustment or settlement of a reinsurance contract in which the reinsurer is released from any part of its duty to pay the originally specified share of losses that had occurred prior to the time of the transactions, unless the reinsurer gives a present fair equivalent value for the release; or

(2) Any part of the transaction took place within one year prior to the date of filing of the petition through which the receivership was commenced.

4. Every person receiving any property from the insurer or any benefit thereof which is a fraudulent transfer under subsection 1 of this section shall be personally liable therefore and shall be bound to account to the liquidator.

(L. 1991 H.B. 385, et al. § 75)

*"This act" (H.B. 385, et al., 1991) contained numerous sections. Consult Disposition of Sections table for a definitive listing.

Transfer of real property not voidable, when.

375.1194. 1. After a petition for rehabilitation or liquidation has been filed, a transfer of any of the real property of the insurer made to a person acting in good faith shall be valid against the receiver if made for a present fair market value or, if not made for a present fair market value, then to the extent of the present consideration actually paid therefor, for which amount the transferee shall have a lien on the property so transferred. The commencement of a proceeding in rehabilitation or liquidation shall be constructive notice upon the recording of a copy of the petition for or order of rehabilitation or liquidation with the recorder of deeds in the county where any real property in question is located. The exercise of any authority by a court of the United States or any state or jurisdiction to authorize or effect a judicial sale of real property of the insurer within any county in any state shall not be impaired by the pendency of such a proceeding unless the copy is recorded in the county prior to the consummation of the judicial sale.

2. After a petition for rehabilitation or liquidation has been filed and before either the receiver takes possession of the property of the insurer or an order of rehabilitation or liquidation is granted:

(1) A transfer of any of the property of the insurer, other than real property, made to a person acting in good faith shall be valid against the receiver if made for a present fair market value or, if not made for a present fair market value, then to the extent of the present consideration actually paid therefor, for which amount the transferee shall have a lien on the property so transferred;

(2) A person indebted to the insurer or holding property of the insurer may, if acting in good faith, pay the indebtedness or deliver the property, or any part thereof, to the insurer or upon his order, with the same effect as if the petition were not pending;

(3) A person having actual knowledge of the pending rehabilitation or liquidation shall be deemed not to act in good faith; and

(4) A person asserting the validity of a transfer under this section shall have the burden of proof.

Except as elsewhere provided in this section, no transfer by or on behalf of the insurer after the date of the petition for liquidation filed by any person other than the liquidator shall be valid against the liquidator.

3. Every person receiving any property from the insurer or any benefit thereof which is a fraudulent transfer under subsection 1 of this section shall be personally liable therefor and shall be bound to account to the liquidator. Any court of competent jurisdiction shall issue an order of contempt upon application of the liquidator with respect to any person who fails to make such account.

4. The provisions of sections 375.1150 to 375.1246 shall not be construed to impair the negotiability of currency or negotiable instruments.

(L. 1991 H.B. 385, et al. § 76)

Preference, voidable when, how recovered--liens, voidable when,procedure--liability of officers for granting preferences.

375.1195. 1. (1) A preference is a transfer of any of the property of an insurer to or for the benefit of a creditor, for or on account of an antecedent debt, which transfer is made or suffered by the insurer within one year before the filing of a successful petition for liquidation under sections 375.1150 to 375.1246, the effect of which transfer may be to enable the creditor to obtain a greater percentage of this debt than another creditor of the same class would receive. If a liquidation order is entered while the insurer is already subject to a rehabilitation order, then such transfers shall be deemed preferences if made or suffered within one year before the filing of the successful petition for rehabilitation, or within two years before the filing of the successful petition for liquidation, whichever time is shorter.

(2) Any preference may be avoided by the liquidator if:

(a) The insurer was insolvent at the time of the transfer; or

(b) The transfer was made within four months before the filing of the petition; or

(c) The creditor receiving it or to be benefitted thereby or his agent acting with reference thereto had, at the time when the transfer was made, reasonable cause to believe that the insurer was insolvent or was about to become insolvent; or

(d) The creditor receiving it was an officer, or any employee or attorney or other person who was in fact in a position of comparable influence in the insurer, as an officer whether or not he held such position, or any shareholder holding directly or indirectly more than five percent of any class of any equity security issued by the insurer, or any other person, firm, corporation, association, or persons with whom the insurer did not deal at arm's length.

(3) Where the preference is avoidable, the liquidator may recover the property or, if it has been converted, its value from any person who has received or converted the property; except where a bona fide purchaser or lienor has given less than fair market value, he shall have a lien upon the property to the extent of the consideration actually given by him. Where a preference by way of lien or security title is voidable, the court may on due notice order the lien or title to be preserved for the benefit of the estate, in which event the lien or title shall pass to the liquidator.

2. (1) A transfer of property other than real property shall be deemed to be made or suffered when it becomes perfected to the extent that no subsequent lien obtainable by legal or equitable proceedings on a simple contract could become superior to the rights of the transferee.

(2) A transfer of real property shall be deemed to be made or suffered when it becomes perfected to the extent that no subsequent bona fide purchaser from the insurer could obtain rights superior to the rights of the transferee.

(3) A transfer which creates an equitable lien shall not be deemed to be perfected if there are available means by which a legal lien could be created.

(4) A transfer not perfected prior to the filing of a petition for liquidation shall be deemed to be made immediately before the filing of the successful petition.

(5) The provisions of this subsection apply whether or not there are or were creditors who might have obtained liens or persons who might have become bona fide purchasers.

3. For purposes of this section:

(1) A lien obtainable by legal or equitable proceedings upon a simple contract is one arising in the ordinary course of such proceedings upon the entry or docketing of a judgment or decree, or upon attachment, garnishment, execution, or like process, whether before, upon, or after judgment or decree and whether before or upon levy. It does not include liens which under applicable law are given a special priority over other liens which are prior in time.

(2) A lien obtainable by legal or equitable proceedings could become superior to the rights of a transferee, or a purchaser could obtain rights superior to the rights of a transferee within the meaning of subsection 2 of this section, if such consequences would follow only from the lien or purchase itself, or from the lien or purchase followed by any step wholly within the control of the respective lienholder or purchaser, with or without the aid of ministerial action by public officials. Such a lien could not, however, become superior and such a purchase could not create superior rights for the purpose of subsection 2 of this section through any acts subsequent to the obtaining of such a lien or subsequent to such a purchase which require the agreement or concurrence of any third party or which require any further judicial action or ruling.

4. A transfer of property for or on account of a new and contemporaneous consideration which is deemed under subsection 2 of this section to be made or suffered after the transfer because of delay in perfecting does not thereby become a transfer for or on account of an antecedent debt if any acts required by the applicable law to be performed in order to perfect the transfer as against liens or bona fide purchasers' rights are performed within twenty-one days or any period expressly allowed by the law, whichever is less. A transfer to secure a future loan, if such a loan is actually made, or a transfer which becomes security for a future loan, shall have the same effect as a transfer for or on account of a new and contemporaneous consideration.

5. If any lien deemed voidable under subdivision (2) of subsection 1 of this section has been dissolved by the furnishing of a bond or other obligation, the surety on which thereby has been indemnified directly or indirectly by the transfer of or the creation of a lien upon any property of an insurer before the filing of a petition under this act* which results in a liquidation order, the indemnifying transfer or lien shall also be deemed voidable.

6. The property affected by any lien deemed voidable under subsections 1 and 5 of this section shall be discharged from such lien, and that property and any of the indemnifying property transferred to or for the benefit of a surety shall pass to the liquidator, except that the court may on due notice order any such lien to be preserved for the benefit of the estate and the court may direct that such conveyance be executed as may be proper or adequate to evidence the title of the liquidator.

7. The court shall have summary jurisdiction of any proceeding by the liquidator to hear and determine the rights of any parties under this section. Reasonable notice of any hearings in the proceeding shall be given to all parties in interest, including the obligee of a releasing bond or other like obligation. Where an order is entered for the recovery of indemnifying property in kind or for the avoidance of an indemnifying lien, the court, upon application of any party in interest, shall in the same proceeding ascertain the value of the property or lien, and if the value is less than the amount for which the property is indemnified or than the amount of the lien, the transferee or lienholder may elect to retain the property or lien upon payment of its value, as ascertained by the court, to the liquidator, within such reasonable times and upon such terms as the court shall fix.

8. The liability of the surety under a releasing bond or other like obligation shall be discharged to the extent of the value of the indemnifying property recovered or the indemnifying lien nullified and avoided by the liquidator, or where the property is retained under subsection 7 of this section to the extent of the amount paid to the liquidator.

9. If an insurer, directly or indirectly, within four months before the filing of a successful petition for liquidation under this act*, or at any time in contemplation of a proceeding to liquidate it, pays money or transfers property to an attorney-at-law for services rendered or to be rendered, the transactions may be examined by the court on its own motion or shall be examined by the court on petition of the liquidator and shall be held valid only to the extent that the amount of such money or value of such property is reasonable as relates to actual services rendered as determined by the court, and the excess may be recovered by the liquidator for the benefit of the estate, provided that where the attorney is in a position of influence in the insurer or an affiliate thereof, payment of any money or the transfer of any property to the attorney-at-law for services rendered or to be rendered shall be governed by the provision of paragraph (d) of subdivision (2) of subsection 1 of this section.

10. (1) Every officer, manager, employee, shareholder, member, subscriber, attorney or any other person acting on behalf of the insurer who knowingly participates in giving any preference when he has reasonable cause to believe the insurer is or about to become insolvent at the time of the preference shall be personally liable to the liquidator for the amount of the preference. A rebuttable presumption may be established that such a person is personally liable if the transfer was made within four months before the date of filing of this successful petition for liquidation.

(2) Every person receiving any property from the insurer or the benefit thereof as a preference voidable under subsection 1 of this section shall be personally liable therefor and shall be bound to account to the liquidator.

(3) Nothing in this subsection shall prejudice any other claim by the liquidator against any person.

(L. 1991 H.B. 385, et al. § 77)

*"This act" (H.B. 385, et al., 1991) contained numerous sections. Consult Disposition of Sections table for a definitive listing.

Claims of creditor, surrender of preference required.

375.1196. 1. No claims of a creditor who has received or acquired a preference, lien, conveyance, transfer, assignment or encumbrance voidable under sections 375.1150 to 375.1246 shall be allowed unless he surrenders the preference, lien, conveyance, transfer, assignment or encumbrance. If an avoidance is effected by a proceeding in which a final judgment has been entered, the claim shall not be allowed unless the money is paid or the property is delivered to the liquidator within thirty days from the date of the entry of judgment, except that the court having jurisdiction over the liquidation may allow further time if there is an appeal or other continuation of the proceeding.

2. A claim allowable under subsection 1 of this section by reason of the avoidance, whether voluntary or involuntary, of a preference, lien, conveyance, transfer, assignment or encumbrance, may be filed as an excused late filing under section 375.1206 if filed within thirty days from the date of the avoidance, or within the further time allowed by the court under subsection 1 of this section.

(L. 1991 H.B. 385, et al. § 78)

Mutual credits or debts, setoffs allowed--exceptions.

375.1198. 1. Mutual debts or mutual credits, whether arising out of one or more contracts, between the insurer and another person in connection with any action or proceeding under sections 375.1150 to 375.1246, sections 374.216 and 374.217, and section 382.302 shall be set off and the balance only shall be allowed or paid, except as provided in subsections 2 and 3* of this section and section 375.1204.

2. No setoff shall be allowed in favor of any person where:

(1) The obligation of the insurer to the person would not as of the date of the filing of a petition for liquidation entitle the person to share as a claimant in the assets of the insurer; or

(2) The obligation of the insurer to the person was purchased by or transferred to the person with a view to its being used as a setoff; or

(3) The obligation of the person is to pay an assessment levied against the members or subscribers of the insurer, or is to pay a balance upon a subscription to the capital stock of the insurer, or is in any other way in the nature of a capital contribution; or

(4) The obligation of the insurer is owed to an affiliate of such person or to any entity or association, rather than the person; or

(5) The obligation of the person is owed to an affiliate of the insurer or to any other entity or association, rather than the insurer; or

(6) The obligations between the person and the insurer arise from reinsurance relationships resulting in business where either the person or the insurer has assumed risks and obligations from the other party and then has ceded back to that party substantially the same risks and obligations.

3. The provisions of this section shall apply to all obligations incurred under contracts entered into, renewed, or extended on or after July 1, 1992, and to any existing contract with a termination date longer than one year from January 1, 1993.

(L. 1991 H.B. 385, et al. § 79, A.L. 2004 H.B. 1253 merged with S.B. 1235)

*Subsections 3, 4, and 5 were deleted and subsection 6 was renumbered by H.B. 1253 and S.B. 1235, 2004.

Report to court by liquidator, when, contents--assessment againstmembers, court to compute an order, when.

375.1200. 1. As soon as practicable, but not more than two years from the date of an order of liquidation under section 375.1176 of an insurer issuing assessable policies, the liquidator shall make a report to the court setting forth:

(1) The reasonable value of the assets of the insurer;

(2) The insurer's probable total liabilities;

(3) The probable aggregate amount of the assessment necessary to pay all claims of creditors and expenses in full, including expenses of administration and costs of collecting the assessment; and

(4) A recommendation as to whether or not an assessment should be made and in what amount.

2. (1) Upon the basis of the report provided in subsection 1, including any supplements and amendments thereto, the court may levy one or more assessments against all members of the insurer who are subject to assessment.

(2) Subject to any applicable legal limits on assessability, the aggregate assessment shall be for the amount that the sum of the probable liabilities, the expenses of administration, and the estimated cost of collection of the assessment, exceeds the value of existing assets, with due regard being given to assessments that cannot be collected economically.

3. After levy of assessment under subsection 2 of this section, the liquidator shall issue an order directing each member who has not paid the assessment pursuant to the order, to show cause why the liquidator should not pursue a judgment therefor.

4. The liquidator shall give notice by publication and by first class mail of the order to show cause to each member liable thereunder, mailed to his last known address as it appears on the insurer's records, at least twenty days before the return day of the order to show cause.

5. (1) If a member does not appear and serve duly verified objections upon the liquidator on or before the return day of the order to show cause under subsection 3 of this section, the court shall make an order adjudging the member liable for the amount of the assessment made against him pursuant to subsection 3 of this section, together with costs, and the liquidator shall have a judgment against the member therefor.

(2) If on or before such return day, the member appears and serves duly verified objections upon the liquidator, the director may hear and determine the matter or may appoint a referee to hear it and make such order as the facts warrant. In the event that the director determines that such objections do not warrant relief from assessment, the member may request the court to review the director's determination and vacate the order to show cause within thirty days of the director's determination.

6. The liquidator may enforce any order or collect any judgment entered pursuant to subsection 5 of this section by any lawful means.

(L. 1991 H.B. 385, et al. § 80)

Reinsurers, amounts recoverable not reduced due to delinquencyproceedings--exceptions.

375.1202. 1. The amount recoverable by the liquidator from reinsurers shall not be reduced as a result of the delinquency proceedings, regardless of any provision in the reinsurance contract or other agreement. Payment made directly to an insured or other creditor shall not diminish the reinsurer's obligation to the insurer's estate except where:

(1) The reinsurance contract specifically provides for payment to the named insured, assignee or named beneficiary of the policy issued by the ceding insurer in the event of the ceding insurer's insolvency; or

(2) The assuming insurer, with the consent of the direct insured or insureds, has directly assumed the ceding insurer's policy obligations to the payees under such policies in substitution for the ceding insurer's obligations to such payees.

2. Notwithstanding subsection 1 of this section, in the event that a life and health insurance guaranty association has made the election to succeed to the rights and obligations of the insolvent insurer under the contract of reinsurance, then the reinsurer's liability to pay covered reinsured claims shall continue under the contract of reinsurance, subject to the payment to the reinsurer of the reinsurance premiums for such coverage. Payment for such reinsured claims shall only be made by the reinsurer pursuant to the direction of the guaranty association or its designated successor. Any payment made at the direction of the guaranty association or its designated successor by the reinsurer will discharge the reinsurer of all further liability to any other party for said claim payment.

(L. 1991 H.B. 385, et al. § 81, A.L. 2002 H.B. 1568)

Payment of unearned premiums required--violation, penalties.

375.1204. 1. A producer, premium finance company, or any other person, other than the insured, responsible for the payment of a premium, shall be obligated to pay any unpaid earned premium due the insurer at the time of the declaration of insolvency as shown on the records of the insurer. The liquidator shall also have the right to recover from such person any part of an unearned premium that represents commission of such person. Credits or setoffs or both shall not be allowed to a producer or premium finance company for any amounts advanced to the insurer by the producer or premium finance company on behalf of, but in the absence of a payment by the insured. An insured shall be obligated to pay any unpaid earned premium due the insurer at the time of the declaration of insolvency, as shown on the records of the insurer.

2. If the director determines that a person has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, the director may issue such administrative orders as authorized under section 374.046. A violation of this section is a level one violation under section 374.049. The director may also suspend, revoke, or refuse to renew any license issued by the director to any offending person for any willful violation.

3. If the director believes that a person has engaged, is engaging in, or has taken a substantial step toward engaging in an act, practice or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, or that a person has materially aided or is materially aiding an act, practice, omission, or course of business constituting a violation of this section or a rule adopted or order issued pursuant thereto, the director may maintain a civil action for relief authorized under section 374.048. A violation of this section is a level one violation under section 374.049.

(L. 1991 H.B. 385, et al. § 82, A.L. 2007 S.B. 66)

Distribution of assets, liquidator shall apply for,when--contents--notice provisions.

375.1205. 1. Within one year of a final order of liquidation of an insurer by a court of competent jurisdiction of this state, the liquidator shall make application to the court for approval of a proposal to make early access disbursements out of marshaled assets to a guaranty association or foreign guaranty association having obligations because of such insolvency.

2. Such proposal shall at least include provisions for:

(1) Reserving amounts for the payment of expenses of administration and the payment of claims of secured creditors, to the extent of the value of the security held, and claims falling within priority class I as established in section 375.1218;

(2) Initial disbursement of the assets marshaled to date, which shall be as soon as practicable and in any case not later than one hundred twenty days after the approval of the early access plan, and subsequent disbursement of assets which shall be at least annually;

(3) The securing by the liquidator from each of the guaranty associations or foreign guaranty associations entitled to disbursements pursuant to this section of an agreement to return to the liquidator such assets, together with income earned on assets previously disbursed, as may be required to pay claims of secured creditors and claims falling within the priorities established in sections 375.700 and 375.1218 in accordance with such priorities. No bond or indemnity agreement shall be required of any such association;

(4) A full report to be made by each guaranty association or foreign guaranty association to the liquidator accounting for all assets so disbursed to the association, all disbursements made therefrom, any interest earned by the association on such assets and any other matter as the court may direct; and

(5) Disbursements to guaranty associations in sums as large as possible, subject to the limitations set forth in subdivision (1) of this subsection and subsection 4 of this section. If the liquidator determines that there are insufficient assets to disburse at the time of any required disbursement, the liquidator shall make application to the court, with notice to the state insurance commissioners and guaranty associations pursuant to subsection 6 of this section, for approval of an intent not to disburse, stating the reasons for such determination.

3. Subject only to the provisions of subdivision (4) of subsection 2 of this section, guaranty associations shall not be charged interest on assets disbursed pursuant to this section.

4. The liquidator's proposal shall provide for disbursements to each guaranty association of foreign guaranty associations in amounts at least equal to the sum of claims payments and allocated lost adjustment expenses of each guaranty association, and a reasonable estimate of reserves for unpaid but known loss claims and allocated loss adjustment expenses expected to be paid within one year by each guaranty association. Amounts used for such calculation shall be those reported to the liquidator by each guaranty association in its most recent financial report to the liquidator. The liquidator's proposal shall further provide that if the assets available for required disbursements do not equal or exceed the amount of such claim payments to be made by the association, the required disbursements may be in the amount of available assets. Unless otherwise provided by the court, the reserves of the insolvent insurer, as reflected in its records or in the financial examination leading to the finding of insolvency, on the date of the final order of liquidation, shall be used to determine the initial disbursement to the guaranty associations. The liquidator shall liquidate the assets of the insurer in an expeditious manner, but is not required to make forced or quick sales that would result in obtaining less than market value for assets.

5. The liquidator's proposal shall, with respect to an insolvent insurer writing life or health insurance or annuities, provide for disbursements of assets to any guaranty association or any foreign guaranty association covering life or health insurance or annuities or to any other entity or organization reinsuring, assuming or guaranteeing policies or contracts of insurance pursuant to the laws creating such associations.

6. Notice of each application shall be given to each guaranty association or foreign guaranty associations in and to the commissioners of the insurance departments of each of the involved states. Any such notice shall be deemed to have been given when deposited in the United States mail, certified delivery, first class postage prepaid, at least thirty days prior to submission of such application to the court. Action on the application may be taken by the court provided the above-required notice has been given.

7. The liquidator shall not offset the amount to be disbursed to a guaranty association or a foreign guaranty association by the amount of any special deposit or any other statutory deposit or asset of the insolvent insurer held in this state or another state unless such deposit has been forwarded to the guaranty association.

(L. 1991 H.B. 385, et al. § 83, A.L. 1992 H.B. 1574, A.L. 1999 S.B. 386)

Proof of claim, filed when--effect of late filing.

375.1206. 1. Proof of all claims shall be filed with the liquidator in the form required by section 375.1208 on or before the last day for filing specified in the notice required under section 375.1185, except that proofs of claim for cash surrender values or other investment values in life insurance and annuities need not be filed unless the liquidator expressly so requires. However, only upon application of the liquidator, the court may allow alternative procedures and requirements for the filing of proofs of claim or for allowing or proving claims. Upon such application, if the court dispenses with the requirement of filing a proof of claim by a person, class or group of persons, a proof of claim for such persons shall be deemed as having been filed for all purposes, including the application of guaranty association or foreign guaranty association laws.

2. The liquidator, in his absolute discretion, may permit a claimant making a late filing to share in distributions, whether past or future, as if he were not late, to the extent that any such payment will not prejudice the orderly administration of the liquidation, under any of the following circumstances:

(1) The existence of the claim was not known to the claimant and that he filed this claim as promptly thereafter as reasonably possible after learning of it;

(2) A transfer to a creditor was avoided pursuant to sections 375.1192 to 375.1195, or was voluntarily surrendered pursuant to section 375.1196, and that the filing satisfies the conditions of section 375.1196; or

(3) The valuation pursuant to section 375.1216 of security held by a secured creditor shows a deficiency, which is filed within thirty days after the valuation.

3. The liquidator, in his absolute discretion, may consider any claim filed late which is not covered by subsection 2 of this section, and permit the claimant to receive distributions which are subsequently declared on any claims of the same or lower priority if the payment does not prejudice the orderly administration of the liquidation. The late filing claimant shall receive, at each distribution, the same percentage of the amount allowed on his claim as is then being paid to claimants of any lower priority. These distributions shall continue until his claim has been paid in full.

(L. 1991 H.B. 385, et al. § 84, A.L. 1992 H.B. 1574)

Form of proof of claim--liquidator may request additionalinformation--effect of incomplete information.

375.1208. 1. Proof of claim shall consist of a statement signed by the claimant that includes all of the following that are applicable:

(1) The basis of the claim including the consideration given for it;

(2) The identity and amount of the security on the claim;

(3) The payments made on the debt, if any;

(4) That the sum claimed is justly owing and that there is no setoff, counterclaim or defense to the claim;

(5) Any right of priority of payment or other specific rights asserted by the claimants;

(6) A copy of the written instrument on which the claim is based; and

(7) The name and address of the claimant and the attorney who represents him, if any.

2. No claim need be considered or allowed if it does not contain all the information in subsection 1 of this section which may be applicable. The liquidator may require that a prescribed form be used, and may require that other information and documents be included. The court before which the liquidation proceedings are pending may establish by court order or local court rule additional claims procedures which are not contrary to the provisions of law or supreme court rule.

3. At any time the liquidator may request the claimant to present information or evidence supplementary to that required under subsection 1 of this section and may take testimony under oath, require production of affidavits or depositions, or otherwise obtain additional information or evidence.

4. No judgment or order against an insured or the insurer entered after the date of filing of a successful petition for liquidation, and no judgment or order against an insured or the insurer entered at any time by default or by collusion need be considered as evidence of liability or of the amount of damages. No judgment or order against an insured or the insurer entered within four months before the filing of the petition need be considered as evidence of liability or of the amount of damages.

5. All claims of a guaranty association or foreign guaranty association shall be in such form and contain such substantiation as may be agreed to by the association and the liquidator.

(L. 1991 H.B. 385, et al. § 85)

Contingent claims, allowed when, exceptions.

375.1210. 1. The claim of a third party which is contingent only on his first obtaining a judgment against the insured shall be considered and allowed as if there were no such contingency.

2. A claim may be allowed even if contingent, if it is filed in accordance with section 375.1206. It may be allowed and may participate in all distributions declared after it is filed to the extent that it does not prejudice the orderly administration of the liquidation.

3. Claims that are due except for the passage of time shall be treated as absolute claims are treated, except that such claims may be discounted at the legal rate of interest for judgments.

4. Claims made under employment contracts by directors, principal officers, or persons in fact performing similar functions or having similar powers are limited to payment for services rendered prior to the issuance of any order of rehabilitation or liquidation under section 375.1168 or 375.1176.

(L. 1991 H.B. 385, et al. § 86)

Third party claims for actions against insureds, filedhow--procedures.

375.1212. 1. Whenever any third party asserts a cause of action against an insured of an insurer in liquidation, the third party may file a claim with the liquidator.

2. Whether or not the third party files a claim, the insured may file a claim on his own behalf in the liquidation. If the insured fails to file a claim by the date for filing claims specified in the order of liquidation or within sixty days after mailing of the notice required by section 375.1185, whichever is later, he is an unexcused late filer.

3. The liquidator shall make his recommendations to the court under section 375.1218, for the allowance of an insured's claim under subsection 2 of this section after consideration of the probable outcome of any pending action against the insured on which the claim is based, the probable damages recoverable in the action and the probable costs and expenses of defense. After allowance by the court, the liquidator shall withhold any dividends payable on the claims, pending the outcome of liquidation and negotiation with the insured. Whenever it seems appropriate, he shall reconsider the claim on the basis of additional information and amend his recommendations to the court. The insured shall be afforded the same notice and opportunity to be heard on all changes in the recommendation as in its initial determination. The court may amend its allowance as it thinks appropriate. As claims against the insured are settled or barred, the insured shall be paid from the amount withheld the same percentage dividend as was paid on other claims of like property, based on the lesser of the amount actually recovered from the insured by action or paid by agreement plus the reasonable costs and expense of defense, or the amount allowed on the claims by the court. After all claims are settled or barred, any sum remaining from the amount withheld shall revert to the undistributed assets of the insurer. Delay in final payment under this subsection shall not be a reason for unreasonable delay of final distribution and discharge of the liquidator.

4. The liability of the insurer relating to liabilities incurred, but for which claims relating to such liabilities are not reported, accrued or claimed, shall be determined with reference to the provisions of this subsection. In such an event, the amount of such liabilities shall be calculated, at their present value, by a panel appointed pursuant to this subsection. The liquidator and the claimant shall each appoint one arbitrator, and the court shall appoint a special magistrate who shall preside over all proceedings under this subsection. Thereupon, the panel shall hear and determine the amount of such liabilities pursuant to the procedures provided by sections 435.365 to 435.395. Any party to the proceeding shall have all rights provided by sections 435.400 to 435.455 and the provisions of said sections shall be applicable to such proceedings.

5. If several claims founded upon one policy are filed, whether by third parties or claims by the insured under this section, and the aggregate allowed amount of the claims to which the same limit of liability in the policy is applicable exceeds that limit, each claim as allowed shall be reduced in the same proportion so that the total equals the policy limit. Claims by the insured shall be evaluated as provided in subsection 3 of this section. If any insured's claim is subsequently reduced under subsection 3 of this section, the amount thus freed shall be apportioned ratably among the claims which have been reduced under this subsection.

6. No claim may be presented under this section if it is or may be covered by any guaranty association or foreign guaranty association.

(L. 1991 H.B. 385, et al. § 87)

Denial of claim--appeal procedure.

375.1214. 1. When a claim is denied in whole or in part by the liquidator, written notice of the determination shall be given to the claimant or his attorney by first class mail at the address shown in the proof of claim. Within sixty days from the mailing of the notice, the claimant may file his objections with the liquidator. If no such filing is made the claimant may not further object to the determination.

2. Whenever objections are filed with the liquidator and the liquidator does not alter his denial of the claim as a result of the objections, the liquidator shall ask the court for a hearing as soon as practicable and give notice of the hearing by first class mail to the claimant or his attorney and to any other persons directly affected, not less than ten nor more than thirty days before the date of the hearing. The matter may be heard by the court or by a court-appointed referee. Hearings before court-appointed referees shall be conducted in an informal manner and the formal rules of evidence shall not apply. The referee shall submit written findings of fact and conclusions of law along with his recommendation for disposition which shall become final if a motion for reconsideration before the court is not filed by the liquidator or claimant with the court within fifteen days that notice of such findings and conclusions is mailed to the parties. The motion for reconsideration shall allege either the existence of new facts which could not, with reasonable diligence, have been discovered and presented before the referee, or such erroneous conclusions of law, that would justify reconsideration of the claim by the court. A motion for reconsideration based upon erroneous conclusions of law may be decided by the court, after opportunity for response by the prevailing party, without necessity of hearing. A motion for reconsideration not ruled upon by the court within ninety days after the motion is filed shall be deemed denied for purposes of appeal.

(L. 1991 H.B. 385, et al. § 88)

Subrogated claim, allowed when.

375.1215. Whenever a creditor whose claim against an insurer is secured, in whole or in part, by the undertaking of another person, fails to prove and file that claim, the other person may do so in the creditor's name, and shall be subrogated to the rights of the creditor, whether the claim has been filed by the creditor or by the other person in the creditor's name, to the extent that he discharges the undertaking. In the absence of an agreement with the creditor to the contrary, the other person shall not be entitled to any distribution, however, until the amount paid to the creditor on the undertaking plus the distributions paid on the claim from the insurer's estate to the creditor equals the amount of the entire claim of the creditor. Any excess received by the creditor shall be held by him in trust for such other person. The term "other person", as used in this section, is not intended to apply to a guaranty association or foreign guaranty association.

(L. 1991 H.B. 385, et al. § 89)

Valuation of security, procedure.

375.1216. 1. The value of any security held by a secured creditor shall be determined in one of the following ways, as the court may direct:

(1) By converting the same into money according to the terms of the agreement pursuant to which the security was delivered to such creditors; or

(2) By agreement, arbitration, compromise or litigation between the creditor and the liquidator.

2. The determination shall be under the supervision and control of the court with due regard for the recommendation of the liquidator. The amount so determined shall be credited upon the secured claim, and any deficiency shall be treated as an unsecured claim. If the claimant shall surrender his security to the liquidator, the entire claim shall be allowed as if unsecured.

(L. 1991 H.B. 385, et al. § 90)

Classes of claims--priority of distribution.

375.1218. The priority of distribution of claims from the insurer's estate shall be in accordance with the order in which each class of claims is herein set forth. Every claim in each class shall be paid in full or adequate funds retained for such payment before the members of the next class receive any payment. No subclasses shall be established within any class. No claim by a shareholder, policyholder or other creditor shall be permitted to circumvent the priority class through the use of equitable remedies. The order of distribution of claims shall be:

(1) Class 1. The costs and expenses of administration during rehabilitation and liquidation, including but not limited to the following:

(a) The actual and necessary costs of preserving or recovering the assets of the insurer, and costs necessary to store records required to be preserved pursuant to section 375.1228;

(b) Compensation for all authorized services rendered in the rehabilitation and liquidation;

(c) Any necessary filing fees;

(d) The fees and mileage payable to witnesses;

(e) Authorized reasonable attorney's fees and other professional services rendered in the rehabilitation and liquidation.

(2) Class 2. All claims under policies including such claims of the federal or any state or local government for losses incurred ("loss claims") including third party claims and all claims of a guaranty association or foreign guaranty association including reasonable allocated loss adjustment expenses and all claims of a life and health insurance guaranty association or foreign guaranty association which covers claims of life and health insurance policies, relating to the handling of such claims. All claims under life insurance and annuity policies and funding agreements, whether for death proceeds, annuity proceeds or investment values shall be treated as loss claims. That portion of any loss, indemnification for which is provided by other benefits or advantages recovered by the claimant, shall not be included in this class, other than benefits or advantages recovered or recoverable in discharge of familial obligation of support or by way of succession at death or as proceeds of life insurance, or as gratuities. No payment by an employer to his employee shall be treated as a gratuity. Early distributions to guaranty associations and foreign guaranty associations may be made in the manner provided in section 375.1205, provided that such guaranty associations and foreign guaranty associations agree to indemnify the liquidator if a shortage occurs in the insurer's estate of property necessary to settle claims as provided by this section. Any early distributions shall not increase the proportionate share of such guaranty associations and foreign guaranty associations, of distributions of the insurer's estate. The liquidator shall have authority to inquire into the reasonableness of any allocated loss adjustment expenses claimed by a guaranty association or foreign guaranty association and such claim shall not be allowed if it is found to be unreasonable.

(3) Class 3. Claims of the United States government other than those claims included in class 2.

(4) Class 4. Reasonable compensation to employees for services performed to the extent that they do not exceed two months of monetary compensation and represent payment for services performed within one year before the filing of the petition for liquidation or, if rehabilitation preceded liquidation, within one year before the filing of the petition for rehabilitation. Principal officers and directors shall not be entitled to the benefit of this priority except as otherwise approved by the liquidator and the court. Such priority shall be in lieu of any other similar priority which may be authorized by law as to wages or compensation of employees.

(5) Class 5. Claims under nonassessable policies for unearned premiums or other premium refunds and claims of general creditors including claims of ceding and assuming companies in their capacity as such.

(6) Class 6. Claims of any state or local government except those under class 2 of this section*. Claims, including those of any governmental body for a penalty or forfeiture, shall be allowed in this class only to the extent of the pecuniary loss sustained from the act, transaction, or proceeding out of which the penalty or forfeiture arose, with reasonable and actual costs occasioned thereby. The remainder of such claims shall be postponed as class 9** claims.

(7) Class 7. Claims filed late or any other claims other than class 8 or 9*** claims.

(8) Class 8. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Payments to members of domestic mutual insurance companies shall be limited in accordance with law.

(9) Class 9. The claims of shareholders or other owners in their capacity as shareholders.

(L. 1991 H.B. 385, et al. § 91, A.L. 1992 H.B. 1574, A.L. 1993 H.B. 709, A.L. 1996 S.B. 896)

*Word "above" appears in original rolls.

**"Class 8" appears in original rolls.

***"Class 7 or 8" appears in original rolls.

Claims allocated to separate account not chargeable with liabilities,when--treated as class 2 claim, when.

375.1219. All claims under policies, contracts or agreements for which assets have been allocated to a separate account established pursuant to section 376.309 and which provide, in effect, that the assets allocated to the separate account shall not be chargeable with liabilities arising out of any other business of the insurer, shall be satisfied out of the assets allocated to the separate account equal to the reserves maintained in such account for such policy, contract or agreement and to the extent, if any, not fully discharged thereby, shall be treated as class 2 claims against the estate of the insurer pursuant to the provisions of section 375.1218.

(L. 1993 H.B. 709)

Claim disputes--duty of liquidator--estimates allowed,when--commutation and release.

375.1220. 1. The liquidator shall review all claims duly filed in the liquidation and shall make such further investigation as the liquidator shall deem necessary. The liquidator may compound, compromise or in any other manner negotiate the amount for which claims will be allowed, under the supervision of the court, except where the liquidator is required by law to accept claims as settled by any person or organization. Unresolved disputes shall be determined pursuant to section 375.1214. No claim under a policy of insurance shall be allowed for any amount in excess of the applicable policy limits or without regard to policy deductibles.

2. If the fixing or liquidation of any claim or claims would unduly delay the administration of the liquidation or if the administrative expense of processing and adjudication of a claim or group of claims of a similar type would be unduly excessive when compared with the moneys which are estimated to be available for distribution with respect to such claim or group of claims, the determination and allowance of such claim or claims may be made by an estimate. Any such estimate shall be based upon an actuarial evaluation made with reasonable actuarial certainty or upon another accepted method of valuing claims with reasonable certainty.

3. The estimation of contingent liabilities permitted by subsection 2 of this section or any other section of this chapter may be used for the purpose of fixing a creditor's claim in the estate, and for determining the percentage of partial or final dividend payments to be paid to creditors with reported allowed claims. However, nothing in subsection 2 of this section or any other section in this chapter shall be construed as authorizing the receiver, or any other entity, to compel payment from a reinsurer on the basis of estimated incurred but not reported losses and, except with respect to claims made pursuant to section 375.1212, outstanding reserves. Nothing in this subsection shall be construed to impair any obligation arising pursuant to any insurance agreement. Expert testimony concerning estimates of incurred but not reported losses may be received in evidence in any tribunal whether offered by the receiver or by the reinsurer, if such testimony is otherwise admissible pursuant to section 490.065.

4. Notwithstanding the provisions of this section or any other section of this chapter to the contrary, the liquidator may negotiate a voluntary commutation and release of all obligations arising from reinsurance contracts or other agreements.

5. The provisions of subsection 3 of this section shall not apply to and have no force and effect regarding any formal delinquency proceeding in which, prior to August 28, 1999, the court in which such proceeding was or is pending issued any order or decree construing or applying the provisions of this section.

(L. 1991 H.B. 385, et al. § 92, A.L. 1992 H.B. 1574, A.L. 1999 S.B. 386 §§ 375.1220, D, A.L. 2001 H.B. 459, A.L. 2004 H.B. 1253 merged with S.B. 1235)

Payment of claims--duties of liquidator.

375.1222. Under the direction of the court, the liquidator shall pay distributions in a manner that will assure the proper recognition of the priorities and a reasonable balance between the expeditious completion of the liquidation and the protection of unliquidated and undetermined claims, including third party claims. Distribution of assets in kind may be made at valuations set by agreement between the liquidator and the creditor and shall be approved by the court. This section shall be applicable to proceedings instituted before and after August 28, 1991.

(L. 1991 H.B. 385, et al. § 93, A.L. 1992 H.B. 1574)

Unclaimed funds, deemed unclaimed property--effect.

375.1224. 1. All unclaimed funds subject to distribution remaining in the liquidator's hands when he is ready to apply to the court for discharge, including the amount distributable to any creditor, shareholder, member or other person who is unknown or cannot be found, shall be deposited with the director of the department of economic development to be held and disposed of as provided by laws for unclaimed property.

2. All funds withheld under section 375.1212 which are not distributed shall upon discharge of the liquidator be deposited with the director of the department of economic development as provided by laws for unclaimed property and distributed by him in accordance with section 375.1218. Any sums remaining which under section 375.1218 would revert to the undistributed assets of the insurer shall be converted to cash and paid to the state treasurer for deposit to the general revenue fund of the state.

3. This section shall be applicable to proceedings instituted before and after August 28, 1991.

(L. 1991 H.B. 385, et al. § 94, A.L. 1992 H.B. 1574)

CROSS REFERENCE:

Dissolution of business, unclaimed intangible personal property presumed abandoned, when, 447.527

Discharge of liquidator, when.

375.1225. When all assets justifying the expense of collection and distribution have been collected and distributed under sections 375.1150 to 375.1246, the liquidator shall apply to the court for discharge. The court may grant the discharge and make any other orders, including an order to transfer any remaining funds that are uneconomical to distribute pursuant to section 375.1224, as may be deemed appropriate. This section shall be applicable to proceedings instituted before and after August 28, 1991.

(L. 1991 H.B. 385, et al. § 95, A.L. 1992 H.B. 1574)

Reopening of proceedings, when.

375.1226. After the liquidation proceeding has been terminated and the liquidator discharged, the director or other interested party may at any time petition the court to reopen the proceedings for good cause, including the discovery of additional assets. If the court is satisfied that there is justification for reopening, it shall so order. The provisions of this section shall apply to delinquency proceedings instituted before and after August 28, 1991.

(L. 1991 H.B. 385, et al. § 96, A.L. 1992 H.B. 1574)

Records may be destroyed after discharge, exceptions.

375.1228. 1. Whenever it shall appear to the director that the records of any insurer after discharge of the liquidator are no longer useful, he may, after complying with sections 109.200 to 109.310, recommend to the court and the court shall direct what records should be retained for future reference and what should be destroyed, provided that the following records shall be retained for five years after the date of discharge:

(1) Financial records regarding administration of the estate;

(2) Records of claims and allowances or disallowances thereof.

2. Notwithstanding the provisions of section 375.1158, the provisions of this section shall apply to delinquency proceedings commenced before and after August 28, 1991.

(L. 1991 H.B. 385, et al. § 97)

Audit of receivership may be ordered, when.

375.1230. The court may, as it deems desirable, cause audits to be made of the books of the receiver relating to any receivership established under sections 375.1150 to 375.1246, and a report of each audit shall be filed with the receiver and with the court. The books, records and other documents of the receivership shall be made available to the auditor at any time without notice. The expenses of each audit shall be considered a cost of administration of the receivership.

(L. 1991 H.B. 385, et al. § 98)

Foreign insurers, director may petition to act as conservator,procedures--court may issue order--termination of conservatorship,application for.

375.1232. 1. If a domiciliary liquidator has not been appointed, the director may apply to the circuit court of Cole County by verified petition for an order directing him to act as conservator to conserve the property of an alien insurer not domiciled in this state or a foreign insurer on any one or more of the following grounds:

(1) Any of the grounds in section 375.1165;

(2) That any of its property has been sequestered by official action in its domiciliary state, or in any other state;

(3) That enough of its property has been sequestered in a foreign country to give reasonable cause to fear that the insurer is or may become insolvent;

(4) (a) That its certificate of authority to do business in this state has been revoked or that none was ever issued; and

(b) That there are residents of this state with outstanding claims or outstanding policies.

2. When an order is sought under subsection 1 of this section, the court shall cause the insurer to be given such notice and time to respond thereto as is reasonable under the circumstances.

3. The court may issue the order in whatever terms it shall deem appropriate. The filing or recording of the order with the clerk of the court or the recorder of deeds of the county in which the principal business of the company is located, shall impart the same notice as a deed, bill of sale or other evidence of title duly filed or recorded with that recorder of deeds would have imparted.

4. The conservator may at any time petition for and the court may grant an order under section 375.1234 to liquidate assets of a foreign or alien insurer under conservation, or, if appropriate, for an order under section 375.1236, to be appointed ancillary receiver.

5. The conservator may at any time petition the court for an order terminating conservation of an insurer. If the court finds that the conservation is no longer necessary, it shall order that the insurer be restored to possession of its property and the control of its business. The court may also make such finding and issue such order at any time upon motion of any interested party, but if such motion is denied all costs shall be assessed