Chapter 15- MO Property & Casualty Laws

Unfair and Deceptive Practices

If an insurer commits any of these practices, it will be deemed an unfair trade practice if: -It is committed in conscious disregard of Missouri's Unfair Trade Practice Act -It has been committed with such frequency it indicates a regular business practice to engage in that type of conduct

License Suspension, Revocation, Denial, and Cancellation (continued)

If the Department denies a license application, the applicant may request a hearing within 30 days of receiving the denial. If the Department has taken no action within 25 working days of receiving a producer license application, the application will be approved automatically. This approval does not apply if the applicant has been convicted of a felony or a crime involving moral turpitude. If, after receiving evidence a person has violated insurance laws or rules, the Director may also: -Issue a cease and desist order -Issue a curative order or other order demanding compliance with insurance laws and rules -Award reasonable costs of the investigation -After a hearing held for a licensee violating any of the state's insurance laws, impose a civil penalty or forfeiture as prescribed by law, which must be paid within 10 days If the Director denies or nonrenews a license application, they must notify the applicant in writing and include the specific reason for denial. The applicant may appeal the Director's decision as prescribed by law. If a partner, officer, or manager of a business entity licensed as an insurance producer knew, or should have known, that an individual insurance producer violated the law and either did not report the violation to the Director or take corrective action, the business entity's producer license can be suspended, revoked, or nonrenewed.

Cease and Desist Orders

If, based upon substantial and competent evidence, the Director determines that any person, including any business entity, has engaged in an unfair method of competition or an unfair or deceptive act or practice—or is engaging in or has serious plans to engage in such—the Director may: -Issue a cease and desist order -Issue a curative order, requiring the person to take specific action -Order a civil penalty or forfeiture -Award reasonable costs of the investigation When determining any penalty or relief sought from a violator, the Director must consider, among other factors, whether: -The violation is likely to continue or reoccur -The amount of any actual financial loss and restitution was made -The violation was detected as part of a self-audit or internal compliance program and immediately reported to the Director -The violation had previously been detected but inadequate policies and procedures did not prevent reoccurrence The Director must provide notice of intent to initiate administrative action, and serve that notice personally or by certified mail, to any person subject to Department proceedings. The notice must direct the person named in the notice to show good cause why a cease and desist order or other relief should not be issued. A hearing must be held no fewer than 10 days after the notice is served. In some situations, the Director may issue a summary order, which is civil action that allows disposition of a matter without legal proceedings because the facts are not in dispute. If the persons affected by the summary order do not request a hearing, and the Director does not order a hearing within 30 days, the summary order becomes the final order. If a hearing is held, the Director will issue a final order, which can vacate or modify a previous order. In addition to any other penalty provided by law, willful violation of a cease and desist order issued by the Director is punishable by a fine up to $100,000, imprisonment for up to 10 years, or both. Violators must also be subject to suspension or revocation of an insurance license or certificate of authority.

Improper Claims Practices

In Missouri, any of the acts cited below are considered improper claims practices under Missouri law if such acts are: -Committed in conscious disregard of the Unfair Claims Settlement Practices Act or any rules associated with it -Committed with such frequency their commission indicates it is the insurer's regular business practice to engage in such act

Commissions and Compensation

In exchange for negotiating, soliciting, or effecting insurance contracts, commissions may only be paid to duly licensed producers. Unless an applicant or an insured enters into a written agreement with a producer that clearly defines the amount and extent of compensation, producers are prohibited from receiving from policyholders any compensation other than commissions deducted from insurance premiums. In addition, in the absence of such a written agreement, producers are prohibited from charging an insured a greater sum than the premium charged by the insurer for a particular policy. This prohibition includes payment for the adjustment of claims. Insurers are prohibited from paying any commission for producer services to any person or business entity not licensed as an insurance producer. Surplus lines producers may compensate duly licensed producers for referrals and the placement of surplus lines insurance Insurers may not use compensation arrangements that transfer any portion of the insurance risk to producers; however, they may vary commissions based on the loss experience of the policies written by producers. Insurers and producers must retain copies of their compensation agreements for 3 years and make them available for the Director's inspection. Renewal and deferred commissions may be paid to an unlicensed person for the sale, solicitation, or negotiation of insurance if the person was licensed at the time of the insurance transaction. Under no circumstance may commissions, service fees, brokerage fees, or any valuable consideration be paid to any person whose insurance license was suspended or revoked.

Unfair and Deceptive Practices- Stock Operations and Advisory Board Contracts

Issuing, delivering, or allowing agents, officers, or employees to issue or deliver any of the following—as an inducement to purchase insurance—if they promise returns or profits of any kind: -Agency stock or other capital stock -Benefit certificates or shares in a common law corporation -Securities in any special or advisory board contract

Unfair and Deceptive Practices- Operating Fraudulently or in Bad Faith

It is unlawful for any Missouri insurer to: -Conduct insurance business fraudulently -Fail to transact insurance in good faith -Consistently and as a business practice compel claimants to accept less than the amount to which they are due under a policy or file lawsuits to obtain fair payment under a policy Any person that engages in, or plans to engage in, or materially aids another person in committing any of these acts, may be the subject of an administrative order issued by the Director as prescribed by law or by a civil action filed by the Director. Each individual practice that is a violation under this section of insurance code is considered a level 2 violation; however, each individual act is not considered a separate violation. In addition, the Director may suspend or revoke the license or certificate of authority of any person that willfully violates this section of insurance code.

Unfair and Deceptive Practices- False Statements and Entries

Knowingly providing false information in an insurer's records about that insurer's financial condition or business activities, or placing such false information with any public official or before the public. This includes knowingly making any false entry, or omission, of a material fact pertaining to the record of any insurance transaction.

Unfair and Deceptive Practices- False Information and Advertising Generally

Publishing any untrue, deceptive, or misleading statement about the insurance business or about an insurer. This includes statements made in advertisements, newspapers, magazines, and other publications as well as those made over any radio or television station.

Obtaining a License- Qualifications

Resident individuals applying for an insurance producer license must: -Be at least 18 years old -Not have committed any act that is grounds for license denial, suspension, or revocation -Pay the required $100 license fee -Pass the examinations for the lines of authority for which the person has applied A business entity that acts as an insurance producer must obtain an insurance producer license. Business entities must also comply with the following requirements: -Provide the name and address of a licensed agent who will be responsible for the business entity's compliance with the insurance laws, rules, and regulations of this state -Provide a list of all insurance producers it employs, or who act on behalf of the business entity, and to whom commission is paid -Pay the $100 license fee -Disclose to the Department all its officers, directors, and partners—even if they are not licensed -Disclose any change of information or termination of a producer within 20 business days

The Association

The Association is obligated to pay covered claims that exist prior to a determination of insolvency if they are submitted: -Within 30 days after the determination of insolvency -Before the policy expiration date, if less than 30 days after the determination of insolvency -Before the insured replaces or cancels the policy, if doing so within 30 days of the determination of insolvency The Association's obligation to pay a covered claim is satisfied by paying the following amounts: -The full amount of a covered claim under a Workers' Compensation policy -An amount not exceeding $25,000 per policy for the return of unearned premium -An amount not exceeding $300,000 per claimant for all other covered claims

The Association (continued)

The Association stands in place of the insolvent insurer to the extent of obligations on covered claims, and has all rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent. It allocates claims paid and expenses incurred among its 4 accounts and assesses member insurers separately for each account the amounts necessary to pay the obligations of the Association. The 4 accounts are the: 1. Workers' Compensation insurance account 2. Automobile insurance account 3. Missouri mutual and extended Missouri mutual insurance company account 4. Account for all other types of insurance to which the Act applies The Association investigates claims brought against it and adjusts, compromises, settles, and pays covered claims to the extent of its obligations; it denies all other claims. It is an unfair trade practice for any insurer or producer to make use in any manner of the protection given by the Association as a reason for the purchase of insurance. The Director must notify the Association within 3 days of receiving notice of a member insurer's insolvency.

Improper Claims Practices (continued...)

-Failing to adopt and implement reasonable standards for the prompt investigation and settlement of a claim submitted under one of its policies -Not attempting in good faith to effectuate prompt, fair, and equitable settlement of claims if liability has become reasonably clear -Compelling insureds or beneficiaries to file lawsuits to recover claim amounts by offering substantially less than the amounts ultimately recovered in such a lawsuit -Refusing to pay claims without first conducting a reasonable investigation -Failing to affirm or deny coverage within a reasonable time after a proof of loss statement has been received by the insurer -Attempting to settle a claim for less than the amount to which a reasonable person would believe the insured or beneficiary was entitled based on the written contents of advertising material that accompanied or was part of an application -Attempting to settle claims on the basis of an application that was altered without the insured's knowledge or consent -Making a claims payment to an insured or beneficiary without indicating the coverage under which each payment is being made -Delaying, unreasonably, the investigation or payment of claims by requiring a duplicate proof of loss and/or verification of the claim -Failing to deny a claim or offer a compromise settlement promptly, or to provide a reasonable and accurate explanation of the basis for such actions -Failing to provide necessary claim forms, including reasonable explanations about how to use them, within 15 calendar days of a request -Failing to adopt and implement reasonable standards to assure that the repairs by a preferred vendor are performed in a workmanlike manner -Failing to settle claims promptly 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

Violations- Penalties and forfeitures ordered by the Director

-Level 1 violations - No penalty or forfeiture -Level 2 violations - $1,000 per violation up to an aggregate of $50,000 per year for multiple violations -Level 3 violations - $5,000 per violation up to an aggregate of $100,000 per year for multiple violations -Level 4 violations - $10,000 per violation up to an aggregate of $250,000 per year for multiple violations -Level 5 violations - $50,000 per violation up to an aggregate of $250,000 per year for multiple violations

Violations- Penalties and forfeitures ordered by the court

-Level 1 violations - No penalty or forfeiture -Level 2 violations - $1,000 per violation up to an aggregate of $50,000 per year for multiple violations -Level 3 violations - $5,000 per violation up to an aggregate of $200,000 per year for multiple violations -Level 4 violations - $20,000 per violation up to an aggregate of $1 million per year for multiple violations -Level 5 violations - $1 million per violation with no limit for multiple violations

Unfair and Deceptive Practices- Discrimination

-Permitting individuals of the same class and hazard to be charged different rates for the same coverage -Cancelling, nonrenewing, or refusing to issue a residential property policy based solely on the geographic location or age of the property to be insured -Cancelling, nonrenewing, or limiting the amount of insurance issued based on an individual's marital status or gender (this includes not providing the same coverage and benefits under the same conditions for females that are provided for males) -Refusing to insure solely because another insurer has denied, nonrenewed, or cancelled another policy on which the applicant was a named insured; this includes asking a question on the application about any prior carrier's denial, nonrenewal, or cancellation of insurance -Cancelling, nonrenewing, or refusing to issue a policy based solely on the race, gender, color, creed, national origin, place of residence, lawful occupation (including military service), or ancestry of anyone to be insured by a policy -Cancelling, nonrenewing, refusing to issue, or modifying coverage under a policy based solely on a mental or physical impairment of the applicant, insured, or any employee of either (exception: health insurance)

Claimant

A claimant is any of the following: -A first-party claimant is a person submitting a claim under an insurance policy in which the person is an insured -A third-party claimant is a person submitting a claim under the insurance policy of another person -Any other person or entity submitting a claim on behalf of any insured, including a legal representative or member of the insured's immediate family who has been designated as such by the insured

Covered Claim Exclusions

A covered claim does not include: -An amount awarded as punitive or exemplary damages, a fine, or a penalty -Return premiums sought under any retrospective rating plan -Amounts due any reinsurer, insurer, insurance pool, underwriting association, HMO, hospital plan corporation, health services corporation, or self-insurer as recoveries (subrogation), contribution, or indemnity -A claim filed by the insured of an insolvent insurer, if the insured has a net worth of more than $25 million -A first-party claim filed by an affiliate of the insolvent insurer -Supplementary payment obligations incurred before the final order of liquidation -Claims for interest -Amounts within the insured's deductible or self-insured retention -Attorney fees or fees charged by others in association with the filing of any claim or lawsuit -A claim submitted under a policy with a deductible or self-insured retention of $300,000 or more -Any amount that is also insured elsewhere

Covered Claim

A covered claim is an unpaid claim, including claims for unearned premium, submitted by a claimant within the time period prescribed by law and under a policy to which the Missouri Property and Casualty Insurance Guaranty Association Act applies. The policy under which a covered claim is made must have been issued by a member insurer that is insolvent. The claimant or insured must be a Missouri resident at the time of the insured loss. If the claim is for unearned premium, the insured must have been a Missouri resident at the time the policy was issued.

Member Insurer

A member insurer is any person that writes any line of insurance under a certificate of authority issued by the Director, except for the following: -Life, health, disability, accident, or annuity -Mortgage guaranty, financial guaranty, and other contracts protecting against investment risk -Fidelity, surety, and other bonds -Credit, vendor's single interest, and collateral protection -Warranties and service contracts -Title -Ocean marine -Insurance provided or guaranteed by any government -Malpractice insurance

Producer Appointment and Termination

A producer appointment is the earliest date an insurer or its authorized agent is permitted to do any of the following: -Give a prospective producer any insurance applications that require the submission of a premium at the time of completion -Accept a premium from a prospective insurance producer -Accept for underwriting purposes an application submitted by a prospective insurance producer -Execute a written or verbal employment contract with a prospective insurance producer -Grant binding authority to the prospective insurance producer Insurers may appoint individual producers or business entity producers. If a business entity producer is appointed, all individual producers employed by the business entity are also considered to be appointed by the insurer. Authority under the appointment is only granted for the lines of authority for which each producer is licensed. An appointment for an individual producer terminates automatically upon the following events: -The individual's termination or resignation from the licensed business entity for which they work -The termination of the licensed business entity by the insurer -Nonrenewal, surrender, suspension, revocation, or surrender of the individual's producer license If an insurer terminates an appointment because a producer violated the law, it must provide to the Director a report or summary of the acts that prompted the insurer to believe a violation of law took place.

Maintaining a License- Renewal

A producer license renews biennially (every 2 years) on the producer's birth date and the renewal fee is $100. Producer licenses continue in effect until they are refused, revoked, or suspended by the Director. If a producer license expires, it may be reinstated within 12 months of the date the renewal fee was due. No re-examination is required if: -All required renewal fees are paid -A penalty of $25 per month is paid for each month during which the license was expired -The producer submits proof of compliance with continuing education requirements Producers who are unable to comply with license renewal requirements due to military service or extenuating circumstances (such as a long-term medical disability) may request a waiver of the requirements and any fines imposed for failure to comply.

Maintaining a License- Reporting of Actions

A producer must report any administrative action taken against them in any jurisdiction or by any governmental agency, including a copy of the order, consent order, or other related legal documents. Written notice must be made within 30 days of the final disposition of the matter. A producer must also report any criminal prosecution for a felony, or a crime involving moral turpitude, in any jurisdiction, including a copy of the indictment and any other related legal document. Written notice must be made within 30 days of the initial pretrial hearing date.

Persons Required to be Licensed- Surplus Lines Producer

A surplus lines licensee is licensed to place insurance with nonadmitted insurers authorized to transact insurance in the state in which the producer or broker is licensed. In Missouri, producers are not permitted to procure any surplus lines insurance with a nonadmitted insurer if they are not licensed as a surplus lines licensee. In order to obtain a surplus lines license in this state, a resident or nonresident property and casualty insurance producer must: -Pay an initial fee of $100 -Submit the required license application -Pass an exam Surplus lines licenses renew biennially on the producer's birth date and remain in effect until refused, revoked, or suspended by the Director. Failure to pay the biennial license renewal fee of $100 when due results in termination of the license.

Persons Required to be Licensed- Producer

An individual applying for a resident insurance producer license must apply for the license and pass a written exam for the lines of authority for which the person has applied. An individual who fails to appear for an exam as scheduled, or who fails to pass the exam, must reapply for an exam and remit all required fees and forms before being rescheduled for another exam. A producer may qualify for a license in one or more of the following lines of authority: -Life insurance, including endowments, annuities, death or dismemberment coverage, and disability income -Accident and health or sickness insurance, which may include disability income benefits -Property insurance -Casualty insurance against legal liability for death, injury, disability, or property damage -Variable life and annuity products -Personal lines property and casualty insurance -Credit-limited line credit insurance (individuals applying for limited lines producer licenses are exempt from examination) -Any other line of insurance permitted under state law Each insurance office must be the principal office of at least one licensed producer. All laws applying to the insurance business also apply to the transaction of insurance business conducted over the internet. Insurers and producers maintaining a website must include on the website: -A contact address and telephone number for communication with producers or insurance companies -A notice that shows the states in which the insurers or producers are authorized to transact insurance

Insolvent Insurer

An insolvent insurer is an insurer licensed to transact insurance in Missouri at the time a policy was issued or at the time an insured event occurred, against which an order of liquidation with a finding of insolvency was entered in court in the insurer's state of domicile or in Missouri.

Unfair and Deceptive Practices- Unfair Financial Planning Practices

An insurance producer, agent, broker, or consultant commits unfair financial planning practices when: -Holding themselves out as being engaged in any of the following fields of specialty when the person is only engaged in the sale of insurance: *Financial planner *Investment adviser *Financial consultant or counselor *Providing advice relating to investments, insurance, real estate, or matters pertaining to taxes, trusts, or estates -Engaging in the financial planning business without disclosing that they are also a producer and that a commission will be received (in addition to the financial planning fee) for the sale of an insurance product -Charging fees for financial planning (other than commissions), unless such fees are based upon a written agreement signed by the client before the services are performed. *A copy of such agreement must be provided to the client at the time it is executed and must contain specific details of the services to be provided for a fee and the amount of all fees charged, including how they will be determined and calculated *The agreement must state the client is not obligated to purchase any insurance product from the insurance agent, broker, or consultant *The agent, broker, or consultant must retain a copy of all such agreements for no fewer than 3 years after all services have been completed and make them available to the Director upon request

Fiduciary Responsibilities

An insurance producer, whether acting on behalf of an insurance company, insured, or applicant, must be held responsible in a trust or fiduciary capacity for any money collected on behalf of these persons. The funds collected, if not immediately remitted, must be held in a trust account. The producer must keep records of the transactions of this account and have the books accessible for inspection. An insurer or insurance producer may charge additional fees for premium installments, late payments, policy reinstatements, or similar services. These fees must be disclosed to the applicant or insured in writing.

Persons Required to be Licensed- Nonresident Producer

Any licensed person who is not a Missouri resident may be issued a nonresident producer license in Missouri for the same lines of authority that appear on the license in their home state under the following conditions: -The home state must award nonresident producer licenses to Missouri residents on the same basis -The person is in good standing in their home state and has submitted the appropriate application and licensing fees -The Director may verify the licensing status of an applicant requesting a nonresident producer license through the NAIC producer registry Nonresident producers: -Must notify the Director within 30 days of any change in legal residence -Are not subject to continuing education requirements in Missouri if they satisfy the continuing education requirements of their home states Individuals who have been issued surplus lines or limited line credit licenses in their home states may be issued nonresident licenses of the same type in Missouri.

General Powers and Duties- False Testimony

During the course of any Department investigation, examination, inquiry, or other proceeding, it is illegal for any person to: -Knowingly make a false statement to the Director in connection with any proceeding -Provide false information in any insurance company books or papers used in the course of any examination, inquiry, or Department investigation

Classification of Violations increased/decreased

Any violations of Missouri insurance law that are not classified, or do not call for a specific penalty or forfeiture, will be considered level 1 violations. Penalties may be increased or decreased by the Director or the court in accordance with the following: -Increased by 1 classification step, if the violation: *Was committed knowingly *Resulted in actual financial loss to consumers -Increased by 2 classification steps, if the violation was committed knowingly in disregard of law -Reduced by 2 classification steps if, prior to receiving notice from the Department, the violation was detected by the violator in a self-audit or internal compliance program and reported immediately to the Director If the Director determines that any insurer has engaged in an unfair method of competition or an unfair or deceptive act or practice—or is engaging in or has serious plans to engage in such competition or conduct—the Director may issue administrative orders as authorized under Missouri Insurance Code. This section of law also applies to any person who has materially aided or is aiding such conduct. Each violation of an unfair method of competition or deceptive act or practice will be considered a level 2 violation; multiple violations of the same type do not constitute separate violations. In addition, the Director may suspend or revoke the violator's insurance license or certificate of authority. The Director may also maintain a civil action for relief for such violations.

Certificate of Authority (continued)

Certificates of authority are renewed on an annual basis on July 1; however, they remain in effect until renewed or refused by the Director. Insurers that transact insurance business without a proper certificate of authority will be liable for any claims made against any policies they issued. Additionally, insurers transacting business without a certificate of authority must defend any lawsuits filed against them, but cannot file legal action pertaining to the transaction of insurance until after they have obtained a certificate of authority. Any person that transacts insurance business without a certificate of authority is guilty of a Class D felony. That person, and any person aiding or abetting such conduct, may be subject to the following actions of the Director: -Administrative orders, as authorized under insurance code -A civil action for relief, as authorized under insurance code -The referral of evidence of the violation to a proper prosecuting attorney or the attorney general All certificates of authority expire on the last day of June in each year and will be extended automatically pending formal renewal by the Director if the parties to whom they are issued have continued to comply with insurance code and other Missouri laws.

Unfair and Deceptive Practices- Failure to Maintain Complaint Handling Procedures

Failure of any person to maintain a complete record, for at least 3 years, of all written complaints received. A complaint is any written communication that has as its primary purpose the expression of a grievance. Records must include: -The total number of complaints -Each complaint's classification by line of insurance -The nature of each complaint and its disposition -The amount of time taken to process each complaint

General Powers and Duties- Disciplinary Action - Expungement of Records

If a disciplinary action against an insurance producer resulted in forfeiture or other monetary relief of $200 or less, and places no other legal duty upon the producer, it must be removed from the records after 5 years from the date of the order's execution or the Director's settlement agreement.

General Powers and Duties- Refusal to Testify

If a person does not appear in or refuses to testify at a Department proceeding or fails to obey a subpoena as required by the Director, the Director may request the court to enforce compliance. The court may: -Hold the person in contempt -Order the person to appear before the Director -Order the person to testify about the matter in question or under investigation -Order the production of records -Grant injunctive relief -Impose a civil penalty up to $50,000 for each violation -Grant any other necessary or appropriate relief -Suspend, revoke, or refuse to issue any license or certificate of authority Any person that knowingly engages in any act in violation of this section of insurance code is guilty of a Class E felony. If the offender holds a license or certificate of authority, the Department must revoke such license or certificate.

Obtaining a License- Examinations

If an applicant was previously licensed in another state for the same lines of authority for which a Missouri producer license is being sought, the examination requirement is waived. This waiver only applies if the applicant is licensed in the other state at the time of application or the application is received within 90 days of the cancellation of the license issued by the other state. If the other state's license was cancelled, the applicant must submit a certificate from that state indicating the applicant's license was in good standing while it was in effect. The Director may also verify the status of the applicant's previous license through the NAIC producer registry. If a producer who is licensed in another state moves to Missouri, they must apply for a resident producer license within 90 days of establishing legal residence in this state. Such person is exempt from examination requirements, as is any individual who applies for a limited lines producer license. The Director may suspend, revoke, deny, or nonrenew an insurance producer license if a person uses notes or any reference material improperly when completing an examination for an insurance license. Insurance producer licenses must contain the following information: -The licensee's name, address, and identification number -The issue and expiration dates of the license -The lines of authority for which the license was issued -Any other information required by the Director

Unfair and Deceptive Practices- Misrepresentation and False Advertising of Insurance Policies

Making a statement in any estimate, illustration, sales presentation, or comparison that: -Misrepresents a policy's benefits, advantages, conditions, or terms -Misrepresents a policy's dividends or share of surplus to be received -Is false or misleading pertaining to dividends or shares of surplus already paid under a policy -Misleads or misrepresents the financial condition of any insurer -Uses the name or title of any policy, or class of policies, that is a misrepresentation -Is a misrepresentation intended to induce the purchase, lapse, surrender, exchange, or conversion of an insurance policy; this includes an intentional misquoting of a policy's premium -Is a misrepresentation intended to effect a pledge, assignment, or loan against a policy -Misrepresents a policy as being a share or shares of stock

Unfair and Deceptive Practices- Defamation

Making any false or maliciously critical statement regarding the financial condition of another insurer with the intent to injure that insurer.

Unfair and Deceptive Practices- Misrepresentation in Insurance Applications

Making false or fraudulent statements on an insurance application or pertaining to an insurance application for the purpose of securing a fee, commission, money, or other benefit from any insurance company, agency, agent, broker, or other person.

Maintaining a License- Change of Name or Address

Producers must notify the Director of a change in legal name or address within 30 days of the change. Failure to provide the required notice within 30 days may result in a fine up to $10 per month. Notice may be made in any manner acceptable to the Director. If a producer fails to notify the Director of a change in address, and such failure results in the inability for a complaint to be served to the producer, the Director may revoke the insurance producer's license immediately. Such revocation will continue until service is obtained.

Certificate of Authority

No insurer is permitted to transact insurance in Missouri until it has been granted a certificate of authority from the Director. A certificate of authority certifies the insurer has complied with the insurance laws in this state with respect to conducting the business of insurance. This includes health services corporations, health maintenance organizations, and prepaid dental plans. This section of insurance code does not apply to: -Surplus lines insurance -Reinsurance -Transactions in Missouri involving a policy issued outside of Missouri for risks that are not located in or residents of Missouri -Attorneys acting in the ordinary course of business in the adjustment of claims or losses on behalf of a client -Transactions involving group or blanket policies (life, accident, health, annuity) where the master policy is issued by an authorized non-domestic company -Wet or ocean marine insurance -Life or health insurance issued to nonprofit charitable or religious organizations -Car rental and travel insurance -Transactions involving one or more industrial insureds, meaning an insured: *Which purchases insurance of any risk other than life, health, and annuity contracts by use of a full-time employee acting as an insurance manager *Whose aggregate annual premium total $100,000, excluding Workers' Compensation *Has at least 25 employees

Licensing Requirements- Persons Required to be Licensed

No person is permitted to sell, solicit, or negotiate any type of insurance in Missouri unless licensed for that line of authority. Exceptions exist for the following persons, who are not required to obtain a producer license: -So long as they do not receive commissions for insurance written or sold in Missouri, the officers, directors, or employees of an insurer or insurance producer if: *The person's activities are executive, administrative, managerial, or clerical in nature and only incidental to the sales, solicitation, or negotiation of insurance *The person's duties are underwriting, loss control, or claims inspection, processing, adjusting, investigation, or settlement *The person acts in a supervisory capacity to assist insurance producers by providing technical advice that does not include the sale, solicitation, or negotiation of insurance -A person securing and furnishing information for group insurance if not paid commissions for providing the service -A person engaged in the administration or operation of an employee benefits program if not compensated by the company issuing the insurance contracts in any manner -Employees of insurers or organizations that engage in the inspection, rating, or classifying of risks, or that engage in producer training, so long as they do not: *Engage in the sale, solicitation, or negotiation of insurance *Accompany producer trainees during sales interviews with clients or prospective clients -A person whose advertising activities in Missouri include publications distributed both in and outside of Missouri, but that does not intend to solicit insurance in this state—if that person does not sell, solicit, or negotiate insurance -A nonresident who sells, solicits, or negotiates commercial property and casualty insurance to an insured with locations in more than one state if that nonresident is licensed as a producer in the state where the nonresident maintains a principal place of business and the commercial property and casualty insurance policy provides insurance in that state -A salaried, full-time employee who gives insurance advice to their employer if they do not sell or solicit insurance or receive a commission -A licensed attorney who provides probate or other bonds required by the court on behalf of clients

Unfair and Deceptive Practices- Prohibited Group Enrollments

Offering more than one group contract through any person unless such person is legally licensed.

Unfair and Deceptive Practices- Rebating

Other than as permitted by law or expressly stated in an insurance contract, paying, giving, or allowing any of the following as an inducement for a person to purchase an insurance policy: -A rebate of insurance policy premiums -A special favor or advantage in the dividends or benefits of an insurance policy -A valuable consideration (anything of value) -Any stocks, bonds, or securities in any insurance company or other corporation, association, or partnership—including dividends accruing on same The following acts are not considered rebates: -Paying bonuses or abating premiums from accumulated surplus -Adjusting premiums for industrial policyholders who have continually made payments directly to the insurer, thus saving collection expenses -Adjusting group policy premiums based on loss or expense experience

Producer Appointment and Termination- Producer Registry

Producers may not act on behalf of an insurer if they are not listed in the insurer's register of appointed producers. Each insurer must maintain a register of all producers it appoints to sell, solicit, or negotiate insurance on its behalf. New appointees must be added to the register within 30 days of appointment. Terminated appointments must also be removed from the register within 30 days and the reason(s) for termination must be provided to the Director. Insurers may not charge fees for adding or removing producers from their registries. Insurers must provide the Director with any additional information discovered later that should have been reportable had the insurer known of its existence before a producer's appointment termination. All information received or obtained by the Director regarding a termination must be treated as confidential and absolutely privileged. Parties providing such notice will be granted immunity from any cause of action for written notice provided in good faith. Insurance company producer registries must be made available for inspection and examination by the Director during the insurer's regular business hours. Producer registries may be maintained electronically. The Director is authorized to use information contained in producer registries in any regulatory or legal action brought as part of their duties as Director. However, neither the Director nor any person will be permitted or required to testify in any private civil action concerning confidential documents, material, or information relating to a producer registry. The Director is permitted to share such information with: -Other state, federal, and international regulatory agencies -The National Association of Insurance Commissioners -Law enforcement authorities that agree to maintain confidentiality and privilege of documents, materials, and information

Improper Claims Practices (continued)

The Director has the authority to examine and investigate any insurer to determine if it is engaging in or has engaged in any improper claims practices. Unfair claims practices include the following: -Misrepresentation of policy provisions in claims settlements, or misrepresenting to any insured or claimant any policy provisions relating to coverages at issue; and specifically: *An insurer's failure to disclose fully to first-party claimants any pertinent insurance policy benefits, coverages, and provisions related to a claim *A producer's concealment from any first-party claimant any pertinent insurance policy benefits, coverages, and provisions related to a claim *An insurer's denial of any claim for failure to exhibit damaged property without proof that the insurer made a request to exhibit the property and the claimant refused to exhibit the property without good cause *An insurer's denial of any claim based upon the insured's failure to submit a written notice of loss within a specified time following any loss, unless such failure prejudices the rights of the insurer *An insurer's request of a first-party claimant to sign a release that extends beyond the subject matter that gave rise to the claim payment *An insurer's issuance of any check for partial settlement of a claim under a specific coverage, when endorsement of the check releases the insured or insurer from liability -Failure to acknowledge pertinent communication, or failing to acknowledge with reasonable promptness any communication that pertains to a claim submitted under one of its policies; and specifically: *Within 10 working days of receiving a notice of claim from any first-party claimant, acknowledge the receipt of claim notices unless payment is made within that period of time *Insurers must document their acknowledgments of claim notices *A notice of claim given to the insurance agent is deemed notice to the insurer *Within 10 working days of receiving any communication from any claimant that infers or states a reply is expected, make an appropriate reply *Within 10 working days of receiving a notice of claim, provide to a first-party claimant all necessary claim forms, instructions, and reasonable assistance so the claimants can comply with policy conditions and insurer requirements

Examination of Records

The Director may examine the affairs of any person engaged in the insurance business at that person's expense. This includes any person claiming or advertising to be involved in the insurance business. The Director or any authorized examiners may conduct an examination as often as appropriate but must conduct a financial examination of every licensed Missouri insurer at least once every 5 years. The Director may hire, at the insurer's expense, any of the following persons as examiners: attorneys, appraisers, independent actuaries, certified public accountants (CPAs), and other professionals and specialists. With respect to foreign or alien insurers, the Director may accept a financial examination report prepared by its parent insurance department or other appropriate agency in lieu of conducting a financial examination. However, such report may only be accepted if the person issuing the report is accredited by the NAIC. Any person being examined must make all documents and records available to examiners. If a requested document is not available, it must be provided within 10 calendar days. All insurance policy records must be maintained during the term of the policy and for at least 2 years after the policy terminates. All claim files must be maintained during the calendar year in which they are closed and for at least 3 years afterward. If a person refuses to comply with any reasonable request during an examination, such refusal will be considered grounds for the suspension, denial, or nonrenewal of an insurance license. A final examination report must be filed no later than 60 days after an examination is completed. The examined insurer will have 30 days to file any submissions or rebuttals about any matter discussed in the report. Within 30 days after the rebuttal period, the Director must either accept the report or initiate any legal action deemed necessary. Examination reports must only contain facts that appear in the books, records, documents, and testimony of the person being examined, including such person's agents. All working papers, recorded information, documents, and copies of all such materials obtained or disclosed during an examination must be treated as confidential and are not subject to subpoena. Such materials cannot be made public unless specifically permitted by law. Agreement to this confidentiality requirement must be made in writing between the parties before the confidentiality provision becomes effective.

Maintaining a License- Continuing Education

The Director may extend the time period for completing continuing education requirements for up to 1 calendar year if a producer provides substantial grounds for the granting of such a waiver. Grounds for a waiver include but are not limited to: -Serious physical injury or illness -Active duty in the armed services for an extended period -Residence outside the United States -The licensee is 70 years old or older Producers must provide to the Director written certification of the approved continuing education courses they have completed. Course providers must furnish to the Director, in prescribed format, certification of each producer who completes an approved continuing education course within 30 business days of completing such course. Continuing education credit may be earned through courses of the following types: -Classroom instruction -Courses leading to a professional designation, if the licensee receives a passing exam grade after completing the course -Self-study courses for which the licensee passes a proctored exam after completing the course The Department may audit the continuing education records of producers and course providers at any time.

General Powers and Duties- Director's Authority

The Director may not make a rule or regulation that conflicts with any Missouri law and has the power and authority to: -Regulate the internal affairs of the Department, financial institutions, and professional registration -Prescribe forms and procedures to be followed in Department proceedings, financial institutions, and professional registration, including continuing education guidelines -Assist with the interpretation and enforcement of state laws relating to insurance -Issue producer licenses, certificates of authority, and cease and desist orders -Conduct hearings -Supervise the state's two guaranty funds -Amend or withdraw any insurance rule or regulation *Any change will only be effective after proper notice has been given, a hearing has been held, and the documented change has been filed with the secretary of state *Hearings must be held at least 15 days before any proposed rule or regulation is adopted

License Suspension, Revocation, Denial, and Cancellation

The Director may suspend, revoke, or refuse to renew a producer license if a licensee has committed or is committing any of the following acts or practices that violate Missouri insurance laws or rules—including the provision of material assistance in committing such acts or practices: -Knowing violation of any state insurance law or Department regulation -Obtaining or attempting to obtain a license by fraud or misrepresentation -Forging a signature on an insurance application or insurance-related document -Conviction of a felony or crime involving moral turpitude (meaning an act that is contrary to community standards of moral integrity, such as fraud, arson, embezzlement, assault, murder, rape, and prostitution) -Demonstrating a lack of trustworthiness or competence -Misappropriating money belonging to an insured or insurer -Committing fraud in connection with an insurance transaction or aiding, abetting, or knowingly allowing another licensee to do so—leading to the suspension or revocation of that person's license -Acting as an insurance agency through persons not licensed as producers -Acting as a producer without a license -Having an insurance license revoked or suspended in another state -Committing unfair insurance or trade acts or practices, as defined by statute -Seeking the license primarily to conduct controlled business (such as procuring coverage for oneself or one's family, employer, employee, or an organization the licensee owns or controls) -Is a legal resident of another state that does not allow Missouri residents to obtain nonresident licenses -Operating as a business when the producer should have known such operation would likely result in the illegal placement of insurance with an unauthorized multiple employer self-insured health plan -Failing to comply with any administrative or court order directing payment of state or federal income tax

Missouri Property and Casualty Insurance Guaranty Association

The Missouri Property and Casualty Insurance Guaranty Association, referred to as the Association, is a nonprofit legal entity created to provide limited protection to Missouri resident policyholders and claimants in the event certain insurers become insolvent. It transacts business under a plan of operation and through a board of directors as prescribed by insurance code. All property and casualty insurers to which a certificate of authority is issued are member insurers; member insurers must remain members as a condition of being granted authority to transact insurance in this state.

Claim Settlement Practices

The Missouri Unfair Claims Settlement Practices Act establishes the standards for the investigation, adjustment, and settlement of claims under insurance contracts. The Act applies to all insurance companies, but does not apply to insurance of the following types: -Workers' Compensation -Fidelity or surety -Equipment breakdown (boiler and machinery)

Personal Insurance Transactions

The following fiduciary duties and responsibilities apply to the transaction of personal insurance in Missouri: -Unless a longer time is permitted under a written agreement between the producer and an applicant or policyholder, producers must handle all applications for new insurance and requests for policy changes in a manner that results in insurance being issued as soon as reasonably possible -If no insurer willing to provide coverage has been found within 30 days of the date of an original insurance application, the producer must inform the applicant of this fact, in writing, immediately -When an insurer requires additional information prior to issuing, renewing, or amending a policy, the producer must inform the insured or applicant of the need for additional information at the earliest reasonable opportunity -Producers must provide all insureds with written evidence of coverage at the time coverage is bound or a policy is issued, whichever occurs earlier, and no later than 30 days after the effective date of coverage -It is a dishonest and unethical practice for a producer to use a senior-specific certification or professional designation that implies or misleads a consumer to believe the producer has special certification or training with respect to advising or servicing seniors, individuals 60 years or older, in connection with the solicitation, sale, or negotiation of an insurance product -It is prohibited for a producer, or a member of the producer's family, to be a beneficiary or have any ownership interest in any policy held by any client unless an insurable interest exists between the two

General Powers and Duties- Director's Qualifications

The head of the Missouri Department of Insurance is the Director of Insurance. The Director must be a Missouri resident and is appointed by the governor with the senate's approval. The Director holds the office concurrently with the governor until a successor is appointed. It is unlawful for the Director or a deputy director to hold an office or position with an insurance company or to have any interest in an insurer other than as a policyholder. Insurance Department employees may not hold any type of insurance license.

Obtaining a License- Continuing Education

Unless exempt under law, insurance producers must complete 16 hours of approved continuing education during each 2-year license renewal period. Courses must address Missouri laws, producer duties and responsibilities, business ethics, sales suitability, and the types of insurance sold under the lines of authority for which the producer is licensed. At least 3 hours of the 16 hours of instruction must be devoted to the topics of ethics, Missouri law, and producer duties and responsibilities. Courses or programs that meet the standards for continuing education requirements in this state include, but are not limited to: -American College Courses (CLU, ChFC) -Life Underwriters Training Council (LUTC) -Certified Insurance Counselor (CIC) -Chartered Property and Casualty Underwriter (CPCU) -Insurance Institute of America (IIA) -Any professional financial designation approved by the Department or the Director -An insurance-related course taught by an accredited college or university, or by a qualified instructor who has taught a course of insurance law at such institution -A course, program, or seminar developed or sponsored by any authorized insurer, recognized producer association, insurance trade association, or approved insurance continuing education provider A producer who teaches any approved continuing education course is eligible to receive the same number of credit hours awarded to students completing the course and passing any required exam. Excess hours accumulated during any 2-year period may be carried over to the license renewal period immediately following the license period during which the course was held.

Classification of Violations

Violations of Missouri insurance laws are classified into 5 categories. Penalties and forfeitures for each category of violation differ based on whether they were issued by the Director or a court in an enforcement proceeding.

General Standards Applying to Auto Insurance

Where liability and damages are reasonably clear, insurers cannot recommend that third-party claimants file claims under their own policies in order to avoid paying claims under the insurer's insurance policy. In addition, insurers cannot require a claimant to travel unreasonably to inspect a replacement automobile, to obtain a repair estimate, or to have the automobile repaired at a specific repair shop. Upon a first-party claimant's request, an insurer must include the claimant's applicable deductible in subrogation demands. Subrogation recoveries shall be shared pro rata with first-party claimants unless the deductible amount has been otherwise recovered. No deduction for expenses can be made from a deductible recovery unless an outside attorney is retained to collect the recovery. If an insurer prepares a repair estimate, it must reflect an amount that may reasonably be expected to repair the damages satisfactorily. A copy of the estimate must be provided to the claimant and is permitted to furnish the name of one or more conveniently located repair shops. An aftermarket part is a sheet metal or plastic part that generally constitutes the exterior of a motor vehicle and that is not made by the vehicle's original manufacturer. An aftermarket part includes inner and outer panels. Insurers cannot prepare estimates that include the use of aftermarket parts unless the estimates meet certain requirements. Those requirements are: -The insurer must disclose in writing to the claimant the following statement: "This estimate has been prepared based on the use of automobile part(s) not made by the original equipment manufacturer. Parts used in the repair of your vehicle by other than the original manufacturer are required to be at least equal in like, kind, and quality in terms of fit, quality, and performance to the original manufacturer parts they are replacing. All aftermarket parts installed on the vehicle must be clearly identified on the repair estimate." -An insurer cannot require the use of aftermarket parts in the repair of an automobile unless the aftermarket part(s) is(are) at least equal in like, kind, and quality to the original part in terms of fit and performance. Insurers specifying the use of aftermarket parts must consider the cost of any modifications that may become necessary when making the repair. -All aftermarket parts must carry sufficient permanent identification so as to identify their manufacturer. This identification must be accessible to the extent possible after installation. The preceding requirements do not apply to estimates prepared at the insured's request by a repair shop that does not have a contractual relationship with the insurer. When the amount claimed under an auto insurance policy is reduced because of betterment or depreciation, all documentation of that reduction must be included in the claim file. These reductions must be itemized and appropriate in amount. When an insurer chooses to repair vehicle damage and designates a specific repair shop for the repairs, it is responsible for assuring the damaged automobile is restored to its pre-loss condition at no additional cost to the claimant other than as stated in the policy and within a reasonable period of time. If a first-party claimant elects a cash settlement in lieu of repairs, the insurer is prohibited from paying an amount less than the value of the repairs—if they were made.

General Standards Applying to All Insurers

Within 15 working days of receiving all necessary documentation that establishes the nature and extent of a claim, the insurer must notify the claimant whether the claim has been accepted or denied. Insurers are prohibited from denying claims on the grounds of a specific policy provision, condition, or exclusion unless reference to that provision, condition, or exclusion is included in a written letter of denial. A copy of the denial must be maintained in the insurer's claim file. If an insurer needs more than 15 working days to determine whether a claim should be accepted or denied, it must notify the first-party claimant within the initial 15 working days; it must explain in detail why more time is needed. If the insurer's investigation remains incomplete, the insurer must, within 45 days from the date of the initial notification and every 45 days thereafter, send the claimant a letter explaining in detail why additional time is needed for further investigation. Insurers are not permitted to refuse to settle any first-party claim because responsibility for claim payment should be assumed by others unless policy provisions specifically permit such action. When a claimant's rights may be affected by a statute of limitations or the time limits under an insurance policy, the insurer must give the claimant a notice of that fact. Negotiations or settlement of any claims may not continue until such notice is given. The notice must be given within the following periods of time before the expiration of statute of limitations or time limits: -To first-party claimants, at least 30 days' advance notice -To third-party claimants, at least 60 days' advance notice Insurers are prohibited from making any statement that indicates that a third-party claimant's rights may be impaired if a form of release is not completed within a given period of time. An exception exists if the statement notifies the third-party claimant of a statute of limitations. Insurers offering cash settlements of first-party long-term disability income claims must develop a present value calculation of future benefits by using contingencies such as mortality, morbidity, and interest rate assumptions appropriate to the risk. A copy of the calculated amount must be given to, and signed by, the insured person at the time into which a settlement is entered. This regulation does not apply to the settlement of liability insurance claims. Insurers must complete their claims investigations within 30 days after receiving notice of a claim unless the investigation cannot reasonably be completed within 30 days.