Missouri Revised Statutes













Chapter 375

Provisions Applicable to All Insurance Companies

←375.1158

Section 375.1160.1

375.1161→

August 28, 2015

Administrative supervision by director, procedures, allowed when--proceedings confidential, exceptions--powers of administrative supervisor--penalties for violations--director may adopt 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after its license has been revoked or suspended by the director;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)





1992



1992



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 of insurance relating to the supervision of any

insurer are confidential except as provided by this section.



(2) Personnel of the department of insurance 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, RSMo, 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, RSMo, 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 impose an administrative penalty in an amount not to

exceed ten thousand dollars for each violation. Moneys collected

pursuant to the imposition of such penalties shall be transferred

to the state treasurer and deposited to the general revenue fund.



8. The director or administrative supervisor may 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 enforce a supervision

order.



9. 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 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.



10. 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.



11. The director may adopt reasonable rules necessary for

the implementation of this section.



12. 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.



13. 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 or its employees or agents for any

action taken by them in the performance of their powers and

duties under this section.



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