Current through Register Vol. 49, No. 6, March 15, 2024
PURPOSE: This proposed amendment revises and
restructures rules relating to assurances of faithful performance required
under section 385.302.4, RSMo.
(1) Each provider who is contractually
obligated to the service contract holder under the terms of a service contract
is responsible for maintaining proof of its assurances of faithful performance
and its continuing compliance with the requirements of section
385.302,
RSMo, with the director.
(2) The
following applies to reimbursement insurance policies used to assure the
faithful performance of a provider's obligations to its contract holders as set
forth in section 385.302.4(3), RSMo:
(A) Any
such policy is acceptable only if it is issued by an insurance company
authorized, registered, or otherwise permitted to transact liability insurance
in this state, or a surplus lines insurer authorized pursuant to the laws of
this state and which insurer meets the surplus requirements of section
385.302.4(4), RSMo. As used in this paragraph, the term "insurance company
authorized to transact insurance in this state" includes a financially
responsible risk retention group (RRG) meeting the following requirements:
1. Such RRG is registered in good standing
with the director pursuant to sections 375.1080-375.1105, RSMo;
2. Such RRG is not in a hazardous financial
condition; and is not in a hazardous financial condition; and
3. Such RRG is authorized to transact
liability insurance in this state.
(B) Any such policy is acceptable only if it
assures the satisfaction of all obligations and liabilities of the provider
under the terms of service contracts issued while the reimbursement insurance
policy is in effect in the event of nonperformance by the provider. No policy
with any provision imposing a deductible or retention payable by the
policyholder or any claimant under the policy will satisfy this
requirement.
(C) Any such policy
is acceptable only if it contains a provision requiring the insurer issuing
such policy to provide the director with at least sixty (60) days prior notice
of insurer's termination of such policy by delivering notice to the
director.
(3) The
following applies to each funded reserve account as set forth in section
385.302.4(1)(a), RSMo,. Such account may be used to establish compliance with
section 385.302.4(1)(a), RSMo, only if such account satisfies the following
requirements:
(A) Such account is maintained
in cash or cash
A. A "qualified United States
financial institution" as that term is defined in section 375.246.3(2), RSMo;
or
B. Such other financial
institution as specifically approved in writing by the director; assets of a
value sufficient to meet the reserve requirements of section 385.302.4(1)(a),
RSMo;
(B) Such account
is maintained exclusively for the satisfaction of the provider's obligations to
service contract holders under Missouri service contracts;
(C) Such account is maintained at a qualified
financial institution which is insured by the Federal Deposit Insurance
Corporation; and
(D) Such account
is maintained at a level and in a manner which is consistent with the
requirements of this rule and the laws of this state.
(4) The following applies to financial
security deposits placed in trust with the director as set forth in section
385.302.4(1)(b), RSMo. Such deposit may be used to establish compliance with
section 385.202.3(2)(b), RSMo, only if the deposit satisfies the following
requirements:
(A) the value of such deposit
is at least that amount established under section 385.302.4(b); and
(B) To the extent that such deposit consists
of-
1. A surety bond issued by an authorized
surety, as provided in section 385.302.4(2)(b)a, RSMo, the bond will be
acceptable only if the bond is completed on the Bond of Service Contract
Provider Form (Form SC-3), provided by the director;
2. Cash or securities as permitted by section
385.302.4(1)(b)b or c, RSMo, such cash or securities will be acceptable only if
the deposit is made with the same depositary and upon the same terms and
conditions as the capital deposits of insurance companies domiciled in this
state, except that the amount of the deposit will be determined by the
provisions of section 385.302.4(1)(b), RSMo;
3. A letter of credit, as provided in section
385.302.4(1)(b)d, RSMo, such letter of credit will be acceptable if it complies
with the following requirements:
A. The
letter of credit is clean, irrevocable, and unconditional;
B. The beneficiary is the director and his or
her successors in office;
C. The
letter of credit is issued by a qualified financial institution;
D. The letter of credit contains a statement
to the effect that the obligation of the qualified United States financial
institution under the letter of credit is in no way contingent upon
reimbursement with respect thereto; and
E. The letter of credit includes an issue
date and expiration date. The term of the letter of credit will be at least one
(1) year and will be subject to an "evergreen clause" that prevents the
expiration of the letter of credit without due notice from the provider of no
less than thirty (30) days' to the director.
(5) The following applies to each
provider maintaining a net worth of one hundred (100) million dollars and
establishing such net worth through the provider's parent company, as set forth
in section 385.302.4(2)(b), RSMo,. To be accepted as proof that the provider
has assured faithful performance of the provider's obligations to its contract
holders, the guarantee will be filed with the director in a writing that
substantially conforms to the Guaranty of Service Contract Obligations Form
(Form SC-4) provided by the director.
*Original authority: 385.318, RSMo
2007.
