Insurers in Missouri who might be in danger of not being able to meet their financial obligations are now under a higher level of scrutiny from regulators, thanks to the passage of Senate Bill 583. The state’s Department of Insurance announced last month that the law spells out explicit standards to which insurance companies will be held.
According to the announcement, the primary function of SB 583 is to give state regulators advance notice of any possible insolvency at an insurer doing business in the state. This will allow the government to work more closely with companies which are having difficulty staying in good financial shape.
The department’s director, John Huff, said “we’ve long had the ability to intervene when a company is insolvent. But to protect policyholders, we need to step in much sooner than that. This new law lets insurers know exactly what we’ll be looking at and when that intervention will occur.”
In addition to the environment of improved cooperation between regulators and insurance companies that the new law is meant to provide, accreditation by the National Association of Insurance Commissioners should be an additional upside to its passage. The department said this accreditation signifies that it has the ability to effectively oversee the finances of insurance companies in Missouri, and that the new standards qualify it for inclusion in the national organization.
Cutting down on insolvency risks could provide an improved climate for the business in Missouri, experts say, possibly making for more favorable car insurance rates. Consumers can compare auto insurance rates with more confidence if they know all available companies are not in immediate danger of running into financial trouble.