Missouri Code of State Regulations › Title 20 - DEPARTMENT OF COMMERCE AND INSURANCE › Division 100 - Insurer Conduct › Chapter 8 - Market Conduct Examination › Section 20 CSR 100-8.005 - Examination Warrants

Current through Register Vol. 49, No. 14, July 15, 2024
PURPOSE: This amendment clarifies the rule by
				  detailing with greater specificity the contents of an examination
				  warrant.
PURPOSE: This rule implements the purposes of section
				  374.185,
				  RSMo, and establishes uniform standards for the director in applying the
				  discretion authorized in issuing examination warrants for market conduct
				  examinations pursuant to sections
				  374.202
				  to
				  374.207,
				  RSMo.
(1) The director is
				responsible for market regulation of insurers for Missouri policyholder
				protection and will utilize market conduct actions, including market analysis,
				investigation, desk examinations, targeted examinations, and comprehensive
				examinations of insurers or other companies. Such actions will be pursued by
				the division in a manner consistent with the purposes of section
				374.185,
				RSMo.
(2) A market conduct
				examination will be conducted only upon the issuance of an examination warrant
				by the director or with the written consent of the insurer or company. In
				furtherance of the purposes of section
				374.185,
				RSMo, and to provide uniform standards designed to avoid arbitrary or
				capricious use of discretion in issuing examination warrants for market conduct
				examinations, the director will apply the following standards in evaluating
				factual support for a market conduct examination warrant:
(A) A request for an examination warrant need
				not be verified by oath, but will contain the signature of the chief market
				conduct examiner, and state facts sufficient to support the director's
				reasonable belief of cause as set forth in subsection (2)(B);
(B) The director may issue an examination
				warrant for-
1. A desk examination, if the
				director has reason to believe-
A. An insurer
				or other company may have engaged in, or taken a substantial step toward
				engaging in, or may have materially aided any other person in engaging in, any
				practice or course of business in violation of Chapter 287, Chapter 354, or
				Chapters 374 to 385, RSMo, or any rule adopted pursuant thereto, and the
				examination is reasonably calculated to provide data or other information
				relevant to this inquiry;
B.
				Significant changes have occurred in an insurer's or other company's market
				share during the last year for which an insurer cannot provide a satisfactory
				explanation;
C. Significant market
				changes threaten the availability or affordability of insurance coverage;
				or
D. An examination is required to
				be performed by law;
2.
				An on-site examination, if the director has reason to believe-
A. An insurer or other company has engaged
				in, is engaging in, has taken a substantial step toward engaging in, or has
				materially aided any other person in engaging in any practice or course of
				business in violation of Chapter 287, Chapter 354, or Chapters 374 to 385,
				RSMo, or any rule adopted pursuant thereto;
B. Significant market changes threaten the
				availability or affordability of insurance coverage; or
C. An examination is required to be performed
				by law;
(C)
				The evidence indicating that an insurer or other company has engaged in, is
				engaging in, has taken a substantial step toward engaging in, or has materially
				aided any other person in engaging in any practice or course of business in
				violation of Chapter 287, Chapter 354, or Chapters 374 to 385, RSMo, or any
				rule adopted pursuant thereto, will be derived from the following sources:
1. Information obtained from a market conduct
				annual statement, market survey, or report of financial examination;
2. Confirmed complaint(s) against the company
				indicating a particular practice or a complaint ratio that deviates
				significantly from the norm;
3.
				Information obtained from other objective sources; or
4. Information obtained from any credible
				source with direct access to relevant information;
(D) An examination warrant shall be based on
				cause and will be reasonably limited in scope to the specific line(s) of
				business, the specific business practice(s), and the time period to be
				examined, as identified in the examination warrant. If additional cause is
				discov- ered, which leads the examiner to believe additional lines of business,
				additional business practices, or additional time periods need to be examined,
				or if the examiner believes a different method of examina- tion needs to be
				employed, a request to modify or expand the previ- ously issued examination
				warrant or for a new examination warrant will be made to the director who may
				issue a new or modified war- rant. The identification of additional laws
				violated does not necessi- tate a request to modify or expand a previously
				issued warrant; and
(E) An
				examination warrant will-
1. Be in writing and
				in the name of the department;
2.
				Be directed to the division;
3.
				Identify the scope of the examination by describing the specific line(s) of
				business , the specific business practice(s) to be examined, and the time
				period to be reviewed during the examination;
4. Identify the law(s) the director
				reasonably believes were violated and the cause that supports the director's
				determination to issue the examination warrant. The division is not precluded
				from pursuing or citing to other violations of law through the course of an
				examination that are not specified under the originally issued warrant. In
				identifying the cause, the examination warrant need only indicate a general
				category(ies) of information relied upon, including, but not limited to,
				complaint(s), complaint indices, market conduct annual statement(s), market
				share(s), financial examination(s), information from other states, legal
				referral(s), premium shift in line(s) of business, statistical information,
				market conduct examination results, new operation(s), reexamination(s), and/or
				evaluation(s) of new laws;
5.
				Identify whether the examination will be conducted as a desk examination, an
				on-site examination, or both; and
6. Be signed by the
				director.