The word that Missouri’s largest seller of pre-need funeral contracts is suspending sales has set off warning alarms at the state capitol.
National Prearranged Services has suspended sales here. Iowa has suspended the company’s license. Illinois has ordered NPS to stop selling there. Kentucky, Ohio, and Texas have taken action against NPS’s parent company. Missouri’s Insurance department thinks about 46-thousand Missourians are affected by National Prearranged problems.
Lawmakers and officials with the state Board of Embalmers and Funeral Directors emphasize most pre-need plans are properly handled and do not appear in any danger. But the chairman of the committee that called the informational meeting says it would not be a bad idea if people who have bought pre-need plans to check the contract and check with the funeral home to see that it is properly drawn and their interests are protected.
Attorney Kim Grinston tells a specially-called senate committee meeting the state law is so full of holes the board has no way to prohibit someone operating in Missouri who had stolen ten million dollars from a pre-need trust in another state. In fact, she says, the law requires the board to issue the license.
She says the law is so cumbersome that disciplinary action against pre-need sellers or providers can take two to five years, that the division has no way of knowing how much money is in trust funds or how the money is being managed because it has no auditing powers, and has no way of knowing who is selling many of these plans. In fact, she says there are cases in which not even the funeral homes know someone is selling a plan committing them to a service.
Others tell the committee most people don’t know that the funeral home can skim 20 percent off the top of the payment immediately and spend it however it wishes or that interest earned on the rest of the money does not have to be credited to the account. One funeral director says the law does not cover what happens to a pre-need plan if the funeral home goes out of business or is sold.
Industry spokesmen say the large number of Missouri funeral homes handle pre-need contracts properly. But Senator Delbert Scott of Lowry City, who convened the meeting, says it would not hurt if people checked their contracts and contacted their funeral homes with any questions.
It’s an issue lawmakers will study for the rest of the year, with action likely in 2009.