A new state law gives Missourians more protection when it comes to their insurance companies.
The Department of Insurance will be able to have tighter oversight over Missouri insurance companies.
“This allows us to intervene sooner through various mechanisms in the law. You know, it’s like catching cancer in someone’s body, the sooner you can get in there and find it before it the problem has spread, the better chance you have of correcting it,” said Department spokesman Travis Ford. “If your insurance company can’t pay your claims when you file them because it doesn’t have any money, then we’re all in big trouble.”
He says the intervention could be anything from meeting with the company and talking about solutions to their financial trouble, to shutting down the company down altogether and liquidating it to protect consumers.
“The new law puts out more specific guidelines for our department, for our regulators, and for insurance companies so that everybody’s on the same page and those companies know exactly what we’ll be looking for. There can be no doubt that we now have the authority to step in and intervene with a company when we see that they are in some financial trouble,” Ford said.
This law change didn’t come out of nowhere.
“The difficulty in the economy the last few years has definitely led to more oversight by our department and the need for laws like this one,” Ford said.
The aftermath of the economic meltdown also created another concern.
“As different types of investment risks have come along. Insurance companies are just like any other business. They use different types of investments to get the most return for the money they collect in premiums. As different types of investments come along and new risks are discovered then sometimes new laws are needed for us to be able to get in and address some of the risky practices that a troubled insurance company might have,” Ford said.
Ford says customers won’t know if the Department does intervene with their insurance provider.
“Short of the company being shut down, consumers will not know of the financial condition of their insurance company, and that’s on purpose. The laws require all of this to be confidential and that’s because an insurance company is a lot like a bank. It has outstanding obligations, and if its customers were to find out that the company was in bad shape they could all leave in droves, and that would drive any, even the most healthy company, out of business,” Ford said.
The law was created as S.B. 583.