PURPOSE: This rule sets minimum requirements for loss reserves, loss adjustment expense reserves and policy provisions for claims-paid policies.

Editor’s Note: The secretary of state has determined that the publication of this rule in its entirety would be unduly cumbersome or expensive. The entire text of the material referenced has been filed with the secretary of state. This material may be found at the Office of the Secretary of State or at the headquarters of the agency and is available to any interested person at a cost established by state law.

1. (1) Any insurer issuing an insurance policy in this state on a claims-paid basis shall maintain as a liability, reserves for losses and loss adjustment expenses in amounts at least equal to the amounts required under the standards of the National Association of Insurance Commissioners (NAIC) for minimum loss and loss adjustment expenses reserves. Those reserves shall be maintained for a period of at least ten (10) years from the date on which the reserves are posted.
2. (2) Nothing contained in section (1) of this regulation shall preclude an insurer from setting reserves for losses and loss adjustment expenses at a level higher than the minimums contained in that section.
3. (3) No insurer shall issue a claims-paid policy in this state unless the policy displays the following notice, or upon the approval of the director, its substantial equivalent. The notice shall be in bold type in a type size at least equal to that used in the rest of the policy.

“NOTICE: THE FOLLOWING TYPE OF LIABILITY POLICY IS KNOWN AS A ‘CLAIMS-PAID’ POLICY. THE CONDI- TIONS WHICH MUST BE MET BEFORE COVERAGE IS AVAILABLE UNDER THIS POLICY ARE SIGNIFICANTLY DIFFER- ENT THAN THOSE UNDER AN ‘OC- CURRENCE’ POLICY OR A ‘CLAIMS- MADE’ POLICY. PLEASE READ THE POLICY CAREFULLY AND PLEASE UNDERSTAND THESE CONDITIONS THOROUGHLY PRIOR TO PURCHASING COVERAGE.” (4) For purposes of this regulation, an insurance policy issued on a claims-paid basis is a policy which provides coverage only in cases where the policyholder is insured at the time of the occurrence, where a written claim for the occurrence is made to the insurer during the stated policy period, and where the claim is actually paid by the insurer during the stated policy period.

1. (5) For purposes of this regulation, an insurer is as defined by section 375.932(3), RSMo.

AUTHORITY: sections 374.040, 374.045, 375.930–375.948 and 379.102, RSMo 1994.* 20 CSR 500-1 Original rule filed Nov. 14, 1991, effective June 25, 1992. *Original authority: Please consult the Revised Statutes of Missouri.