It would seem that the Missouri Legislature has grown impatient with the funeral industry’s efforts to regulate preneed. New legislation, Senate Bill No. 32, would establish a two tier approach to preneed oversight. This law would create a threshold whereby the State Board of Embalmers and Funeral Directors would be required to notify the Department of Commerce and Insurance when examinations find preneed sellers with substantial financial deficiencies or discrepancies. Once the notification requirement is triggered, the State Board must regularly update the Department with the progress of the examination and the resolution of the seller’s financial deficiencies. If the Department should become concerned about the Board’s lack of progress or the resolution of funding the deficiency, the Department could designate one of its agencies to either assist the State Board or assume control of the examination. The bill’s intent seems to want to provide a check and balance to ensure that preneed examinations are done completely, accurately, efficiently and without the appearance of impropriety.
This coming August will be the 14th anniversary of the passage of Senate Bill No. 1. That law gave the State Board the authority, and obligation, to conduct a preneed examination on each preneed seller once each five years. By the Legislature’s time table, the State Board should be finishing the second round of examinations and preparing for phase 3. However, the State Board has yet to adopt examination procedures for tracking consumer payments. The State Board’s phase 1 and 2 preneed examinations focused on preneed contract compliance. Those examinations did not seek bank or insurance reports to test for timely deposit of consumer payments. Nor did the examinations review fiduciary distributions made to preneed sellers.
In late 2017, I and a handful of preneed sellers began to press the State Board to begin discussions for the phase 2 preneed examinations. The preneed sellers in favor of new examination procedures were victims of National Prearranged Services. Some Board members were in favor of a pivot in the direction of preneed examinations, but a majority of the Board members were swayed by certain industry representatives’ recommendation to stay the course. They suggested it would not be fair to funeral homes if the exam procedures were changed.
The October 2021 sacking of the State Board and its staff caught the Legislature’s attention. The 2021 State Board had found problems with the investigative unit from the Division of Professional Registration, and took actions to hire its own investigators. The termination of the Board’s preneed exam supervisor raised questions whether the Division was protecting a preneed seller. A year and half has passed and there are no signs that the new State Board has taken actions with regard to preneed sellers known to have serious problems.
The Bill would also introduce new features such as a “Preneed Audit Fund” and State Board authority to either fine preneed sellers or require the repayment of missing consumer funds. We will explore these new features in a future post.