MISSISSIPPI LEGISLATURE

1997 Regular Session

To: Insurance

By: Representatives Blackmon, Smith (39th), Reynolds, Read, Wells-Smith, Smith (27th), Bailey, Perkins, Franks, Fredericks

AN ACT TO CREATE THE MISSISSIPPI CHURCH PROPERTY RISK INSURANCE UNDERWRITING ASSOCIATION FOR THE PURPOSE OF PROVIDING ADEQUATE AND AFFORDABLE INSURANCE UPON CHURCH PROPERTY IN THIS STATE; TO PROVIDE DEFINITIONS; TO PROVIDE FOR A BOARD OF DIRECTORS OF THE ASSOCIATION; TO REQUIRE THAT ALL INSURERS AUTHORIZED TO WRITE PROPERTY INSURANCE IN THIS STATE SHALL PARTICIPATE IN THE ASSOCIATION'S WRITINGS, EXPENSES, PROFITS AND LOSSES; TO REQUIRE A PLAN OF OPERATION APPROVED BY THE COMMISSIONER OF INSURANCE; TO PROVIDE THAT THE COMMISSIONER OF INSURANCE MAY PROMULGATE RULES AND REGULATIONS FOR THE ENFORCEMENT OF THIS ACT INCLUDING RULES GOVERNING A HEARING PROCEDURE FOR PERSONS AGGRIEVED; AND FOR RELATED PURPOSES. 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. The Legislature finds that an adequate market for fire and extended coverage insurance for the churches of this state is necessary to the economic welfare of the State of Mississippi and that without adequate and affordable insurance the orderly growth and development of the State of Mississippi is severely impeded; that adequate insurance upon church property in Mississippi is necessary; and that while the need for such insurance is increasing, the market for such insurance is not adequate. It is the purpose of this act to provide a mandatory program to assure an adequate market for church fire and extended coverage insurance in Mississippi.

SECTION 2. In this act, unless the context otherwise requires:

(a) "Essential property insurance" means insurance against direct loss to church property as defined and limited in the standard fire policy and extended coverage endorsement thereon, as approved by the Mississippi Insurance Commissioner.

For the purposes of this act, essential property insurance coverage shall be limited to ninety-five percent (95%) of the market value of real and personal property that is insured by the association, excluding the value of land.

(b) "Association" means the Mississippi Church Property Risk Insurance Underwriting Association established pursuant to the provisions of this act.

(c) "Plan of operation" means the plan of operation of the association approved or promulgated by the Mississippi Insurance Commissioner pursuant to the provisions of this act.

(d) "Insurable interest" means any lawful and substantial economic interest in the safety or preservation of church property from loss, destruction or pecuniary damage.

(e) "Insurable property" means church builder's risk and church real property or the contents located therein, but shall not include insurance on motor vehicles, which property is determined by the association after inspection and pursuant to the criteria specified in the plan of operation, to be in an insurable condition. Neighborhood, area, location and environmental hazards beyond the control of the applicant or owner of the property shall not be considered in determining insurable condition.

(f) "Commissioner" means the Mississippi Insurance Commissioner as provided in Section 83-1-3.

(g) "Net direct premiums" means gross direct premiums, excluding reinsurance assumed and ceded, written on church property in this state for fire and extended coverage insurance, less return premiums upon cancelled contracts, dividends paid or credited to the policyholders or the unused or unabsorbed portion of premium deposits.

SECTION 3. There is created the Mississippi Church Property Risk Insurance Underwriting Association consisting of all insurers authorized to write and engage in writing property insurance within this state on a direct basis. Every such insurer shall be a member of the association and shall remain a member of the association so long as the association is in existence, as a condition of its authority to continue to transact the business of insurance in this state.

SECTION 4. The association, pursuant to the provisions of this act and the plan of operation and with respect to essential property insurance on insurable property, shall have the power on behalf of its members:

(a) To cause to be issued policies of insurance to applicants;

(b) To assume reinsurance from its members;

(c) To cede reinsurance to its members and to purchase reinsurance in behalf of its members.

SECTION 5. (1) The Commissioner of Insurance shall appoint a temporary board of directors of the association consisting of five (5) representatives of members of the association. The temporary board of directors shall prepare and submit a plan of operation in accordance with Section 7 of this act and shall serve until the permanent board of directors takes office in accordance with the plan of operation. The permanent board shall consist of five (5) representatives of members of the association and two (2) agents from the state.

(2) Members of the board shall serve without salary, but shall receive per diem compensation under Section 25-3-69 while attending to business of the association; members shall be reimbursed for travel expenses incurred in the discharge of their duties; all per diem compensation and travel reimbursement shall be approved by the board before being incurred.

SECTION 6. All members of the association shall participate in its writings, expenses, profits and losses in the proportion that the net direct premium of such member written in this state during the preceding calendar year bears to the aggregate net direct premiums written in this state by all members of the association, as certified to the association by the commissioner after review of annual statements, other reports, and any other statistics the commissioner shall deem necessary to provide the information herein required and which the commissioner is hereby authorized and empowered to obtain from any member of the association.

A member shall receive credit annually for essential property insurance voluntarily written on church properties in this state, and its participation in the writings in the church property account shall be reduced in accordance with the provisions of the plan of operation.

The participation of each member in the association shall be determined annually in the same manner as the initial determination.

Any insurer authorized to write and engaged in writing any insurance, the writing of which requires such insurer to be a member of the association, who is authorized and engaged in writing such insurance after July 1, 1997, shall become a member of the association on the January 1 immediately following such authorization, and the determination of such insurer's participation in the association shall be made as of the date of such membership in the same manner as for all other members of the association.

SECTION 7. (1) Within ninety (90) days after July 1, 1997, the directors of the association shall submit to the commissioner for review and approval a proposed plan of operation. Such proposed plan shall grant proper credit annually to each member of the association for essential property insurance voluntarily written on the church properties of the state, shall provide for a method of computing rates that is actuarially sound and shall provide for the efficient, economical, fair and nondiscriminatory administration of the association. The proposed plan may include an assessment of all members for initial expenses necessary to the commencement of operation, the establishment of necessary facilities, management of the association, plan for the assessment of members to defray losses and expenses, underwriting standards, procedures for the acceptance and cession of reinsurance, procedures for determining the amount of insurance to be provided to specific risks, time limits and procedures for processing applications for insurance, and for such other provisions as may be deemed necessary by the commissioner to carry out the purposes of this act.

(2) The proposed plan shall be reviewed by the commissioner and approved if the commissioner finds that such plan fulfills the purposes provided by Section 1 of this act. In the review of the proposed plan, the commissioner may consult with the directors of the association and may seek any further information which is necessary for a decision. If the commissioner approves the proposed plan, the commissioner shall certify such approval to the directors, and the plan shall become effective thirty (30) days after such certification. If the commissioner disapproves all or any part of the proposed plan of operation, the commissioner shall return the same to the directors with a written statement of the reasons for disapproval and any recommendations. The directors may alter the plan in accordance with the commissioner's recommendation or, within thirty (30) days from the date of disapproval, may return a new plan to the commissioner. Should the directors fail to submit a proposed plan of operation within ninety (90) days after July 1, 1997, or a new plan which is acceptable to the commissioner, or accept the recommendation of the commissioner within thirty (30) days after disapproval of the plan, the commissioner shall promulgate and place into effect a plan of operation certifying the same to the directors of the association. A plan promulgated by the commissioner shall take effect thirty (30) days after certification to the directors.

(3) The directors of the association, subject to the approval of the commissioner, may amend the plan of operation at any time. The commissioner may review the plan of operation at any time deemed expedient or prudent, but not less than once in each calendar year.

SECTION 8. (1) Any person having an insurable interest in insurable property on or after the effective date of the plan of operation is entitled to apply to the association for such coverage and for an inspection of the property. Such application may be made on behalf of the applicant by a licensed broker or agent authorized by him. Every such application shall be submitted on forms prescribed by the association after consultation with the commissioner. The application shall contain an inquiry as to whether there are unpaid premiums due from the applicant for fire insurance on the church property.

The commission paid to the submitting broker or agent shall be equal to ten percent (10%) of the premium collected.

(2) If the association determines that the property is insurable and that there is no unpaid premium due from the applicant for prior insurance on the property, the association, upon receipt of the premium or such portion thereof as is prescribed in the plan of operation, shall cause to be issued a policy of essential property insurance for a term of one (1) year. Any policy issued pursuant to the provisions of this section shall be renewed annually, upon application therefor, so long as the property meets the definition of "insurable property" set forth in Section 2(e) of this act.

(3) If the association for any reason denies an application and refuses to cause to be issued an insurance policy on insurable property to any applicant, or takes no action on an application within the time prescribed in the plan of operation, the applicant may appeal to the commissioner. The commissioner or a member of the staff of the Insurance Department designated by the commissioner, after reviewing the facts, may determine if the association acted in accordance with the law and the plan of operation. In carrying out the duties pursuant to this section, the commissioner may request, and the association shall provide, any information deemed necessary to a determination concerning the reasons for the denial or delay of the application.

SECTION 9. The rates, rating plans and rating rules applicable to the insurance written by the association shall be those approved for use of the association by the commissioner. Surcharges may be used as approved by the commissioner. Rates shall be actuarially sound and nondiscretionary as to the same class of risk.

SECTION 10. Any person insured pursuant to this act, or his representative, or any affected insurer who may be aggrieved by an act, ruling, or decision of the association, within thirty (30) days after such ruling, is entitled to appeal to the commissioner. A hearing before the commissioner upon such appeal shall be in accordance with the procedures promulgated by the commissioner. The commissioner is authorized to appoint a member of the Insurance Department staff for the purpose of hearing such appeals, and a ruling based upon such hearing shall have the same effect as if heard by the commissioner. All persons or insureds aggrieved by any order or decision of the commissioner may appeal, within thirty (30) days of such order or decision to the Chancery Court of the First Judicial District of Hinds County.

SECTION 11. All reports of inspection performed by or on behalf of the association are available to the members of the association, applicants, agent, broker and the commissioner.

SECTION 12. There shall be no liability on the part of and no cause of action of any nature shall arise against the Commissioner of Insurance or any of his staff, the association or its directors, agents or employers, or against any participating insurer for any inspections made hereunder or any statements made in good faith by them in any reports or communications concerning risks submitted to the association, or at any administrative hearings conducted in connection therewith under the provisions of this act.

SECTION 13. The association shall file in the office of the commissioner on or before March 1 of each year a statement which summarizes the transactions, conditions, operations and affairs of the association during the preceding fiscal year ending December 31. The statement shall contain such matters and information and be in a form prescribed by the commissioner. At any time the commissioner may require the association to furnish any additional information with respect to its transactions or any other matter which the commissioner deems to be material in evaluating the operation and experience of the association.

SECTION 14. The commissioner may make an examination into the affairs of the association at any time. In undertaking such examination, the commissioner is empowered to hold a public hearing. The expenses of such examination shall be borne and paid by the association.

SECTION 15. The commissioner is empowered to make reasonable rules and regulations, not inconsistent with law, to enforce, carry out, and make effective the provisions of this act.

SECTION 16. This act shall take effect and be in force from and after July 1, 1997.