MISSISSIPPI LEGISLATURE

1998 Regular Session

To: Insurance

By: Senator(s) Kirby

Senate Bill 2154

(As Sent to Governor)

AN ACT TO AMEND SECTION 83-6-21, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT INSURANCE COMPANIES WITHIN A HOLDING COMPANY SYSTEM SHALL NOT SELL OR EXCHANGE THEIR STOCK AMONG EACH OTHER UNLESS THE COMPANIES HAVE OBTAINED STOCK COMPANY PERMITS; TO AMEND SECTION 83-7-17, MISSISSIPPI CODE OF 1972, TO DEPOSIT INTO THE INSURANCE DEPARTMENT FUND CERTAIN FEES COLLECTED BY THE INSURANCE COMMISSIONER FOR THE APPROVAL OF LIFE INSURANCE POLICIES; TO AMEND SECTION 83-19-15, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT THE OFFICES OF PRESIDENT AND TREASURER WITHIN AN INSURANCE COMPANY SHALL NOT BE HELD BY THE SAME INDIVIDUAL; TO AMEND SECTION 83-19-31, MISSISSIPPI CODE OF 1972, TO REVISE THE CAPITAL REQUIREMENTS NECESSARY FOR THE FORMATION OF INSURANCE COMPANIES; TO AMEND SECTIONS 83-37-11 AND 83-39-7, MISSISSIPPI CODE OF 1972, TO ELIMINATE CASH AS A CLASS OF SECURITIES REQUIRED TO BE DEPOSITED BY BURIAL ASSOCIATIONS AND PROFESSIONAL BAIL AGENTS BEFORE ENGAGING IN BUSINESS; TO AMEND SECTION 83-39-13, MISSISSIPPI CODE OF 1972, TO CHANGE THE FILING DATE OF ANNUAL REPORTS REQUIRED TO BE FILED BY PROFESSIONAL BAIL AGENTS; TO AMEND SECTION 27-15-83, MISSISSIPPI CODE OF 1972, TO REVISE THE STATEWIDE PRIVILEGE TAXES ON INSURANCE COMPANIES; TO REPEAL SECTION 83-19-73, MISSISSIPPI CODE OF 1972, WHICH ESTABLISHES A SCHEDULE OF SURPLUS TO BE MAINTAINED BY ALL DOMESTIC STOCK, MUTUAL AND RECIPROCAL INSURANCE COMPANIES AND ASSOCIATIONS; AND FOR RELATED PURPOSES. 

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

SECTION 1. Section 83-6-21, Mississippi Code of 1972, is amended as follows:

83-6-21. (1) Transactions within a holding company system to which an insurer subject to registration is a party shall be subject to the following standards:

(a) The terms shall be fair and reasonable;

(b) Charges or fees for services performed shall be reasonable;

(c) Expenses incurred and payment received shall be allocated to the insurer in conformity with customary insurance accounting practices consistently applied;

(d) The books, accounts and records of each party to all such transactions shall be so maintained as to clearly and accurately disclose the nature and details of the transactions including such accounting information as is necessary to support the reasonableness of the charges or fees to the respective parties; and

(e) The insurer's surplus as regards policyholders following any dividends or distributions to shareholder affiliates shall be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs.

(2) The following transactions involving a domestic insurer and any person in its holding company system shall not be entered into unless the insurer has notified the commissioner in writing of its intention to enter into such transaction at least thirty (30) days prior thereto, or such shorter period as the commissioner may permit, and the commissioner has not disapproved it within such period:

(a) Sales, purchases, exchanges, loans or extension of credit, guarantees or investments provided such transactions are equal to or exceed: (i) with respect to nonlife insurers, the lesser of three percent (3%) of the insurer's admitted assets or twenty-five percent (25%) of surplus as regards policyholders; (ii) with respect to life insurers, three percent (3%) of the insurer's admitted assets; each as of the thirty-first day of December next preceding:

(b) Loans or extensions of credit to any person who is not an affiliate, where the insurer makes such loans or extension of credit with the agreement or understanding that the proceeds of such transactions, in whole or in substantial part, are to be used to make loans or extensions of credit to, to purchase assets of or to make investments in, any affiliate of the insurer making such loans or extensions of credit provided such transactions are equal to or exceed: (i) with respect to nonlife insurers, the lesser of three percent (3%) of the insurer's admitted assets or twenty-five percent (25%) of surplus as regards policyholders; (ii) with respect to life insurers, three percent (3%) of the insurer's admitted assets; each as of the thirty-first day of December next preceding;

(c) Reinsurance agreements or modifications thereto in which the reinsurance premium or a change in the insurer's liabilities equals or exceeds five percent (5%) of the insurer's surplus as regards policyholders, as of the thirty-first day of December next preceding, including those agreements which may require as consideration the transfer of assets from an insurer to a nonaffiliate, if an agreement or understanding exists between the insurer and nonaffiliate that any portion of such assets will be transferred to one or more affiliates of the insurer;

(d) All management agreements that would place control of the insurer outside of the insurance holding company system;

(e) All service contracts or cost-sharing arrangements wherein the annual aggregate cost to the insurer would equal or exceed the amounts specified in paragraph (a) of this subsection.

(3) A domestic insurer shall not enter into transactions which are part of a plan or series of like transactions with persons within the holding company system if the purpose of those separate transactions is to avoid the statutory threshold amount and avoid the review that would occur otherwise. If the commissioner determines that such separate transactions were entered into over any twelve-month period for such purpose, he may exercise his authority under Section 83-6-35.

(4) The commissioner, in reviewing transactions pursuant to subsection (2) of this section, shall consider whether the transactions comply with the standards set forth in subsection (1) of this section and whether they may adversely affect the interests of policyholders.

(5) The commissioner shall be notified within thirty (30) days of any investment of the domestic insurer in any one corporation if the total investment in such corporation by the insurance holding company system exceeds ten percent (10%) of such corporation's voting securities.

(6) Insurance companies within a holding company system shall not sell or exchange their stock among each other unless the companies have obtained stock company permits before conducting such transactions.

SECTION 2. Section 83-7-17, Mississippi Code of 1972, is amended as follows:

83-7-17. All life insurance companies other than fraternal beneficiary associations, authorized to do the business of life insurance in this state, are hereby required to print or stamp in conspicuous type on the face or first page of each and every policy sold to citizens of this state words indicating correctly and fully the kind and character of the policy. The same words shall also be printed or stamped on the back or title page of every such policy so that they may be easily seen and read when the policy is folded. Every such life insurance company shall submit to the commissioner for his approval the words required in this section to be printed on each policy, together with sample copy of every kind or class of policies offered for sale in this state; and every life insurance company shall print on each of its policies sold to citizens of this state such words as the insurance commissioner shall approve. The license of any insurance company doing business in this state may be revoked by the commissioner for violating any of the provisions of this section. A policy of life insurance shall not be issued or delivered in this state until the form has been approved and filed by the insurance commissioner.

The commissioner shall collect and pay into the Insurance Department Fund in the State Treasury the following fees for services provided under this section:

FORM FEE

Each individual policy contract, including

revisions $15.00

Each group master policy or contract,

including revisions 15.00

Each rider, endorsement or amendment, etc. 10.00

Each insurance application where written

application is required and is to be made

a part of the policy or contract 10.00

Each questionnaire 7.00

Charge for resubmission where payment is not

included with original submission 5.00

Additional charge for tentative approval same as above.

SECTION 3. Section 83-19-15, Mississippi Code of 1972, is amended as follows:

83-19-15. The first meeting for the purpose of organization shall be called by a notice signed by one or more of the subscribers to the articles of association, stating the time, place, and purposes of the meeting, a copy whereof shall, seven (7) days at least before the appointed time, be given to each subscriber, or left at his usual place of business or residence, or duly mailed to his post office address. Whoever gives such notice shall make affidavit thereof, which shall include a copy of the notice and be entered upon the records of the corporation. At such first meeting, including any adjournment thereof, an organization shall be effected by the choice of a temporary clerk, who shall be sworn to correctly keep and record the proceedings of the meeting, by the adoption of bylaws, and by the election of directors and such other officers as the bylaws may require; but at such first meeting no person shall be elected director who has not signed the articles of association. The temporary clerk shall record the proceedings until and including the choice and qualification of the secretary. The directors so chosen shall elect a president, secretary, and other officers who, under the bylaws, they are authorized to choose. The offices of president and treasurer shall not be held by the same individual.

SECTION 4. Section 83-19-31, Mississippi Code of 1972, is amended as follows:

83-19-31. (1) No corporation so formed shall transact any other business than that specified in its charter and articles of association. Companies so formed must meet the following capital and surplus requirements:

(a) * * * Single-line companies so formed to write a classification listed in paragraphs (a) through (n) in Section 27-15-83, the minimum capital requirement shall be Four Hundred Thousand Dollars ($400,000.00) and the surplus shall be a minimum of Six Hundred Thousand Dollars ($600,000.00).

 * * *

(b) Multi-line companies so formed to write a combination of the classifications listed in paragraphs (a) through (n) in Section 27-15-83, the minimum capital requirement shall be Six Hundred Thousand Dollars ($600,000.00) and the surplus shall be a minimum of Nine Hundred Thousand Dollars ($900,000.00).

(c) Companies so formed for the purpose of transacting the business of life insurance on the industrial plan may organize with a minimum capital of * * * One Hundred Thousand Dollars ($100,000.00) and a minimum surplus of Fifty Thousand Dollars ($50,000.00).

An industrial life insurer shall be limited to the following:

1. A life insurance policy, in the aggregate value of Five Thousand Dollars ($5,000.00) in death benefits, exclusive of multiple indemnity benefits.

2. A disability policy in the aggregate benefits of Sixty Dollars ($60.00) per week.

3. A policy providing benefits for dismembered and broken limbs and/or loss of eyesight in the aggregate of Five Thousand Dollars ($5,000.00) per policy year.

4. A policy which provides benefits for the payment for or furnishing of hospitalization, drugs, attending physicians and surgical costs in the aggregate of Three Thousand Five Hundred Dollars ($3,500.00) per policy year.

(d) All mutual and reciprocal companies shall possess at the time of initial license and maintain thereafter a surplus, after deductions for services, in an amount equal to the capital and surplus requirements of a stock company writing similar lines of insurance.

(e) If at any time the surplus of such domestic company or association shall be less than the minimum surplus noted above, such company or association shall be considered impaired; and it shall be the duty of the officers of such company or association to report any such impairment of surplus to the State Commissioner of Insurance in writing within ten (10) days after such impairment occurs. When any such impairment is reported, or if the Commissioner of Insurance should determine that the company is operating in an impaired condition, the commissioner may suspend the certificate of authority and license of such domestic insurance company or association to do business in this state until such company shall raise or increase its surplus to the minimum amount required herein.

(2) Any domestic company qualifying under the foregoing sections shall deposit with the State Treasurer fifty percent (50%) of its capital stock, either in cash or in such bonds or securities in which such company is authorized by law to invest its funds. Upon such deposit and evidence, by affidavit or otherwise, satisfactory to the Insurance Commissioner that the capital and surplus is all paid in and that the company is the actual and unqualified owner of the securities representing the paid-up capital and surplus, he shall issue to such company his certificate authorizing it to transact business in this state; but no part of either capital or surplus of such company shall be loaned to any stockholder, officer or director of the company.

The provisions of this section as to the minimum requirements as to paid-up capital stock and cash surplus shall not become effective until January 1, 1988, concerning any domestic company which was authorized to do business and was writing business in this state on July 1, 1985.

(3) No insurance company, including any mutual insurance company, organized under the laws of this state and transacting business in this state shall expose itself to loss on any one (1) risk or hazard to an amount exceeding ten percent (10%) of its paid-up capital and surplus unless the excess is reinsured in some other company duly authorized to transact similar business in this state or as otherwise provided in the insurance code. For purposes of this subsection, the terms "risk" and "hazard" apply to the subject matter of any one (1) insurance policy and not to any one (1) peril.

(4) The Commissioner of Insurance may require additional capital and surplus based on the type, nature or volume of business transacted.

SECTION 5. Section 83-37-11, Mississippi Code of 1972, is amended as follows:

83-37-11. Before engaging in said business, any such person, firm, association, or corporation, both foreign and domestic, shall deposit with the Treasurer of the State of Mississippi such securities as may be approved by the Commissioner of Insurance, consisting of * * * certificates of deposit or bonds of the United States, of the State of Mississippi, or of any county, municipality, levee district, or road district in this state. The securities so deposited shall be not less than par value of Five Hundred Dollars ($500.00) for each One Hundred Twenty-five Thousand Dollars ($125,000.00), or fraction thereof, of face value and in-force certificates.

Any such person, firm, association, or corporation organized under this section may issue contracts or burial certificates in amounts not to exceed One Hundred Fifty Dollars ($150.00), provided said person, firm, association, or corporation deposits securities with the Treasurer of the State of Mississippi according to the schedule set out heretofore, with a minimum deposit of not less than One Thousand Dollars ($1,000.00) par value. Said person, firm, association, or corporation organized under this section may also issue contracts or burial certificates in amounts not to exceed Three Hundred Dollars ($300.00), provided said person, firm, association, or corporation deposits securities with the Treasurer of the State of Mississippi according to the schedule set out heretofore, with a minimum deposit of not less than Two Thousand Dollars ($2,000.00) par value. Said person, firm, association, or corporation organized under this section may also issue contracts or burial certificates in amounts not to exceed Four Hundred Fifty Dollars ($450.00), provided said person, firm, association, or corporation deposits securities with the Treasurer of the State of Mississippi according to the schedule set out heretofore, with a minimum deposit of not less than Three Thousand Dollars ($3,000.00) par value.

Any such person, firm, association, or corporation who prior hereto had on deposit with the Treasurer of the State of Mississippi the maximum amount of securities heretofore required shall not be required to deposit additional securities except on the net increase in liability of in-force certificates issued after January 1, 1974.

No individual benefit shall exceed the sum of Four Hundred Fifty Dollars ($450.00) unless said benefit in excess of Four Hundred Fifty Dollars ($450.00) is written on a schedule of rates approved by the State Commissioner of Insurance, and unless said contract specifically stipulates that anyone insured thereunder may receive in cash at his or her option the face value thereof; and with the further provision that any and all burial certificates in excess of Four Hundred Fifty Dollars ($450.00) shall come under and be subject to all the qualifications and all provisions of law governing life insurance contracts and policies in the State of Mississippi.

All contracts issued by a person, firm, association, or corporation of any of the above classifications will be issued in amounts of One Hundred Fifty Dollars ($150.00), Three Hundred Dollars ($300.00), or Four Hundred Fifty Dollars ($450.00) only. The provisions of this subsection shall not apply to funeral benefit certificates already in force in excess of Four Hundred Fifty Dollars ($450.00). No person, firm, association, or corporation shall write or issue a paid-up certificate.

A surety bond made by some company authorized to do business in Mississippi for an amount equal to twice the amount of securities required above may be filed with the Treasurer, after approval by the insurance department, in lieu of the other securities above referred to.

SECTION 6. Section 83-39-7, Mississippi Code of 1972, is amended as follows:

83-39-7. Each applicant for professional bail agent who acts as personal surety shall be required to post a qualification bond in the amount of Five Thousand Dollars ($5,000.00) with the department. Any professional bail agent making application for license renewal, as herein provided, who shall have furnished bail in fifty (50) or more criminal cases shall post such bond in the amount of Ten Thousand Dollars ($10,000.00). The qualification bond shall be made by depositing with the commissioner the aforesaid amount of * * * bonds of the United States, State of Mississippi, or any agency or subdivision thereof, or shall be written by an insurer as defined in this chapter, shall meet the specifications as may be required and defined in this chapter, and shall meet such specifications as may be required and approved by the department. The bond shall be conditioned upon the full and prompt payment of any bail bond issued by such professional bail agent into the court ordering the bond forfeited. The bond shall be to the people of the State of Mississippi in favor of any court of this state, whether municipal, justice, county, circuit, Supreme or other court. If any bond issued by a professional bail agent is declared forfeited and judgment entered thereon by a court of proper jurisdiction and the amount of the bond is not paid within ninety (90) days, that court shall order the department to declare the qualification bond of the professional bail agent to be forfeited and the license revoked. The department shall then order the surety on the qualification bond to deposit with the court an amount equal to the amount of the bond issued by the professional bail agent and declared forfeited by the court, or the amount of the qualification bond, whichever is the smaller amount. The department shall, after hearing held upon not less than ten (10) days' written notice, suspend the license of the professional bail agent until such time as another qualification bond in the required amount is posted with the department. The revocation of the license of the professional bail agent shall also serve to revoke the license of each soliciting bail agent and bail enforcement agent employed or used by such professional bail agent. In the event of a final judgment of forfeiture of any bail bond written under the provisions of this chapter, the amount of money so forfeited by the final judgment of the proper court, less all accrued court costs and excluding any interest charges or attorney's fees, shall be refunded to the bail agent or his insurance company upon proper showing to the court as to which is entitled to same, provided the defendant in such cases is returned to the sheriff of the county to which the original bail bond was returnable within twelve (12) months of the date of such final judgment, or proof made of incarceration of the defendant in another jurisdiction, and that "hold order" has been placed upon the defendant for return of the defendant to the sheriff upon release from the other jurisdiction, then the bond forfeiture shall be stayed and remission made upon petition to the court, in the amount found in the court's discretion to be just and proper. A bail agent licensed under this chapter shall have a right to apply for and obtain from the proper court an extension of time delaying a final judgment of forfeiture if such bail agent can satisfactorily establish to the court wherein such forfeiture is pending that the defendant named in the bail bond is lawfully in custody outside of the State of Mississippi.

SECTION 7. Section 83-39-13, Mississippi Code of 1972, is amended as follows:

83-39-13. Each professional bail agent licensed under this chapter, under oath, shall report annually to the department on forms prescribed by the department. This report shall be made on a calendar basis before June 1 of each year.

SECTION 8. Section 27-15-83, Mississippi Code of 1972, is amended as follows:

27-15-83. (1) Upon each foreign insurance company licensed as a single line company defined under Section 83-19-1, the privilege tax is as follows:

(a) Fire and Allied Lines and/or

Industrial Fire $200.00

(b) Casualty/Liability $200.00

(c) Fidelity and/or Surety $200.00

(d) Workers' Compensation $200.00

(e) Boiler and Machinery $200.00

(f) Plate Glass $200.00

(g) Aircraft $200.00

(h) Inland Marine and/or Ocean Marine $200.00

(i) Automobile Physical Damage/Automobile

Liability $200.00

(j) Homeowners/Farmowners $200.00

(k) Guaranty/Mortgage Guaranty $200.00

(l) Trip Accident and Baggage $200.00

(m) Legal $200.00

(n) Life and/or Accident and Health;

Credit Life, Accident and Health;

Industrial Life, Accident and Health;

and Variable Contracts $200.00

(o) Title $200.00

(p) Fraternal $ 50.00

(2) For any combination of classifications of a foreign insurance company, the privilege tax for a multiple line company shall be Three Hundred Fifty Dollars ($350.00).

(3) Any stock, mutual, reciprocal or reinsurance company shall pay the appropriate privilege tax for each line of insurance the company is licensed to underwrite.

(4) For each domestic insurance which has its home office located in Mississippi, the privilege tax shall be one-half (1/2) of the fees listed in this section.

(5) Each insurance company or association which amends its privilege license shall pay a fee of Twenty-five Dollars ($25.00).

SECTION 9. Section 83-19-73, Mississippi Code of 1972, which establishes a schedule of surplus to be maintained by all domestic stock, mutual and reciprocal insurance companies and associations, is hereby repealed.

SECTION 10. This act shall take effect and be in force from and after July 1, 1998.