MISSISSIPPI LEGISLATURE
2018 Regular Session
To: Insurance
By: Representatives Chism, Arnold, Carpenter, Miles, Hughes, Reynolds, Gipson, Byrd, Turner, Holloway, Gibbs (72nd), Staples, Horne, Weathersby, Rogers (61st), Steverson, Rushing, Hale
AN ACT TO REENACT AND AMEND SECTION 83-34-4, MISSISSIPPI CODE OF 1972, TO REQUIRE MONIES DERIVED FROM THE NONADMITTED POLICY FEE TO BE DEPOSITED INTO THE RURAL FIRE TRUCK FUND OR SUPPLEMENTARY RURAL FIRE TRUCK FUND AND TO EXTEND THE REPEALER THEREON; TO AMEND SECTION 83-34-35, MISSISSIPPI CODE OF 1972, TO REQUIRE THE ASSOCIATION TO OBTAIN APPROVAL FROM THE COMMISSIONER BEFORE OBTAINING REINSURANCE GREATER THAN THE PROBABLE MAXIMUM LOSS FOR A STORM EXPECTED TO OCCUR EVERY ONE HUNDRED FIFTY YEARS, AND TO REQUIRE ANY PURCHASE OF REINSURANCE TO INCLUDE AT A MINIMUM A SELF-INSURED RETENTION OF ONE HUNDRED MILLION DOLLARS; TO REQUIRE THE COMMISSIONER OF INSURANCE TO SUBMIT A STUDY OF THE ASSOCIATION TO THE LEGISLATURE; TO AMEND SECTION 83-21-21, MISSISSIPPI CODE OF 1972, TO CONFORM; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. Section 83-34-4, Mississippi Code of 1972, is reenacted and amended as follows:
83-34-4. (1) Nonadmitted
insurers shall not be assessable insurers of the association. All surplus
lines insurance producers placing insurance through nonadmitted insurers shall
collect from the insured and remit to the * * * Department of Insurance a
nonadmitted policy fee on all premiums for all insurance written by such
surplus lines insurance producer for a policy from a nonadmitted insurer for
any and all risks in this state, except that policies or portions
thereof that cover residential earthquake risks or residential flood risks that
are not written through the National Flood Insurance Program shall be exempt
from the nonadmitted policy fee. By procuring or selling insurance on property
in this state from a nonadmitted insurer, each surplus lines insurance producer
placing insurance through a nonadmitted insurer agrees to be bound by the
provisions of this chapter and to collect and remit the nonadmitted policy fee
provided for herein.
(2) The nonadmitted policy fee shall be a percentage of the total policy premium but the nonadmitted policy fee shall not be considered premium and is not subject to premium taxes or commissions. However, failure to pay the nonadmitted policy fee shall be treated the same as failure to pay premium. "Total policy premium" includes taxes and commissions.
(3) The nonadmitted policy fee percentage shall be three percent (3%).
(4) Within twenty (20) days
of the end of the quarter, surplus lines insurance producers placing insurance
through nonadmitted insurers shall remit directly to the * * * Department of Insurance all
nonadmitted policy fees collected in the preceding quarter. In addition to the
nonadmitted policy fee provided for herein, surplus lines insurance producers
placing insurance through nonadmitted insurers shall collect and remit
surcharges as provided by this chapter. Surplus lines insurance producers
placing insurance through nonadmitted insurers may designate another surplus
lines insurance producer that actually procured the insurance from the
nonadmitted carrier to collect and remit the nonadmitted policy fees.
(5) Each insured in this state who directly procures or renews insurance with a nonadmitted insurer on properties, risks or exposures located or to be performed, in whole or in part, in this state, other than insurance procured through a surplus lines licensee, shall be subject to the nonadmitted policy fee which shall be paid by the insured according to the procedures provided for premium taxes in Section 83-21-17(5).
(6) Monies derived from the
nonadmitted policy fee collected under this section * * * shall be deposited into the Rural Fire
Truck Fund or Supplementary Rural Fire Truck Fund.
(7) This section shall
stand repealed from and after July 1, * * * 2021.
SECTION 2. Section 83-34-35, Mississippi Code of 1972, is amended as follows:
83-34-35. (1) In order to avoid or lessen the possibility and amount of surcharges authorized by this chapter, the commissioner shall approve rates for policies issued by the association at least adequate to fund annual reinsurance above a self-insured retention of One Hundred Million Dollars ($100,000,000.00) that, combined with any readily available reserves of the association, is sufficient to cover at least the probable maximum losses from a storm expected to occur once every one hundred (100) years as predicted by a model or method approved by the commissioner for the properties insured by the association at the time the reinsurance was negotiated. The amount of reinsurance in the foregoing rate adequacy requirement shall increase every two (2) years by increasing the probable maximum loss by five (5) years, until such time as the probable maximum loss insured is for a storm expected to occur every one hundred fifty (150) years. The commissioner may approve rates in excess of the minimums required by this section as consistent with his duties and the insurance laws of the State of Mississippi.
(2) The association must receive approval from the commissioner before purchasing reinsurance in excess of the amount to cover the probable maximum loss for a storm expected to occur every one hundred fifty (150) years.
(3) Any purchase of reinsurance by the association shall include at a minimum a self-insured retention of One Hundred Million Dollars ($100,000,000.00).
SECTION 3. Not later than September 1, 2019, the Commissioner of Insurance shall submit to the Legislature a report on the Windstorm Underwriting Association which shall include an organizational analysis of the association. This report shall at a minimum include an analysis of any problems identified, and any recommendations for any legislative action necessary to address those problems and to foster stability, availability, and competition within the windstorm insurance industry. The commissioner, at his discretion, may retain professionals or specialists to assist with the report, and the costs thereof shall be borne by the association.
SECTION 4. Section 83-21-21, Mississippi Code of 1972, is amended as follows:
83-21-21. (1) The Commissioner of Insurance may establish a stamping procedure for all eligible nonadmitted/surplus lines insurance policies sold on risks subject to the payment of premium taxes to the State of Mississippi.
(2) The Commissioner of Insurance may rely upon the advice and assistance of a duly constituted association of surplus lines insurance producers in carrying out the purposes of this chapter, if the association files with the commissioner:
(a) A copy of the association's constitution and articles of agreement of association or the association's certificate of incorporation and bylaws and any rules and regulations governing the association's activities;
(b) A list of the association's members; and
(c) The name and address of a resident of this state upon whom notices or orders of the commissioner or process issued by the commissioner may be served.
(3) The Commissioner of Insurance may examine the association's records concerning the functions or duties performed on behalf of the commissioner by the association.
(4) The association shall provide a means for the examination of all surplus lines coverages written to determine whether such coverages comply with the law and such rules or regulations as may be issued by the Commissioner of Insurance.
(5) The Commissioner of Insurance may refuse to accept, or may suspend or revoke the acceptance of, an association for any of the following reasons:
(a) It reasonably appears that the association will not be able to carry out the purposes of this chapter;
(b) The association does not maintain and enforce rules and regulations which will ensure that members of the association and persons associated with those members will comply with this chapter, other applicable state law or rules or regulations promulgated under either;
(c) The rules or regulations of the association do not ensure a fair representation of its members in the selection of directors and in the administration of its affairs;
(d) The rules or regulations of the association do not provide for an equitable allocation of reasonable dues, fees and other charges among members;
(e) The rules or regulations of the association impose an undue burden on competition; or
(f) The association fails to meet other applicable requirements prescribed in this chapter.
(6) A surplus lines insurance producer shall cooperate with the association and the Commissioner of Insurance in fulfilling the surplus lines agent's statutory responsibility under this chapter and Section 83-34-4.
(7) Upon request from the association, the Commissioner of Insurance may approve the levy of an examination fee of not more than one percent (1%) of premiums charged under this chapter for the operation of the association to the extent that such operation relieves the commissioner of duties otherwise required of the Commissioner of Insurance under this chapter and Section 83-34-4.
(8) The association may revoke the membership of, and the Commissioner of Insurance may revoke the license in this state of, any licensee who fails to pay the examination fee when due, if the examination fee has been approved by the Commissioner of Insurance.
(9) The fees levied and collected by the association pursuant to this section shall be subject to transfer to the Department of Insurance Special Fund by act of the Legislature.
(10) The association, the association's board members and employees shall not be subject to liability for any functions or duties performed in good faith, from and after May 9, 2008, by the association pursuant to this chapter.
(11) In the alternative, the Commissioner of Insurance may contract with a third party to assist the commissioner with carrying out the purposes of this chapter and Section 83-34-4. The third party may collect an examination fee in an amount determined by the commissioner but not more than one percent (1%) of premiums charged under this chapter. The fees shall be collected and deposited into the Department of Insurance Special Fund, and from this fund the department may pay the third party a reasonable fee for its services.
(12) Notwithstanding the provisions of Section 83-21-18(3), any stamping procedure established under this section may apply to the reporting, payment, collection and allocation of premium taxes and fees for nonadmitted insurance consistent with any agreement, compact or procedures entered into by the commissioner under Section 83-21-18(1).
(13) The commissioner may promulgate rules and regulations necessary for the implementation of this section.
SECTION 5. This act shall take effect and be in force from and after its passage.