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

House Bill 948

(As Passed the House)

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; TO AMEND SECTION 17-23-1, MISSISSIPPI CODE OF 1972, TO AUTHORIZE AN ADDITIONAL ROUND FOR THE RURAL FIRE TRUCK ACQUISITION ASSISTANCE PROGRAM; 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 * * *association 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 * * *association 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 * * *may be used by the association, in addition to any uses provided for in Section 83‑34‑3(4), for education, public outreach, training of building officials and other programs targeted to reduce the number of policies within the association 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, * * *2018 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).

     (4)  All contracts for personal and professional services entered into by the Mississippi Windstorm Underwriting Association that exceed Seventy-five Thousand Dollars ($75,000.00) in annual payments shall be submitted to the Commissioner of Insurance and the Public Procurement Review Board for review and approval.  This subsection (4) shall not apply to the reinsurance policy itself.

     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.  Section 17-23-1, Mississippi Code of 1972, is amended as follows:

     17-23-1.  (1)  There is established the Rural Fire Truck Acquisition Assistance Program to be administered by the Department of Insurance for the purpose of assisting counties and municipalities in the acquisition of fire trucks, firefighting equipment and/or personal protective equipment and related gear.

     (2)  There is created in the State Treasury a special fund to be designated as the "Rural Fire Truck Fund."  The Legislature may appropriate that amount necessary to fulfill the obligations created under this section by the Department of Insurance, from the State General Fund to such special fund, which sum shall be added to the remainder of the money transferred on July 1, 1995, and during the 1996 Regular Session to the Rural Fire Truck Fund.  Unexpended amounts remaining in the fund at the end of a fiscal year shall not lapse into the State General Fund, and any interest earned on amounts in the fund shall be deposited to the credit of the fund.  Unobligated amounts remaining in the Rural Fire Truck Fund, Fund No. 3507, or in Fund No. 3508, or in Fund No. 3504, or in any fund created for funds appropriated or otherwise made available for this program, may be used as matching funds by any county with remaining eligibility as provided herein.  It is the intent of the Legislature that the Department of Insurance continue to accept applications from the counties for fire trucks as provided in subsection (3) of this section.

     (3)  (a)  A county that meets the requirements provided herein may receive an amount not to exceed * * *Six Hundred Fifty Thousand Dollars ($650,000.00) Seven Hundred Twenty Thousand Dollars ($720,000.00) as provided in subparagraphs (i), (ii), (iii), (iv), (v), (vi), (vii), (viii), (ix), (x) * * * and, (xi) and (xii) of this paragraph, and such amount shall be divided as follows:  an amount of not more than Fifty Thousand Dollars ($50,000.00) per fire truck for the first six (6) trucks and not more than Seventy Thousand Dollars ($70,000.00) per fire truck for the seventh, eighth, ninth, tenth * * * and, eleventh and twelfth trucks.  Monies distributed under this chapter shall be expended only for the purchase of new fire trucks and such trucks must meet the National Fire Protection Association (NFPA) standards in the 1900 series.

              (i)  Any county that has not applied for a fire truck under this section is eligible to submit applications for * * *eleven (11) twelve (12) fire trucks as follows:  six (6) fire trucks at not more than Fifty Thousand Dollars ($50,000.00) per truck and * * *five (5) six (6) fire trucks at not more than Seventy Thousand Dollars ($70,000.00) per truck or a total of * * *Six Hundred Thirty Thousand Dollars ($630,000.00) Seven Hundred Twenty Thousand Dollars ($720,000.00).

              (ii)  Any county that has received one (1) fire truck under this section is eligible to submit applications for * * *ten (10) eleven (11) fire trucks as follows:  six (6) fire trucks at not more than Fifty Thousand Dollars ($50,000.00) per truck and * * *five (5) six (6) fire trucks at not more than Seventy Thousand Dollars ($70,000.00) per truck or a total of * * *Five Hundred Eighty Thousand Dollars ($580,000.00) Six Hundred Seventy Thousand Dollars ($670,000.00).

              (iii)  Any county that has received two (2) fire trucks under this section is eligible to submit an application for * * *nine (9) ten (10) fire trucks as follows:  four (4) fire trucks at not more than Fifty Thousand Dollars ($50,000.00) per truck and * * *five (5) six (6) fire trucks at not more than Seventy Thousand Dollars ($70,000.00) per truck or a total of not more than * * *Five Hundred Thirty Thousand Dollars ($530,000.00) Six Hundred Twenty Thousand Dollars ($620,000.00).

              (iv)  Any county that has received three (3) fire trucks under this section is eligible to submit an application for * * *eight (8) nine (9) fire trucks as follows:  three (3) fire trucks at not more than Fifty Thousand Dollars ($50,000.00) per truck and * * *five (5) six (6) fire trucks at not more than Seventy Thousand Dollars ($70,000.00) per truck or a total of not more than * * *Four Hundred Eighty Thousand Dollars ($480,000.00) Five Hundred Seventy Thousand Dollars ($570,000.00).

              (v)  Any county that has received four (4) fire trucks under this section is eligible to submit an application for * * *seven (7) eight (8) fire trucks as follows:  two (2) fire trucks at not more than Fifty Thousand Dollars ($50,000.00) per truck and * * *five (5) six (6) fire trucks at not more than Seventy Thousand Dollars ($70,000.00) per truck or a total of not more than * * *Four Hundred Thirty Thousand Dollars ($430,000.00) Five Hundred Twenty Thousand Dollars ($520,000.00).

              (vi)  Any county that has received five (5) fire trucks under this section is eligible to submit an application for * * *six (6) seven (7) fire trucks as follows:  one (1) fire truck at not more than Fifty Thousand Dollars ($50,000.00) per truck and * * *five (5) six (6) fire trucks at not more than Seventy Thousand Dollars ($70,000.00) per truck or a total of not more than * * *Three Hundred Eighty Thousand Dollars ($380,000.00) Four Hundred Seventy Thousand Dollars ($470,000.00).

              (vii)  Any county that has received six (6) fire trucks under this section is eligible to submit an application for * * *five (5) six (6) fire trucks at not more than Seventy Thousand Dollars ($70,000.00) per truck or a total of not more than * * *Three Hundred Thirty Thousand Dollars ($330,000.00) Four Hundred Twenty Thousand Dollars ($420,000.00).

              (viii)  Any county that has received seven (7) fire trucks under this section is eligible to submit an application for * * *four (4) five (5) fire trucks at not more than * * *Two Hundred Eighty Thousand Dollars ($280,000.00) Three Hundred Fifty Thousand Dollars ($350,000.00).

              (ix)  Any county that has received eight (8) fire trucks under this section is eligible to submit an application for * * *three (3) four (4) fire trucks at not more than * * *Two Hundred Ten Thousand Dollars ($210,000.00) Two Hundred Eighty Thousand Dollars ($280,000.00).

              (x)  Any county that has received nine (9) fire trucks under this section is eligible to submit an application for * * *two (2) three (3) fire trucks at not more than * * *One Hundred Forty Thousand Dollars ($140,000.00) Two Hundred Ten Thousand Dollars ($210,000.00).

              (xi)  Any county that has received ten (10) fire trucks under this section is eligible to submit an application for * * *one (1) two (2) fire trucks at not more than * * *Seventy Thousand Dollars ($70,000.00) One Hundred Forty Thousand Dollars ($140,000.00).

              (xi)  Any county that has received eleven (11) fire trucks under this section is eligible to submit an application for one (1) fire truck at not more than Seventy Thousand Dollars ($70,000.00).

          (b)  The board of supervisors of the county shall submit its request for the receipt of monies to the Department of Insurance.  A committee composed of the Commissioner of Insurance, the State Fire Coordinator, the Director of the Rating Bureau and the Director of the State Fire Academy shall review the requests by the boards of supervisors and shall determine whether the county or municipality for which the board of supervisors has requested a truck meets the requirements of eligibility under this chapter.

          (c)  To be eligible to receive monies under this chapter:

              (i)  A county or municipality must pledge to set aside or dedicate each year as matching funds, for a period not to extend over ten (10) years, local funds in an amount equal to or not less than one-tenth (1/10) of the amount of monies for which it is requesting distribution from the Rural Fire Truck Fund, which pledged monies may be derived from local ad valorem tax authorized by law or from any other funds available to the county or municipality, except for those funds received by municipalities or counties from the Municipal Fire Protection Fund or the County Volunteer Fire Department Fund, as defined in Sections 83-1-37 and 83-1-39.

              (ii)  A municipality must provide adequate documentation of its contract with the county that requires the municipality to provide fire protection in rural areas.  The term "rural areas" means any area within the county located outside the boundaries of an incorporated municipality or any incorporated municipality with a population of two thousand five hundred (2,500) or less.

          (d)  The Department of Insurance shall maintain an accurate record of all monies distributed to counties and municipalities and the number of fire trucks purchased and the cost for each fire truck, such records to be kept separate from other records of the Department of Insurance; notify counties and municipalities of the Rural Fire Truck Acquisition Assistance Program and the requirements for them to become eligible to participate; adopt and promulgate such rules and regulations as may be necessary and desirable to implement the provisions of this chapter; and file with the Legislature a report detailing how monies made available under this chapter were distributed and spent during the preceding portion of the fiscal year in each county and municipality, the number of fire trucks purchased, the counties and municipalities making such purchases, * * * and the cost of each fire truck purchased and the equipment/gear purchased under paragraph (e) of this subsection.

          (e)  Any county participating in any round under this section may request and receive an amount up to Twenty-five Thousand Dollars ($25,000.00) for firefighting equipment and/or personal protective equipment and related gear.

     SECTION 6.  This act shall take effect and be in force from and after its passage.