House Bill 1426

AN ACT TO AMEND SECTION 83-34-15, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT HOLDERS OF INSURANCE POLICIES ISSUED BY THE MISSISSIPPI WINDSTORM UNDERWRITING ASSOCIATION (WIND POOL) MUST BE GIVEN THE OPTION TO SELECT DEDUCTIBLE PERCENTAGES THAT ARE HIGHER THAN THE MINIMUM REQUIRED PERCENTAGE FOR A DEDUCTIBLE BASED ON A PERCENTAGE OF THE VALUE OF THE PROPERTY THAT APPLIES TO WINDSTORM LOSSES RESULTING FROM A HURRICANE; TO PROVIDE THAT THE PREMIUM RATES FOR SUCH A POLICY SHALL BE CORRESPONDINGLY REDUCED WHEN THE POLICYHOLDER SELECTS A HIGHER PERCENTAGE DEDUCTIBLE; AND FOR RELATED PURPOSES.

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

SECTION 1. Section 83-34-15, Mississippi Code of 1972, is amended as follows:

83-34-15. (1) Any person having an insurable interest in insurable property is entitled to apply to the association for such coverage and for an inspection of the property on or after the effective date of the plan of operation. Applications shall be made on behalf of the owner of the insurable interest by a licensed resident broker or agent authorized by him. Applications shall be submitted on forms prescribed by the association.

The commissions paid to the submitting broker or agent shall not exceed fifteen percent (15%) of the premium.

The term "insurable interest" as used in this subsection shall be deemed to include any lawful and substantial economic interest in the safety or preservation of property from loss, destruction or pecuniary damage.

(2) (a) 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, or issue, a policy of essential property insurance for a term of one (1) year. Any policy issued under 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 83-34-1. The coverage limits shall be determined by the value of the insurable property at the time the policy is issued subject to maximum limits, which shall be set forth under the plan of operation adopted by the board; provided that the commissioner may revise any limit that he determines to be inadequate. The coverage afforded by policies issued by or through the association shall not be subject to any deductible or coinsurance provision except as specifically approved by the commissioner.

(b) If the policies issued under the provisions of this section are required to include a deductible based on a percentage of the value of the insurable property that applies to windstorm losses resulting from a storm named by the National Hurricane Center of the National Weather Service, the association and the commissioner shall offer the policyholders the option to select deductible percentages that are higher than the minimum required percentage, and shall provide for corresponding reductions in the premium rates for a policy when the policyholder selects a higher percentage deductible. If the insurable property is subject to a mortgage or deed of trust, the policyholder, in order to be allowed to select a higher percentage deductible, must have a letter of credit with a financial institution that is at least equal to the amount of the higher percentage deductible applied to the insured value of the insurable property. If the insurable property is a condominium, the management body of the condominium project may establish an account that contains at least the amount of the higher percentage deductible applied to the insured value of the insurable property of the condominium project, and assess the individual owners of the condominium units for a proportionate share of the amount that is necessary for the account.

(3) If the association for any reason denies an application and refuses to issue or 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 designated member of his staff, after reviewing the facts, may direct the association to issue or cause to be issued an insurance policy to the applicant. In carrying out his duties under this section, the commissioner may request, and the association shall provide, any information the commissioner deems necessary to a determination concerning the reasons for the denial or delay of the application.

SECTION 2. This act shall take effect and be in force from and after July 1, 2007.