MISSISSIPPI LEGISLATURE
2022 Regular Session
To: Insurance
By: Representative Ford (54th)
AN ACT TO PROVIDE FOR RESIDENTIAL FLOOD INSURANCE COVERAGE; TO PROVIDE CERTAIN DEFINITIONS; TO PROVIDE FOR CERTAIN NOTICES AND FILINGS WITH THE COMMISSIONER OF INSURANCE; TO PROVIDE FOR POLICY TYPES; TO PROVIDE CERTAIN NOTICES TO THE APPLICANT REGARDING FLOOD COVERAGE; TO AMEND SECTION 83-2-1, MISSISSIPPI CODE OF 1972, TO CONFORM; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. For purposes of this act, the following words shall have the following meanings unless the context clearly requires otherwise:
(a) "Flood" means a general and temporary condition of partial or complete inundation of two (2) or more acres of normally dry land area or of two (2) or more properties, at least one (1) of which is the policyholder's property, from any of the following:
(i) Overflow of inland or tidal waters.
(ii) Unusual and rapid accumulation or runoff of surface waters from any source.
(iii) Mud flow.
(iv) Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined in this paragraph.
(b) "Hurricane" means a storm system that has been declared a hurricane by the National Hurricane Center of the National Weather Service.
(c) "Named storm" means a storm system that has been declared a named storm by the National Hurricane Center of the National Weather Service.
(d) "Residential flood coverage" means insurance for the peril of flood for homeowner's, condominium owner's, renter's, and tenant's dwelling, mobile home, and manufactured housing, and similar policies.
(e) "Separate named storm or hurricane deductible" means a deductible that applies to flood damage incurred during a named storm or hurricane and may be expressed as a percentage of the insured value of the property or as a specific dollar amount. All of the following shall apply to a separate deductible:
(i) The insurer shall not apply the separate named storm or hurricane deductible in addition to another deductible. (ii) There shall be one (1) separate named storm or hurricane deductible in a calendar year, which shall apply to all named storm or hurricane losses during the calendar year.
(iii) The insurer may apply to later flood loss events the greater of the remaining amount of the separate named storm or hurricane deductible or the amount of any other standard flood deductible.
(iv) The insurer may require policyholders to maintain receipts or other records of such losses in order to apply such losses to a subsequent flood loss incurred during a named storm or hurricane claims.
(f) "Standard flood deductible" means a deductible that applies to flood damage incurred during any event and may be expressed as a percentage of the insured value of the property or as a specific dollar amount.
SECTION 2. (1) Notwithstanding any other provision of law to the contrary, this act shall govern the regulation of any insurance policy, contract or endorsement providing residential flood coverage on any structure or the contents of personal property contained therein.
(2) This act does not apply to either of the following:
(a) Commercial lines insurance.
(b) Surplus lines insurance.
SECTION 3. In addition to other requirements, an insurer providing residential flood coverage shall do all of the following:
(a) Notify the Commissioner of Insurance at least thirty (30) days before writing residential flood policies in this state.
(b) File a plan of operation, financial projections, and any revisions to either, as applicable, with the commissioner. (c) Note prominently on the policy declarations page the residential flood coverage premiums, deductibles, and policy limits.
(d) Notify the commissioner in writing at least sixty (60) days prior to the market end date of residential flood coverage and advise regarding all of the following:
(i) If an approved policy form will no longer be marketed in this state.
(ii) If an approved policy form will be permanently withdrawn from this state.
(iii) Whether residential flood coverage issued in this state under a discontinued or withdrawn policy form will remain in force.
(iv) Whether existing residential flood coverage issued in this state under a discontinued or withdrawn policy form will continue to be renewed.
(v) The policy form numbers being discontinued or withdrawn and the dates of original approval.
SECTION 4. (1) In addition to excess flood insurance, insurers may issue any of the following types of residential flood coverage:
(a) Standard flood insurance, which covers only losses from the peril of flood in a manner equivalent to that provided under the National Flood Insurance Program, including standard flood deductibles and adjustment of losses.
(b) Preferred flood insurance, which includes all of the following:
(i) The same coverage as standard flood insurance. (ii) Coverage for losses from water intrusion originating from outside the structure that are not otherwise covered by a flood policy.
(iii) Coverage for additional living expenses.
(iv) A requirement that any loss under personal property or contents coverage be adjusted only on the basis of replacement costs up to the policy limits.
(c) Customized flood insurance, which includes coverage that is broader than the coverage provided under standard flood insurance.
(d) Flexible flood insurance, which covers losses from the peril of flood and may also include coverage for losses from water intrusion originating from outside the structure, that is not otherwise covered. Flexible flood insurance shall include one (1) or more of the following provisions:
(i) An agreement between the insurer and the insured that the flood coverage is in a specified amount, such as coverage that is limited to the total amount of each outstanding mortgage applicable to the covered property.
(ii) A requirement for a separate named storm or hurricane deductible.
(iii) A requirement that flood loss to a dwelling be adjusted only on the basis of the actual cash value of the property.
(iv) A restriction limiting residential flood coverage to the principal building defined in the policy.
(v) A provision including or excluding coverage for additional living expenses.
(vi) A provision excluding coverage for personal property and contents as to the peril of flood.
(e) Supplemental flood insurance, which may provide coverage designed to supplement a flood policy obtained from the National Flood Insurance Program or from an insurer issuing standard or preferred flood insurance pursuant to this section. Supplemental flood insurance may provide coverage for any of the following:
(i) Jewelry.
(ii) Art.
(iii) Deductibles.
(iv) Additional living expenses.
(v) Other coverage permitted by law.
(2) An insurer writing residential flood policies may issue flood insurance that covers losses from the peril of flood using either or both of the following:
(a) A definition of "flood" other than that in Section 1 of this act.
(b) Terms and conditions other than those used in the policy types described in subsection (1) of this section.
(3) Notwithstanding subsections (1) and (2) of this section, insurers offering private flood insurance may continue using policy forms filed and approved before January 1, 2023.
SECTION 5. For an insurer writing residential flood coverage, either of the following shall apply:
(a) An insurer may establish and use residential flood coverage rates in accordance with the provisions of Chapter 2, Title 83, Mississippi Code of 1972.
(b) For residential flood coverage rates filed with the commissioner before January 1, 2028, all of the following shall apply:
(i) An insurer shall establish and use rates in accordance with the rates, rating schedules, or rating manuals filed by the insurer with the commissioner which allow the insurer a reasonable rate of return on residential flood coverage written in this state.
(ii) Rates established pursuant to this paragraph (b) are not subject to Chapter 2, Title 83, Mississippi Code of 1972.
(ii) Within thirty (30) days after the effective date of the change, the insurer shall notify the commissioner of any change to previously established rates and of the average statewide percentage change in rates.
(iii) Actuarial data with regard to rates for residential flood coverage shall be maintained by the insurer for two (2) years after the effective date of the rate change and is subject to examination by the commissioner. The commissioner may require the insurer to incur the costs associated with an examination. Upon examination, the commissioner, in accordance with generally accepted and reasonable actuarial techniques, shall consider the rate factors and standards in applicable law, to determine if the rate is excessive, inadequate, or unfairly discriminatory.
(iv) If the commissioner determines that a rate is excessive or unfairly discriminatory, the commissioner shall require the insurer to provide appropriate credit to any affected policyholders and an appropriate refund to any affected former policyholders.
SECTION 6. (1) (a) A producer shall provide written notice to be signed by the applicant before a producer places residential flood coverage with an authorized or surplus lines insurer for a property receiving flood coverage from the National Flood Insurance Program. The notice required by this subsection shall inform the applicant of all of the following:
(i) Coverage under the National Flood Insurance Program is provided at a subsidized rate.
(ii) If the applicant discontinues coverage under the National Flood Insurance Program, the full risk rate may apply to the property if the applicant later seeks coverage under the National Flood Insurance Program.
(b) If an applicant does not have flood coverage, a producer shall inform the applicant of the existence of the National Flood Insurance Program.
(2) (a) An insurer writing standard flood insurance policies, preferred flood insurance policies, customized flood insurance policies, flexible flood insurance policies, residential flood insurance policies using a different definition of "flood" than that used in Section 1 of this act, or residential flood insurance policies with terms and conditions other than those described in Section 4 of this act, shall make one of the following certifications:
(i) "This policy meets the definition of private flood insurance contained in 42 USC 4012a(b)(7) and the corresponding regulation." A certification made under this subparagraph (i) shall also contain a separate statement providing: "This policy provides at least the coverage of the standard flood insurance policy under the National Flood Insurance Program."
(ii) "This policy does not meet the definition of private flood insurance contained in 42 USC 4012a(b)(7) and the corresponding regulation." A certification made under this subparagraph (ii) shall also contain a separate statement providing: "This policy provides less coverage than the standard flood insurance policy under the National Flood Insurance Program."
(b) The certifications required pursuant to this subsection shall be in writing on the declarations page of the policy in bold typed print of not less than a fourteen (14) point font.
SECTION 7. Section 83-2-1, Mississippi Code of 1972, is amended as follows:
83-2-1. (1) This chapter applies to all forms of property and casualty insurance on risks or operations in this state by any insurer authorized to do business in this state, except:
(a) Accident and health;
(b) Ocean marine insurance;
(c) Reinsurance;
(d) Aircraft liability and aircraft hull insurance;
(e) Title insurance;
(f) Credit accident
and health insurance * * *;
(g) Residential flood insurance under Section (5)(b) of this act.
(2) As used in this chapter:
(a) "Advisory organization" means any person or organization, other than a rate service organization, which assists insurers as authorized by Section 83-2-9(3).
(b) "Joint underwriting" means a voluntary arrangement established on an ad hoc basis to provide insurance coverage for a risk pursuant to which two (2) or more insurers separately contract with the insured at a price and under policy terms agreed upon between the insurers.
(c) "Pool" means a voluntary arrangement other than a residual market mechanism, established on an ongoing basis, pursuant to which two (2) or more insurers participate in the sharing of risks on a predetermined basis. The pool may operate through an association, syndicate or other pooling agreement.
(d) "Rate service organization" means any person or organization which assists insurers in ratemaking or filing as authorized by Section 83-2-9.
(e) The terms "rate service organization" and "advisory organization" do not include joint underwriting organizations, actuarial, legal or other consultants, a single insurer, any employees of an insurer, or insurers under common control or management or their employees or managers.
(f) "Residual market mechanism" means an arrangement, either voluntary or mandated by law, involving participation by insurers in the equitable apportionment among them of insurance which may be afforded applicants who are unable to obtain insurance through ordinary methods.
(g) "Supplementary rate information" includes any manual or plan of rates, classification, rating schedule, minimum premium, policy fee, rating rule, and any other similar information needed to determine the applicable rate in effect or to be in effect.
(h) "Supporting information" means (i) the experience and judgment of the filer and the experience or data of other insurers or organizations relied upon by the filer, (ii) the interpretation of any statistical data relied upon by the filer, (iii) a description of methods used in making the rates, and (iv) other similar information relied upon by the filer.
SECTION 8. This act shall take effect and be in force from and after January 1, 2023.