MCA Chapter 38

in effect

Miss. Code Ann. § 83-38-1 Purpose of chapter.

The Legislature finds that an adequate market for fire and extended coverage insurance is necessary to the economic welfare of the State of Mississippi and that without adequate and affordable insurance the orderly growth and development of the State of Mississippi is severely impeded; that insurance upon residential property in Mississippi is necessary; that while the need for such insurance is increasing, the market for such insurance is not adequate; and that the existing Mississippi Rural Risk Underwriting Association Law that provides a residual market for residential property insurance in rural areas of the state should be expanded to provide a residual market for residential property insurance in both rural areas and other areas of the state. It is the purpose of this chapter to provide a mandatory program to assure an adequate market for residential fire and extended coverage insurance in both the rural and other areas of Mississippi.

Miss. Code Ann. § 83-38-3 Definitions.

In this chapter, unless the context otherwise requires: “Essential property insurance,” in all counties of the state except the coastal area as defined in paragraph (i), means insurance against direct loss to residential property as provided by a standard fire policy and extended coverage endorsement thereon, with terms, limits, deductibles, endorsements and exclusions as approved by the Mississippi Insurance Commissioner. “Essential property insurance” in the coastal area as defined in paragraph (i) means insurance against direct loss to residential property as provided by a standard fire policy and extended coverage endorsement thereon, with terms, limits, deductibles, endorsements and exclusions as approved by the Mississippi Insurance Commissioner, except for the risks of wind and hail storm, which shall be excepted from coverage. The Mississippi Residential Property Underwriting Association is not required to insure the risks of wind and hail storm in the coastal area as defined in paragraph (i). For the purposes of this chapter, essential property insurance coverage shall be limited to ninety-five percent (95%) of the market value of real and personal property that is insured by the association, excluding the value of land. “Association” means the Mississippi Residential Property Insurance Underwriting Association established pursuant to the provisions of this chapter as the successor for the Mississippi Rural Risk Underwriting Association. “Plan of operation” means the plan of operation of the association approved or promulgated by the Mississippi Insurance Commissioner pursuant to the provisions of this chapter. “Insurable interest” means any lawful and substantial economic interest in the safety or preservation of property from loss, destruction or pecuniary damage. “Insurable property” means residential builder’s risk and residential real property or the contents located therein, but shall not include insurance on motor vehicles, which property is determined by the association after inspection and pursuant to the criteria specified in the plan of operation, to be in an insurable condition; provided, however, any one- and two-family dwelling including, but not limited to, permanently installed manufactured housing built in substantial accordance with the local building code if applicable, which is not otherwise rendered uninsurable by reason of use, occupancy or state of repair, shall be an insurable risk within the meaning of this chapter, but neighborhood, area, location, environmental hazards beyond the control of the applicant or owner of the property shall not be considered in determining insurable condition. “Commissioner” means the Mississippi Insurance Commissioner as provided in Section 83-1-3. “Net direct premiums” means gross direct premiums, excluding reinsurance assumed and ceded, written on property in this state for residential fire and extended coverage insurance, including the fire and extended coverage components of comprehensive dwelling policies and homeowner policies but not including premiums on farm property, less return premiums upon cancelled contracts, dividends paid or credited to the policyholders or the unused or unabsorbed portion of premium deposits. “Rural areas” means all areas in the State of Mississippi designated as fire protection Class 9 or 10 by the Mississippi State Rating Bureau. “Coastal areas” means Hancock, Harrison and Jackson Counties.

Miss. Code Ann. § 83-38-5 Mississippi Residential Property Insurance Underwriting Association.

The Mississippi Rural Risk Insurance Association is modified and expanded as provided in this chapter and shall hereafter be known as the Mississippi Residential Property Insurance Underwriting Association. The Mississippi Residential Property Insurance Underwriting Association shall consist of all insurers authorized to write and engaged in writing property insurance within this state on a direct basis. Every such insurer shall be a member of the association and shall remain a member of the association so long as the association is in existence, as a condition of its authority to continue to transact the business of insurance in this state.

Miss. Code Ann. § 83-38-7 Powers of association.

The association, pursuant to the provisions of this chapter and the plan of operation and with respect to essential property insurance on insurable property, shall have the power on behalf of its members: To cause to be issued policies of insurance to applicants; To assume reinsurance from its members; To cede reinsurance to its members and to purchase reinsurance in behalf of its members.

Miss. Code Ann. § 83-38-9 Association board of directors.

The Board of Directors of the Mississippi Rural Risk Underwriting Association serving on July 1, 2003, shall serve as the Board of Directors of the Mississippi Residential Property Insurance Underwriting Association until such time as new directors are elected or appointed as provided in the plan of operation. The permanent board shall consist of five (5) representatives of members of the association and two (2) agents from the state. The agent board members shall be appointed annually by the Commissioner of Insurance. Members of the board shall serve without salary, but shall receive per diem compensation under Section 25-3-69 while attending to business of the association; members shall be reimbursed for travel expenses incurred in the discharge of their duties; all per diem compensation and travel reimbursement shall be approved by the board prior to being incurred.

Miss. Code Ann. § 83-38-11 Benefits and obligations of association members; determination of participation.

All members of the association shall participate in its writings, expenses, profits, and losses in the proportion that the net direct premium of such member written in this state during the preceding calendar year bears to the aggregate net direct premiums written in this state by all members of the association, as certified to the association by the commissioner after review of annual statements, other reports, and any other statistics the commissioner shall deem necessary to provide the information herein required and which the commissioner is hereby authorized and empowered to obtain from any member of the association. A member shall receive credit annually for essential property insurance voluntarily written in rural and coastal areas, and its participation in the writings of the association shall be reduced in accordance with the provisions of the plan of operation. The participation of each member in the association shall be determined annually.

Miss. Code Ann. § 83-38-13 Association plan of operation; approval and certification; amendment.

The directors of the association shall maintain a plan of operation to carry out the purposes of this chapter. Such plan shall grant proper credit annually to each member of the association for essential property insurance voluntarily written in the rural and coastal areas of the state, shall provide for a method of computing rates that is actuarially sound and shall provide for the efficient, economical, fair and nondiscriminatory administration of the association. The plan may include a method for assessment of all members for expenses necessary to operate the association, selection of directors from the members of the association, assessment of members to defray losses and expenses, underwriting standards, procedures for the acceptance and cession of reinsurance, procedures for determining the amount of insurance to be provided to specific risks, time limits and procedures for processing applications for insurance, and other provisions as may be deemed necessary by the commissioner to carry out the purposes of this chapter. The plan of operation and any proposed amendments thereto are subject to review and approval by the commissioner to fulfill the purposes provided by Section 83-38-1. In the review of the plan, the commissioner may consult with the directors of the association and may seek any further information which is necessary for a decision. If the commissioner approves the plan, the commissioner shall certify such approval to the directors, and the plan shall become effective after such certification. If the commissioner disapproves all or any part of the plan of operation, the commissioner shall return the same to the directors with a written statement of the reasons for disapproval and any recommendations. The directors may alter the plan in accordance with the commissioner’s recommendation or, within thirty (30) days from the date of disapproval, may return a new plan to the commissioner. Should the directors fail to submit a proposed plan of operation which is acceptable to the commissioner, or accept the recommendation of the commissioner within thirty (30) days after disapproval of the plan, the commissioner shall promulgate and place into effect a plan of operation certifying the same to the directors of the association. A plan promulgated by the commissioner shall take effect thirty (30) days after certification to the directors. The directors of the association, subject to the approval of the commissioner, may amend the plan of operation at any time. The commissioner may review the plan of operation at any time deemed expedient or prudent, but not less than once in each calendar year.

Miss. Code Ann. § 83-38-15 Application for coverage; forms; commission; issuance of policy; renewal.

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. Such application may be made on behalf of the applicant by a broker or agent licensed in Mississippi authorized by him. Every such application shall be submitted on forms prescribed by the association after consultation with the commissioner. The application shall contain an inquiry as to whether there are unpaid premiums due from the applicant for fire insurance on the property. The commission paid to the submitting broker or agent shall be equal to ten percent (10%) of the premium collected. 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 a policy of essential property insurance for a term of one (1) year. Any policy issued pursuant to the provisions of this section shall be renewed annually so long as: The property continues to meet the definition of “insurable property” set forth in Section 83-38-3(e); A properly completed application for renewal shall have been received by the association on or before the date of renewal; and Property premiums have been received by the association on or before the date of renewal. If the association for any reason denies an application and refuses to 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 member of the staff of the Insurance Department designated by the commissioner, after reviewing the facts, may determine if the association acted in accordance with the law and the plan of operation. In carrying out the duties pursuant to this section, the commissioner may request, and the association shall provide, any information deemed necessary to a determination concerning the reasons for the denial or delay of the application.

Miss. Code Ann. § 83-38-17 Rate requirements.

The forms, rates, rating plans, and rating rules applicable to the insurance written by the association shall be those approved for use of the association by the commissioner. Surcharges may be used as approved by the commissioner. Rates shall be actuarially sound and nondiscretionary as to the same class of risk.

Miss. Code Ann. § 83-38-19 Appeals to commissioner by persons aggrieved; related procedures; subsequent appeals to Chancery Court.

Any person insured pursuant to this chapter, or his representative, or any affected insurer who may be aggrieved by an act, ruling, or decision of the association, within thirty (30) days after such ruling, is entitled to appeal to the commissioner. A hearing before the commissioner upon such appeal shall be in accordance with the procedures promulgated by the commissioner. The commissioner is authorized to appoint a member of the Insurance Department staff for the purpose of hearing such appeals, and a ruling based upon such hearing shall have the same effect as if heard by the commissioner. All persons or insureds aggrieved by any order or decision of the commissioner may appeal, within thirty (30) days of such order or decision to the Chancery Court of the First Judicial District of Hinds County.

Miss. Code Ann. § 83-38-21 Availability of reports on inspections by association.

All reports of inspection performed by or on behalf of the association are available to the members of the association, applicants, agents, brokers and the commissioner.

Miss. Code Ann. § 83-38-23 Nonliability of commissioner, association, or insurers for good faith statements.

There shall be no liability on the part of and no cause of action of any nature shall arise against the Commissioner of Insurance or any of his staff, the association or its directors, agents or employers, or against any participating insurer for any inspections made hereunder or any statements made in good faith by them in any reports or communications concerning risks submitted to the association, or at any administrative hearings conducted in connection therewith under the provisions of this chapter.

Miss. Code Ann. § 83-38-25 Annual summary of association activity.

The association shall file in the office of the commissioner on or before March 1 of each year a statement which summarizes the transactions, conditions, operations and affairs of the association during the preceding fiscal year ending December 31. The statement shall contain such matters and information and be in a form prescribed by the commissioner. At any time the commissioner may require the association to furnish any additional information with respect to its transactions or any other matter which the commissioner deems to be material in evaluating the operation and experience of the association.

Miss. Code Ann. § 83-38-27 Examination of association affairs; public hearings; related expenses borne by association.

The commissioner may make an examination into the affairs of the association at any time. In undertaking such examination, the commissioner is empowered to hold a public hearing. The expenses of such examination shall be borne and paid by the association.

Miss. Code Ann. § 83-38-29 Rules and regulations.

The commissioner is empowered to make reasonable rules and regulations, not inconsistent with law, to enforce, carry out, and make effective the provisions of this chapter.