Surcharge for excess covered event losses on all property and casualty premiums; issuance of bonds to pay claims losses; exempted premiums; purpose of certain surcharges to be designated and specifically identified; licensed insurers and agents to collect and remit surcharges; setting and adjustment of surcharge percentage; cessation of surcharge
Surcharge for excess covered event losses on all property and casualty premiums; issuance of bonds to pay claims losses; exempted premiums; purpose of certain surcharges to be designated and specifically identified; licensed insurers and agents to collect and remit surcharges; setting and adjustment of surcharge percentage; cessation of surcharge
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When the association knows or has reason to believe that (a) it has or will incur losses from a covered event that exceeds available surplus, reinsurance, recoupable or nonrecoupable assessments and other reasonably available assets of the association, such that one or more bond issues or other financing, or both, will be necessary to pay claims losses and other related expenses, or (b) the association has an excess deficit that cannot be reasonably resolved by income available to the association above the minimum reserve, then the association shall immediately give notice to the commissioner and request that the commissioner implement an excess deficit surcharge on all property and casualty insurance premiums for insurance for property and operations in this state designed to recover to the association the amount of all such bonds and other indebtedness resulting from the covered event, or other deficit.
All such bonds and loans are secured by the power and duty of the commissioner to implement surcharges against all property and casualty insurance premiums for insurance for property and activities in this state sufficient to repay the bonds or loans, or both.
If any of the bonds remain unsold sixty (60) days after issuance, the commissioner shall require all assessable insurers to purchase the bonds, which purchased bonds shall be treated as admitted assets; each assessable insurer shall be required to purchase that percentage of the unsold portion of the bond issue that equals the assessable insurer's current percentage of participation. An assessable insurer shall not be required to purchase the bonds to the extent that the commissioner determines that the purchase would endanger or impair the solvency of the insurer. The bonds must be in a form approved by the commissioner. With approval of the commissioner, the association may issue bonds or incur other indebtedness to retire or consolidate bonds as appropriate. Bonds and other debt obligations issued by or on behalf of the association are not to be considered "state bonds" and shall not be an obligation of the state.
At such time as the commissioner can reasonably estimate the amount of bonds or indebtedness, or both, necessitated by a covered event, and in no event more than ninety (90) days from the notice given by the association, the commissioner shall have the duty and the power to implement an excess deficit surcharge on all property and casualty insurance premiums for insurance for property and activities in this state. "Premiums" includes premiums for policies issued by or for the association and by or for the Mississippi Residential Property Insurance Underwriting Association. "Premiums" shall not include premiums for workers' compensation coverage, premiums for medical malpractice liability coverage including medical malpractice liability coverage issued by companies created under Section 83-47-1 et seq., nor any premiums for coverage by insurance pools or plans administered by or through the State of Mississippi.
If the excess deficit surcharge is designed to repay bonds, it shall be designated as such and all funds recovered from the excess deficit surcharge shall be used for repayment of the bonds for which it was implemented, until such time as the bonds have been paid or redeemed.
If the excess deficit surcharge is designed to repay a specific indebtedness incurred for losses from a specific covered event, it shall be designated as such and all funds recovered from the excess deficit surcharge shall be used for repayment of the indebtedness for which it was implemented, until such time as the indebtedness has been paid or redeemed.
Such excess deficit surcharge shall be specifically identified on either the premium statements or the policy declarations pages or other appropriate policy forms as relating to the specific covered event losses or bonds or indebtedness for which it was implemented. The commissioner shall name each such excess deficit surcharge so that it can be uniformly identified by insurers and agents.
The excess deficit surcharge shall be a percentage of the total policy premium but the excess deficit surcharge shall not be considered premium and is not subject to premium taxes or commissions. However, failure to pay the excess deficit surcharge shall be treated the same as failure to pay premium. "Total policy premium" includes taxes and commissions.
The commissioner shall implement an appropriate excess deficit surcharge percentage sufficient to recover the amount necessary for repayment of bonds and indebtedness necessitated by a covered event, or the resolution of other deficit, as applicable. If at any time such surcharge shall be insufficient, the commissioner shall increase the excess deficit surcharge as necessary and appropriate. The commissioner shall cease excess deficit surcharges as he determines appropriate funds have been collected. However, the commissioner shall endeavor to apply excess deficit surcharges on a one-year basis in order to promote consistency, nondiscrimination and fairness among policyholders purchasing or renewing insurance during that year. Any collections in excess of the amounts needed shall be assets of the association for investment and other uses.
Each licensed insurer issuing insurance for property and casualty risks in the state and each agent placing insurance through nonadmitted insurers, shall collect the excess deficit surcharges established by the commissioner under the authority of this section. Funds collected by such licensed insurers and agents placing insurance through nonadmitted insurers as excess deficit surcharges authorized by this section shall be collected and held in trust and shall be fully remitted to the association on a quarterly basis with forms providing appropriate information as designed by the association. Insurers and agents shall remit such funds to the association within twenty (20) days after the end of each quarter. At such time the insurers and agents shall further remit to the association all interest earned on the excess deficit surcharge funds.
The association and the commissioner are both specifically given the power to audit licensed insurers and agents placing insurance through nonadmitted insurers to confirm the accuracy of remittances of excess deficit surcharges at the expense of the licensed insurers and agents.
The commissioner has the duty and power to adjust the percentage of any excess deficit surcharge previously established as he finds appropriate taking into consideration any relevant factors, including, but not limited to, consolidation or replacement of bonds, any additional indebtedness resulting from a covered event, the rate of recovery, anticipated length of total recovery, and impact of other covered events; however, the commissioner shall not reduce the amount of excess deficit surcharges implemented and designated to pay or redeem bonds, or other indebtedness below the amount necessary to timely pay or redeem such bonds, or other indebtedness.
When the association knows or has reason to believe that excess deficit surcharges authorized by this section previously established by the commissioner will be insufficient to timely pay or redeem bonds or indebtedness, the association shall immediately give notice to the commissioner. The commissioner shall alter such excess deficit surcharge as necessary to timely pay or redeem bonds or pay other indebtedness.
The association shall report quarterly to the commissioner providing all financial information for each excess deficit surcharge authorized by this section, including:
The original and current outstanding indebtedness of all bonds and loans;
Total excess deficit surcharge funds recovered to date; and
Any information requested by the commissioner.
The commissioner may request, and the association shall provide, on an immediate basis to the commissioner any financial information or other information concerning any excess deficit surcharge. This section shall not limit the reporting requirements provided by Section 83-34-25.