Bill Text: MS HB888 | 2024 | Regular Session | Comm Sub
Bill Title: Insurance mitigation; revise various provisions related to.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Failed) 2024-04-02 - Died In Committee [HB888 Detail]
Download: Mississippi-2024-HB888-Comm_Sub.html
MISSISSIPPI LEGISLATURE
2024 Regular Session
To: Insurance
By: Representatives Turner, Arnold
House Bill 888
(COMMITTEE SUBSTITUTE)
AN ACT TO AMEND SECTION 27-7-1001, MISSISSIPPI CODE OF 1972, TO DEFINE "DISASTER MITIGATION EXPENSE", "DISASTER RECOVERY EXPENSES" AND "QUALIFIED CATASTROPHE EXPENSES"; TO AMEND SECTION 27-7-1003, MISSISSIPPI CODE OF 1972, TO CLARIFY THAT THE LIMITS ON THE TOTAL AMOUNT THAT MAY BE CONTRIBUTED TO A CATASTROPHE SAVINGS ACCOUNT IS AN ANNUAL LIMIT; TO AMEND SECTION 27-7-1005, MISSISSIPPI CODE OF 1972, TO CLARIFY THAT CATASTROPHE SAVINGS ACCOUNTS MAY BE USED FOR QUALIFIED DISASTER MITIGATION EXPENSES; TO AMEND SECTION 83-1-191, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT THE MISSISSIPPI COMPREHENSIVE HURRICANE AND WIND DAMAGE MITIGATION TRUST FUND SHALL FUND THE COMPREHENSIVE HURRICANE AND WIND DAMAGE MITIGATION PROGRAM; TO ADD "WIND" TO THE MISSISSIPPI COMPREHENSIVE HURRICANE DAMAGE MITIGATION PROGRAM; TO DELETE THE REPEALER; TO CREATE A SPECIAL FUND IN THE STATE TREASURY TO BE DESIGNATED AS THE "MISSISSIPPI COMPREHENSIVE HURRICANE AND WIND DAMAGE MITIGATION PROGRAM TRUST FUND"; TO AMEND SECTION 83-2-33, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT ALL PROPERTY AND CASUALTY INSURANCE COMPANIES DOING BUSINESS IN THIS STATE SHALL CONTRIBUTE, IN PROPORTION TO THEIR GROSS PREMIUMS, TO THE MISSISSIPPI COMPREHENSIVE HURRICANE AND WIND DAMAGE MITIGATION PROGRAM TRUST FUND; TO PROVIDE THAT TOTAL CONTRIBUTIONS COLLECTED FOR THE MISSISSIPPI COMPREHENSIVE HURRICANE AND WIND DAMAGE MITIGATION PROGRAM TRUST FUND SHALL NOT EXCEED ONE MILLION FIVE HUNDRED THOUSAND DOLLARS; TO TRANSFER FIVE MILLION DOLLARS FROM THE MISSISSIPPI SURPLUS LINES ASSOCIATION TO THE MISSISSIPPI COMPREHENSIVE HURRICANE AND WIND DAMAGE MITIGATION PROGRAM TRUST FUND; TO BRING FORWARD SECTION 83-2-3, MISSISSIPPI CODE OF 1972, FOR THE PURPOSE OF POSSIBLE AMENDMENTS; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. Section 27-7-1001, Mississippi Code of 1972, is amended as follows:
27-7-1001. As used in this article, the following terms shall have the meanings as defined in this section:
(a) "Catastrophe
savings account" means a regular savings account or money market account
established by an insurance policyholder who is a state income taxpayer (i) to
pay an insurance deductible under an insurance policy that covers the taxpayer's
legal residence that covers hurricane, flood, windstorm or other catastrophic
event damage, (ii) to pay for catastrophic event damage to the taxpayer's legal
residence that is not covered by the policy of insurance that covers the
taxpayer's legal residence for such damage after the deductible under such
policy has been paid, * * *
(iii) to pay self-insured losses for the taxpayer's legal residence from a
hurricane, flood, windstorm, or other catastrophic event, or (iv) to pay qualified
disaster mitigation expenses. The account must be labeled as a "catastrophe
savings account" in order to qualify as a catastrophe savings account for
the purposes of this article. A taxpayer may establish only one (1) catastrophe
savings account and shall specify that the purpose of the account is to cover
the aggregate amount of insurance policy deductibles and other uninsured
portions of risks of loss from a hurricane, flood, windstorm or other
catastrophic event or disaster mitigation expenses.
(b) "Catastrophic event" means windstorms, cyclones, earthquakes, hurricanes, ice storms, tornadoes, high winds, flood, hail and force majeure, and similar perils not normally among those covered under most property casualty insurance policies, but obtainable through the purchase of wind, wind and hail, flood, or storm or windstorm coverage, or any combination of those coverages. The term "catastrophic event" also includes any event or occurrence for which a Presidential declaration of disaster or declaration of disaster by the Governor is issued.
(c) "Disaster mitigation expenses" means expenses for any of the following with respect to the taxpayer's legal residence:
(i) Tornado safe rooms manufactured or constructed in accordance with FEMA 320 or FEMA 361 guidance or tornado shelters manufactured or constructed in accordance with the National Storm Shelter/International Code Council 500 standard.
(ii) Opening protection, including impact and wind resistance windows, exterior doors and garage doors.
(iii) Reinforcement of roof-to-wall and floor-to-wall connection for wind or seismic activity.
(iv) Roof covering for impact, fire or high wind resistance.
(v) Cripple and shear walls to resist seismic activity.
(vi) Flood resistance building materials.
(vii) Elevating structures and utilities above base flood elevation.
(viii) Fire resistance exterior wall assemblies/systems.
(ix) Lightning protection systems.
(x) Whole home standby generators.
(xi) Any activity specified by the Commissioner of Insurance as appropriate to mitigate the risks of future hazards (including earthquake, flood, hail, wind, hurricane, sinkhole, lightning, power outage, tornado, wildfire and other natural disasters.
(d) "Disaster recovery expenses" means, with respect to the taxpayer's legal residence, any expense incurred to replace or repair catastrophic event related uninsured personal property losses totaling One Thousand Dollars ($1,000.000) or greater.
(e) "Qualified catastrophe expenses" means disaster mitigation expenses and disaster recovery expenses.
SECTION 2. Section 27-7-1003, Mississippi Code of 1972, is amended as follows:
27-7-1003. (1) Except as otherwise provided in Section 27-7-1005, the amounts contributed to a catastrophe savings account in accordance with subsection (3) of this section, interest income earned on a catastrophe savings account, and distributions from a catastrophe savings account shall be excluded from the taxable gross income of the account holder under Section 27-7-15.
(2) A catastrophe savings account is not subject to attachment, levy, garnishment, or legal process in this state, provided that no funds in an account are derived from or the result of a fraudulent conveyance making contributions to the account.
(3) The total amount that may be contributed annually to a catastrophe savings account shall not exceed any of the following:
(a) In the case of an individual whose qualified insurance deductible is less than or equal to One Thousand Dollars ($1,000.00), the amount of Two Thousand Dollars ($2,000.00).
(b) In the case of an individual whose qualified insurance deductible is greater than One Thousand Dollars ($1,000.00), the amount equal to the lesser of Fifteen Thousand Dollars ($15,000.00) or twice the amount of the taxpayer's qualified insurance deductible.
(c) In the case of a self-insured individual who chooses not to obtain insurance on his or her legal residence, the amount of Three Hundred Fifty Thousand Dollars ($350,000.00), but in no event may the amount contributed exceed the value of the taxpayer's legal residence.
(4) If a taxpayer contributes in excess of the limits provided in subsection (3) of this section, the taxpayer shall withdraw the amount of the excess contributions and include that amount in the taxable gross income of the taxpayer in the year of withdrawal.
SECTION 3. Section 27-7-1005, Mississippi Code of 1972, is amended as follows:
27-7-1005. (1) A distribution from a catastrophe savings account shall be included in the taxable gross income of the taxpayer unless the amount of the distribution is used to pay qualified catastrophe expenses or qualified disaster mitigation expenses.
(2) No amount of a distribution shall be included in the taxable gross income of the taxpayer if the qualified catastrophe expenses and qualified disaster mitigation expenses of the taxpayer during the taxable year are equal to or greater than the aggregate distributions during the taxable year.
(3) If the aggregate distributions exceed the qualified catastrophe expenses and qualified disaster mitigation expenses during the taxable year, the amount otherwise included in the taxable gross income of the taxpayer shall be reduced by the amount of the distributions for qualified catastrophe expenses and qualified disaster mitigation expenses.
(4) (a) The tax paid under Section 27-7-5 that is attributable to a taxable distribution shall be increased by two and one-half percent (2-1/2%) of the amount of the distribution that is includable in the taxable gross income of the taxpayer.
(b) The additional tax imposed by this subsection does not apply if either of the following apply:
(i) The taxpayer no longer owns a legal residence that qualifies for homestead exemption under Section 27-33-1 et seq.; or
(ii) The distribution is from a catastrophe savings account conforming with Section 27-7-1003(3)(c) and is made on or after the date on which the taxpayer attains the age of seventy (70) years.
(5) If a taxpayer who owns a catastrophe savings account dies, the amount of money in his or her account shall be included in the taxable gross income of the person who receives the account, unless that person is the surviving spouse of the taxpayer. Upon the death of the surviving spouse, the amount of money in the account shall be included in the taxable gross income of the person who receives the account. The additional tax imposed in subsection (4) of this section does not apply to a distribution from the account upon the death of the taxpayer or the surviving spouse.
SECTION 4. Section 83-1-191, Mississippi Code of 1972, is amended as follows:
83-1-191. (1) There is established
within the Department of Insurance a Comprehensive Hurricane and Wind Damage
Mitigation Program. This section does not create an entitlement for property owners
or obligate the state in any way to fund the inspection or retrofitting of residential
property or commercial property in this state. * * * The
Mississippi Comprehensive Hurricane and Wind Damage Mitigation Trust Fund, upon
appropriation from the Legislature, shall fund this program. The Department of
Insurance may contract with a third-party vendor to administer this program; however,
in entering into any such contract, the provisions of the public purchasing laws
on state contracts shall be followed and may expend not more than ten percent (10%)
of the monies in the fund for the administration and management of the fund and
carrying out the purposes of this section. The program may develop and implement
a comprehensive and coordinated approach for hurricane and wind damage mitigation
that may include the following:
(a) Cost-benefit study on wind hazard mitigation construction measures. The performance of a cost-benefit study to establish the most appropriate wind hazard mitigation construction measures for both new construction and the retrofitting of existing construction for both residential and commercial facilities within the wind-borne debris regions of Mississippi as defined by the International Building Code. The recommended wind construction techniques shall be based on both the newly adopted Mississippi building code sections for wind load design and the wind-borne debris region. The list of construction measures to be considered for evaluation in the cost-benefit study shall be based on scientifically established and sound, but common, construction techniques that go above and beyond the basic recommendations in the adopted building codes. This allows residents to utilize multiple options that will further reduce risk and loss and still be awarded for their endeavors with appropriate wind insurance discounts. It is recommended that existing accepted scientific studies that validate the wind hazard construction techniques benefits and effects be taken into consideration when establishing the list of construction techniques that homeowners and business owners can employ. This will ensure that only established construction measures that have been studied and modeled as successful mitigation measures will be considered to reduce the chance of including risky or unsound data that will cost both the property owner and state unnecessary losses. The cost-benefit study shall be based on actual construction cost data collected for several types of residential construction and commercial construction materials, building techniques and designs that are common to the region. The study shall provide as much information as possible that will enhance the data and options provided to the public, so that homeowners and business owners can make informed and educated decisions as to their level of involvement. Based on the construction data, modeling shall be performed on a variety of residential and commercial designs, so that a broad enough representative spectrum of data can be obtained. The data from the study will be utilized in a report to establish tables reflecting actuarially appropriate levels of wind insurance discounts (in percentages) for each mitigation construction technique/combination of techniques. This report will be utilized as a guide for the Department of Insurance and the insurance industry for developing actuarially appropriate discounts, credits or other rate differentials, or appropriate reductions in deductibles, for properties on which fixtures or construction techniques demonstrated to reduce the amount of loss in a windstorm have been installed or implemented. Additional data that will enhance the program, such as studies to reflect property value increases for retrofitting or building to the established wind hazard mitigation construction techniques and cost comparison data collected to establish the value of this program against the investment required to include the mitigation measures, also may be provided.
(b) Wind certification and hurricane mitigation inspections.
(i) Home-retrofit inspections of site-built, residential property, including single-family, two-family, three-family or four-family residential units, and a set of representative commercial facilities may be offered to determine what mitigation measures are needed and what improvements to existing residential properties are needed to reduce the property's vulnerability to hurricane or wind damage. A state program may be established within the Department of Insurance to provide homeowners and business owners wind certification and hurricane mitigation inspections. The inspections provided to homeowners and business owners, at a minimum, must include:
1. A home inspection and report that summarizes the results and identifies corrective actions a homeowner may take to mitigate hurricane or wind damage.
2. A range of cost estimates regarding the mitigation features.
3. Insurer-specific information regarding premium discounts correlated to recommended mitigation features identified by the inspection.
4. A hurricane resistance rating scale specifying the home's current as well as projected wind resistance capabilities.
This data may be provided by trained and certified inspectors in standardized reporting formats and forms to ensure all data collected during inspections is equivalent in style and content that allows construction data, estimates and discount information to be easily assimilated into a database. Data pertaining to the number of inspections and inspection reports may be stored in a state database for evaluation of the program's success and review of state goals in reducing wind hazard loss in the state.
(ii) To qualify for selection by the department as a provider of wind certification and hurricane mitigation inspections services, the entity shall, at a minimum, and on a form and in the manner prescribed by the commissioner:
1. Use wind certification and hurricane mitigation inspectors who:
a. Have prior experience in residential and/or commercial construction or inspection and have received specialized training in hurricane and wind mitigation procedures through the state certified program. In order to qualify for training in the inspection process, the individual should be either a licensed building code official, a licensed contractor or inspector in the State of Mississippi, or a civil engineer.
b. Have undergone drug testing and background checks.
c. Have been certified through a state mandated training program, in a manner satisfactory to the department, to conduct the inspections.
d. Have not been convicted of a felony crime of violence or of a sexual offense; have not received a first-time offender pardon or nonadjudication order for a felony crime of violence or of a sexual offense; or have not entered a plea of guilty or nolo contendere to a felony charge of violence or of a sexual offense.
e. Submit a statement authorizing the Commissioner of Insurance to order fingerprint analysis or any other analysis or documents deemed necessary by the commissioner for the purpose of verifying the criminal history of the individual. The commissioner shall have the authority to conduct criminal history verification on a local, state or national level, and shall have the authority to require the individual to pay for the costs of such criminal history verification.
2. Provide a quality assurance program including a reinspection component.
3. Have data collection equipment and computer systems, so that data can be submitted electronically to the state's database of inspection reports, insurance certificates, and other industry information related to this program. It is mandatory that all inspectors provide original copies to the property owner of any inspection reports, estimates, etc., pertaining to the inspection and keep a copy of all inspection materials on hand for state audits.
(c) Financial grants to retrofit properties. Financial grants may be used to encourage single-family, site-built, owner-occupied, residential property owners or commercial property owners to retrofit their properties to make them less vulnerable to hurricane and wind damage.
(d) Education and consumer awareness. Multimedia public education, awareness and advertising efforts designed to specifically address mitigation techniques may be employed, as well as a component to support ongoing consumer resources and referral services. In addition, all insurance companies shall provide notification to their clients regarding the availability of this program, participation details, and directions to the state website promoting the program, along with appropriate contact phone numbers to the state agency administrating the program. The notification to the clients must be sent by the insurance company within thirty (30) days after filing their insurance discount schedules with the Department of Insurance.
(e) Advisory council. There is created an advisory council to provide advice and assistance to the program administrator with regard to his or her administration of the program. The advisory council shall consist of:
(i) An agent, selected by the Independent Insurance Agents of Mississippi.
(ii) Two (2) representatives of residential property insurers, selected by the Department of Insurance.
(iii) One (1) representative of homebuilders, selected by the Home Builders Association of Mississippi.
(iv) The Chairman of the House Insurance Committee, or his designee.
(v) The Chairman of the Senate Insurance Committee, or his designee.
(vi) The Executive Director of the Mississippi Windstorm Underwriting Association, or his designee.
(vii) The Director of the Mississippi Emergency Management Agency, or his designee.
Members appointed under subparagraphs (i) and (ii) shall serve at the pleasure of the Department of Insurance. All other members shall serve as voting ex officio members. Members of the advisory council who are not legislators, state officials or state employees shall be compensated at the per diem rate authorized by Section 25-3-69, and shall be reimbursed in accordance with Section 25-3-41, for mileage and actual expenses incurred in the performance of their duties. Legislative members of the advisory council shall be paid from the contingent expense funds of their respective houses in the same manner as provided for committee meetings when the Legislature is not in session; however, no per diem or expense for attending meetings of the advisory council may be paid while the Legislature is in session. No advisory council member may incur per diem, travel or other expenses unless previously authorized by vote, at a meeting of the council, which action shall be recorded in the official minutes of the meeting. Nonlegislative members shall be paid from any funds made available to the advisory council for that purpose.
(f) Rules and regulations.
The Department of Insurance may adopt rules and regulations * * * as necessary for the administration
and implementation of the Comprehensive Hurricane and Wind Damage Mitigation
Program. * * *
(2) Nothing in this section shall prohibit the Department of Insurance from entering into an agreement with any other appropriate state agency to assist with or perform any of the duties set forth hereunder.
* * *
SECTION 5. There is created in the State Treasury a special fund to be designated as the "Mississippi Comprehensive Hurricane and Wind Damage Mitigation Program Trust Fund." The Legislature may appropriate the amount necessary to fulfill the obligations created under this act from the State General Fund to such special fund. Furthermore, the Commissioner of Insurance is authorized to apply for any federal or private grants that will provide funds for this program. 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.
SECTION 6. Section 83-2-33, Mississippi Code of 1972, is amended as follows:
83-2-33. All property and
casualty insurance companies doing business in this state shall contribute
annually, at such times as the Insurance Commissioner shall determine, in
proportion to their gross premiums collected within the State of Mississippi during
the preceding year, to a special fund in the State Treasury to be known as the * * * "Mississippi
Comprehensive Hurricane and Wind Damage Mitigation Program Trust Fund".
The commissioner is hereby authorized to employ such actuarial and other
assistance as shall be necessary to carry out the duties of the department; and
such employees shall be under the authority and direction of the Insurance
Commissioner. The amount to be contributed annually to the fund shall be fixed
each year by the Insurance Commissioner at a percentage of the gross premiums
so collected during the preceding year. However, a minimum assessment of One
Hundred Dollars ($100.00) shall be charged to each licensed property and casualty
insurance company regardless of the gross premium amount collected during the
preceding year.
The total contributions collected
for the * * * Mississippi Comprehensive Hurricane and Wind Damage
Mitigation Program Trust Fund shall not exceed the sum of * * *
One Million Five Hundred Thousand Dollars ($1,500,000.00) in each fiscal
year.
* * *
From and after July 1, 2016, no state agency shall charge another state agency a fee, assessment, rent or other charge for services or resources received by authority of this section.
SECTION 7. Upon the effective date of this act, the State Treasurer, in conjunction with the State Fiscal Officer, shall transfer the sum of Five Million Dollars ($5,000,000.00) from the Mississippi Surplus Lines Association to the Mississippi Comprehensive Hurricane and Wind Damage Mitigation Program Trust Fund.
SECTION 8. Section 83-2-3, Mississippi Code of 1972, is brought forward as follows:
83-2-3. (1) Rates shall comply with the following standards:
(a) Rates shall not be excessive, inadequate or unfairly discriminatory.
(b) A rate is excessive if it is likely to produce a profit that is unreasonably high for the insurance provided or if the expense provision included therein is unreasonably high in relation to the services rendered.
(c) A rate is inadequate if it threatens the solvency of the insurance company or tends to create a monopoly.
(d) Unfair discrimination exists if, after allowing for practical limitations, price differentials fail to reflect equitably the differences in expected losses and expenses. A rate is not unfairly discriminatory because different premiums result for policyholders with like loss exposures with different expenses, or like expenses but different loss exposures, so long as the rate reflects the differences with reasonable accuracy.
(2) In determining whether rates comply with the standards set forth in subsection (1), the following criteria shall apply:
(a) Due consideration shall be given to past and prospective loss and expense experience within and outside this state; to catastrophe hazards; to any residual market loss redistributions and other similar obligations; to a reasonable provision for profit and contingencies; to trends within and outside this state; to loadings for leveling premium rates over a reasonable period of time or for dividends or savings to be allowed or returned by insurers to their policyholders, members or subscribers; and to all other relevant factors, including the judgment of the filer.
(b) Risks may be classified in any reasonable way for the establishment of rates except that no risks may be grouped by classifications based, in whole or in part, on race, color, creed, or national origin of the risk. Rates may be modified for individual risks in accordance with rating plans or schedules which provide for recognition of probable variations in hazards, expenses or both.
(c) The systems of expense provisions included in rates for use by an insurer or group of insurers may differ from those of other insurers or group of insurers to reflect the operating methods of such insurer or group with respect to any kind of insurance, or with respect to any subdivision or combination thereof.
(d) Any homeowners' insurance policy filed with the Commissioner of Insurance that offers a percentage deductible for the peril of windstorm from a named storm shall offer a buy-back provision for that deductible which is actuarially sound; however, the Commissioner of Insurance may grant a waiver from the mandatory buy-back provision in accordance with the following procedure and criteria:
(i) An insurance company shall make a formal filing requesting a waiver from the buy-back provision requirement with the Commissioner of Insurance.
(ii) An insurance company shall submit written proof in its formal filing as to why it is in the best interest of Mississippi policyholders to receive a waiver from the buy-back provision requirement and shall provide any supporting documentation requested by the commissioner deemed appropriate to make his decision.
(iii) All expenses incurred by the Commissioner of Insurance or his designee in determining the validity of the waiver request shall be borne by the petitioning insurer. Such expenses may include, but not be limited to, the cost of reviewing the filing by actuaries, and if the commissioner deems a public hearing appropriate, the cost of a facility, the cost of publicity and the cost of a court reporter for the hearing.
(e) The commissioner shall establish by regulation uniform policy language regarding the applicability of hurricane deductibles and the form of notice to be provided to an insured under a homeowner's insurance policy by an insurer utilizing a hurricane deductible program or programs. The term "hurricane," for the purpose of a hurricane deductible program, means a storm system that has been declared to be a hurricane by the National Hurricane Center of the National Weather Service. The duration of the hurricane includes the time period, in Mississippi:
(i) Beginning at the time a hurricane watch or hurricane warning is issued for any part of Mississippi by the National Hurricane Center of the National Weather Service;
(ii) Continuing for the time period during which the hurricane conditions exist anywhere in Mississippi; and
(iii) Ending twenty-four (24) hours following the termination of the last hurricane watch or hurricane warning issued for any part of Mississippi by the National Hurricane Center of the National Weather Service.
(3) To ensure the most appropriate use of state resources with respect to the engagement of actuarial services for the review of rate filings under this chapter, the commissioner may adopt rules and regulations to establish the criteria and procedures for determining when a rate filing should be submitted to an actuary for review.
SECTION 9. This act shall take effect and be in force from and after July 1, 2024.
