SB 923 - This act establishes the Missouri Catastrophe Fund to help pay covered residential property damage insurance claims in the aftermath of an earthquake which affects Missouri homeowners and their property/casualty insurers. The fund, which will consist of premiums paid by insurers, bond revenues, and appropriated state funds, will provide a backstop for insurance companies to insure against covered catastrophic losses to avoid the collapse of the property insurance market in the wake of a major earthquake.
REIMBURSEMENT PREMIUMS - Reimbursement premiums for the backstop coverage shall be set by the Director of the Department of Insurance, Financial Institutions and Professional Regulation, who shall select an independent consultant to develop a formula for determining the actuarially indicated premium. The director will calculate premiums based upon the insured values under the insurer's covered policies, as reported annually to the director. In order to provide startup moneys for the administration of the fund, insurers are required to pay to the fund an advance premium of $1,000.
COVERAGE OF LOSSES - In exchange for the reimbursement premium paid to the fund by insurers, the director will enter into a contract with each insurer, promising to reimburse the insurer for a percentage of its losses in excess of the insurer's retention, plus 10% of that amount to cover loss adjustment expenses. The insurer will select the reimbursement percentage, at 45%,75% or 90%, which may be adjusted under certain circumstances. Reimbursement amounts from the fund shall not be reduced by reinsurance paid or payable to the insurer, but the insurer's total recovery shall not exceed 100% of the insurer's losses from covered events, and any excess shall be returned to the fund, unless there is an agreement to the contrary.
INSUFFICIENT FUNDS - The act further authorizes the director to issue bonds if moneys in the fund are insufficient to pay reimbursement at the levels agreed to in the reimbursement contracts, upon the occurrence of a covered event. The act provides that if the director determines that the amount of the actuarially indicated premiums are insufficient to fund revenue bonds to pay the reimbursement contracts, the director shall levy emergency assessments on each property and casualty insurer in the state.
APPROPRIATIONS TO OTHER AGENCIES FOR EMERGENCY PREPAREDNESS - The act also allows, in fiscal years in which there are no outstanding obligations of the fund, the General Assembly to make an appropriation (10% to 35% of the fund's investment income) from the catastrophe fund for the purpose of providing funding for local governments, state agencies, public and private educational institutions, and nonprofit organizations to support programs intended to improve catastrophe preparedness, prevent and reduce potential losses from a covered event, provide research into means to prevent and reduce such losses, educate or inform the public as to means to reduce losses from covered events, assist the public in determining the appropriateness of particular upgrades to structures or in the financing of those upgrades, or protect local infrastructure from potential damage from a covered loss. Moneys from the fund shall not be appropriated if the director finds that an appropriation would jeopardize the actuarial soundness of the fund.
MISSOURI CATASTROPHE FUND ADVISORY COUNCIL - The act establishes the "Missouri Catastrophe Fund Advisory Council" within the Department of Insurance, Financial and Professional Regulation to provide the director with information and advice in connection with the fund. The advisory council shall be comprised of 13 members who shall be appointed by the governor with the advice and consent of the senate.
MULTISTATE OR FEDERAL REINSURANCE OR CATASTROPHIC PROGRAMS - In anticipation of the creation of a federal or multistate catastrophic insurance fund or reinsurance program, the act requires the director, following the creation of such a federal or multistate fund or program, to make recommendations to the General Assembly as to how the catastrophe fund can coordinate with the federal or multistate program and for such other actions as the director determines are appropriate under the circumstances.
This act is identical to HB 1468 (2010) and is similar to SB 877 (2008).