MS Windstorm Underwriting Association; divert nonadmitted policy fee to the State and School Employees' Insurance Fund.
The bill requires that beginning December 31, 2022, and annually thereafter, the fees collected will be diverted to the State and School Employees' Insurance Fund, unless the association's total admitted assets fall below a specified threshold of $250 million. This diversion of funds is significant as it aims to support state and school employee insurance and potentially enhance the overall fiscal responsibility of the association around insurance premiums. The provision to delay fund diversion based on asset valuation suggests an intention to manage economic stability within the insurance framework.
Senate Bill 2450 aims to amend Section 83-34-4 of the Mississippi Code of 1972 concerning the collection and allocation of the nonadmitted policy fee levied on premiums for insurance written by surplus lines insurers. The bill mandates that a percentage (3%) of the total policy premium, which is defined to include taxes and commissions, be collected by surplus lines insurance producers and remitted to the Mississippi Windstorm Underwriting Association. This fee specifically does not apply to policies covering residential earthquake or flood risks that are not part of the National Flood Insurance Program.
The discussion surrounding SB2450 has been generally supportive, particularly among legislators who recognize the need for a designated funding stream to assist state and school employee insurance programs. This highlights a broader legislative trend towards ensuring sustainable funding for critical public services. However, there are concerns among some stakeholders about the implications of diverting fees from their initial purpose, which could lead to potential operational challenges within the Windstorm Underwriting Association if funding flows are not adequately managed.
Notable contention points arose around the stipulations regarding the diversion based on the association's asset value, with some stakeholders questioning the adequacy of this threshold to ensure that the organization remains financially stable. Critics of the bill might argue that diverting such funds could undermine the intended benefits of the nonadmitted policy fee, while supporters advocate for the need to bolster state and school funding mechanisms to address growing insurance challenges.