Mississippi House Bill HB1172

Mississippi 2023 Regular Session

• Introduced: 1/16/23
• Refer: 1/16/23
• Engrossed: 2/9/23
• Refer: 2/13/23
• Failed: 2/28/23

Caption

Federal home loan banks; define term and provide process for handling delinquent insurer's secured claim.

Impact

The implications of HB 1172 are particularly significant in the realm of insurance law in Mississippi. By enacting this bill, the Mississippi legislature aims to provide clarity to federal home loan banks about their rights during delinquency procedures related to insurers. The legislation establishes processes to ensure that these banks can protect their interests effectively, potentially streamlining the recovery of secured claims during an insurer's financial distress and boosting confidence in such financial arrangements. Additionally, by delineating the procedures for releasing collateral and repurchasing capital stock, the bill seeks to enhance regulatory frameworks surrounding financial stability within the insurance sector.

Summary

House Bill 1172 concerns the procedures and rights related to collateral in the context of federal home loan banks' delinquency proceedings. The bill proposes amendments to several sections of the Mississippi Code to explicitly define the term 'federal home loan bank' and outline the rights these institutions have when dealing with insurers undergoing delinquency proceedings. It addresses how secured claims on insurers are to be managed and asserts that federal home loan banks should not be hindered in exercising their rights regarding collateral pledged under security agreements.

Sentiment

The sentiment around HB 1172 appears largely supportive among legislators and financial institutions who view the bill as a necessary step toward providing legal clarity and stability in financial dealings involving insurers. Proponents argue that it enhances the security of loans made by federal home loan banks to insurers and supports overall market integrity. However, it may face scrutiny from critics concerned about any potential negative impacts on policyholders or lessors who could be affected in the event of an insurer's insolvency.

Contention

Notable points of contention around HB 1172 revolve around the balance of powers and rights between federal home loan banks and individual insurers. Some stakeholders question whether the bill may create an imbalance that privileges banking institutions over the need for sufficient protections for policyholders and other stakeholders. Additionally, concerns have been raised regarding the equitability of the proposed measures—particularly whether the preemptive rights granted to banks could jeopardize the financial well-being of insurers and their clients in times of declared delinquency.