HB 1918 -- Missouri Catastrophe Fund

Sponsor:  Brandom

This bill creates the Missouri Catastrophe Fund to help pay for
covered residential property damage insurance claims after a
catastrophe involving an earthquake.  In its main provisions, the
bill:

(1)  Requires the Director of the Department of Insurance,
Financial Institutions, and Professional Registration to
establish the premium rate as determined by an actuarial formula
developed by an independent consultant.  The premiums will be
paid by insurers, bond revenues, and appropriated state funds.
The insurer's premiums will be calculated based on the amount of
insurance coverage it provides;

(2)  Allows an insurer covered under the fund to be reimbursed
based on a percentage of its losses in excess of the insurer's
retention, plus 10% of that amount to cover loss adjustment
expenses.  Insurers may elect to be reimbursed at 45%, 75%, or
90%, which can be adjusted under certain circumstances.
Reimbursement amounts will not be reduced because of reinsurance
payable to the insurer; however, the total amount received cannot
exceed 100% of the insurer's losses from covered events.  Any
excess must be returned to the fund, unless agreed to otherwise;

(3)  Allows the department director to issue bonds if moneys in
the fund are insufficient to reimburse at the agreed to levels.
If the actuarially indicated premiums are insufficient to fund
revenue bonds to pay the reimbursement contracts, the department
director will levy an emergency assessment to each property and
casualty insurer in the state;

(4)  Allows the General Assembly to appropriate from 10% to 35%
of the investment income of the fund from the prior fiscal year
in a fiscal year when no outstanding obligations are incurred for
the purpose of funding programs intended to improve catastrophe
preparedness;

(5)  Establishes the Missouri Catastrophe Fund Advisory Council
to provide the department director with information and advice
regarding the fund and to develop prevention and mitigation
standards that prevent or reduce damage from natural or man-made,
covered losses; and

(6)  Requires the department director, upon the establishment of
a similar federal or multistate program, to recommend to the
General Assembly whether to coordinate with the program,
terminate Missouri's fund, or take other appropriate action.

Missouri House of Representatives
94th General Assembly, 2nd Regular Session
Last Updated October 15, 2008 at 3:11 pm