Rate regulations, assessment levies, and dividends for the local government property insurance fund. (FE)

What it does

Summary by the Legislative Reference Bureau, the Legislature's nonpartisan drafting office. It's their wording, not ours.

Under this bill, the local government property insurance fund (fund) is subject to rate regulations currently applied to private insurers, must levy assessments against participating local governmental units to maintain the fund assets when the assets fall to a certain threshold ratio with respect to premiums, and must pay dividends when the fund assets reach a certain threshold ratio with respect to premiums. Under current law, a local governmental unit, including any city, county, town, village, school, or library board, may pass a resolution to insure its property, and property that it does not own but for which it is contractually liable if the property is damaged or destroyed, in the fund. The fund is managed by the commissioner of insurance and provides protection for the property insured in the fund against fire and extended coverage perils.

The bill requires that the rate standards used to regulate private insurance, to the extent that rates are not excessive, inadequate, or unfairly discriminatory, shall apply to the rates set by the fund. The rates must be set by actuarial determination to maintain the ratio of the net premiums of the fund to the surplus of the fund at no less than 200 percent. If the ratio of net premiums to surplus rises above 225 percent, then the fund must levy an assessment against all of the local governmental units participating in the fund, in proportion to each local governmental unit's share of premiums written by the fund. The bill also provides that if a local governmental unit fails to pay its assessment within 60 days of the due date of the assessment, the local governmental unit's coverage under the fund shall be terminated. As with unpaid premiums, the fund can collect unpaid assessments and charge such unpaid assessments against the local government unit, with interest, as a special charge.

Who's behind it

6 lawmakers are its authors⁠. All 6 are Republicans.

4 more lawmakers signed on in support⁠.

What it would cost

State agencies filed a cost estimate. Each opens as a PDF from the Legislature.

• Fiscal Estimate From OCI