Mo. revises insurance rules after Joplin tornado
Wednesday, August 22, 2012
JEFFERSON CITY, Mo. (AP) — The Missouri insurance department says new regulations for mutual insurance companies are intended to prevent a run on their finances similar to what happened after the deadly Joplin tornado.
Missouri’s new rule will require mutual insurance companies that provide coverage to property owners to ensure that future losses won’t deplete their surplus funds by more than 20 percent in one year. The companies would do that by carrying sufficient reinsurance policies for themselves.
The department says the change was made after a large mutual insurance company in southwest Missouri suffered financial stress following claims from the May 2011 tornado that hit Joplin. Mutual insurers generally are nonprofit cooperatives that cover homes and businesses in much of rural Missouri.
The new regulation takes effect Jan. 1.