§ 23-88-306 - Provisions of plan. - Arkansas Statutes

23-88-306. Provisions of plan.

(a) (1) The plan shall provide for the efficient, economical, and fair administration of the Arkansas Rural Risk Underwriting Association and shall be consistent with the purposes of this subchapter. Therefore, the plan shall include provisions for the equitable apportionment among the association's members of the expenses, profits, and losses arising from the association's rural risk writings.

(2) A member's participation in the association's expenses, profits, and losses shall be in the proportion that the net direct property insurance premiums of each member, written in this state during the preceding calendar year, bears to the aggregate net direct property insurance premiums of all members of the association, written in this state during the preceding calendar year.

(3) (A) The governing board shall be empowered to make assessments as may be necessary to provide funds needed to make payment of all loss claims and expenses of the association.

(B) Assessments during a calendar year may be made up to, but not in excess of, two percent (2%) of each insurer's net direct written premium for the preceding calendar year.

(C) If the maximum assessment in any calendar year results in a deficiency in premiums to losses, assessments may be made in the next and any successive calendar year.

(4) Further, the plan shall provide for an annual credit to members for basic property insurance voluntarily written on rural risks. This dollar credit shall relieve a member wholly or partially from participation in the association's expenses and losses.

(b) The plan shall also establish reasonable underwriting standards, subject to the approval of the Insurance Commissioner. Any applicant that meets these standards will be an insurable risk and entitled to property insurance through the association.

(c) The plan shall include deductibles, rules for classification of risks, rate modifications consistent with the objective of providing and maintaining funds sufficient to pay rural risk losses and expenses, and the limits of coverage available.

(d) The commissioner shall assess all members an amount not to exceed two hundred dollars ($200) annually, if needed, for the expense of mailing fire department renewal subscription notices.