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TABLE OF CONTENTS

• CITATION
• STATUS
• WHAT'S NEW
• ADOPTED TEXT

CITATION
2007-3


STATUS
This regulation was assigned the status of Adopted Rule
 on 09/19/2007.

Agency: Department of Insurance
StateNet Processing Date: 10/24/2007
StateNet Regulation ID: 2007 MS 11199


ADOPTED TEXT
                     MISSISSIPPI DEPARTMENT OF INSURANCE
                            REGULATION NO. 2007-3

             SPECIAL NON-BINDING ARBITRATION PROGRAM FOR PERSONAL
              LINES RESIDENTIAL INSURANCE CLAIMS RESULTING FROM
                              HURRICANE KATRINA

    TABLE OF CONTENTS

    Section 1. Authority

    Section 2. Purpose and Scope

    Section 3. Definitions

    Section 4. Notification of the Right to Arbitrate

    Section 5. Request for Arbitration

    Section 6. Arbitrator and Scheduling of Arbitration

    Section 7. Arbitration Conference

    Section 8. Costs of Arbitration

    Section 9. Post Arbitration Hearing

    Section 10. Designation of Administrator

    Section 11. Court Ordered Arbitration

    Section 12. Immunity

    Section 13. Severability

    Section 14. Effective Date
    Section 1. Authority

    The 2005 Hurricane season was extremely destructive for Mississippi.
Extensive and devastating damage was caused by Hurricane Katrina, which hit
the Mississippi Gulf Coast on August 29, 2005, as a Category 4 hurricane.
Hurricane Katrina continued northward, blanketing the State and causing
widespread major damage to homes, loss of personal belongings and
corresponding loss of employment.  In response in part to the devastation of
Hurricane Katrina, the Mississippi Department of Insurance ("Department")
sought the passage of Senate Bill 2381, 2006 Regular Legislative Session,
which was passed by the Mississippi Legislature, signed by Governor Barbour on
March 1, 2006, and made effective that date. Codified as Miss. Code Ann.
Section 83-1-47, this statute gives the Commissioner of Insurance the
authority to establish a non-binding, nonadversarial alternative dispute
resolution procedure for the handling of personal lines residential insurance
claims.

    Furthermore, pursuant to the Governor's Proclamations dated August 26,
2005, and September 2, 2005, Governor Barbour declared a state of emergency
invoking his emergency powers pursuant to Miss. Code Ann. Section 35-15-11,
and directed agencies of the State to discharge their emergency
responsibilities as deemed necessary as set forth in the State of Mississippi
Emergency Operations Plan and Executive Order No. 653, dated November 16,
1990. In accordance with the Proclamations and Executive Order, and Miss. Code
Ann. Sections 33-15-11(b)(9) and 33-15-11(c)(4), there was a delegation of
those emergency powers to the Commissioner of Insurance which allows him, in
his discretion, to promulgate emergency regulations and guidelines to promote
and secure the safety and protection of the citizens of this State.

    Regulation 2007-3 is hereby promulgated by the Commissioner of Insurance
pursuant to the authority granted to him by Miss. Code Ann. Sections 83-1-47;
83-5-1; 83-5-29 through 83-5-51; as well as the provisions of Mississippi
Department of Insurance Regulation No. 88-101, said Regulation being the Rules
of Practice and Procedure before the Mississippi Insurance Department. This
filing makes Regulation 2007-3 a permanent Regulation.

    Section 2. Purpose and Scope

    Mississippi Insurance Department Regulation 2005-2 was adopted by the
Commissioner of Insurance on December 20, 2005, to allow for all Mississippi
insureds to enter into a non-binding voluntary mediation conference with their
insurance company regarding any claim disputes arising from Hurricane Katrina.
This program has allowed over 3400 insureds' claim disputes to be resolved,
and has seen an 83% successful resolution for all insureds who have
participated in the Mississippi Insurance Department Hurricane Katrina
Mediation Program.

    As a result of the success of the Department's Hurricane Katrina Mediation
Program, the Department was contacted by U.S. District Judge L.T. Senter, Jr.,
who is presiding over most of the Hurricane Katrina lawsuits filed in the U.S.
District Court in South Mississippi. Judge Senter asked the Department to
include in its regulation a mediation program for those insureds who had
lawsuits pending in his court. The Commissioner of Insurance thereby adopted
Mississippi Insurance Department Regulation 2006-4, which allowed any court of
competent jurisdiction to order any party in litigation to participate in the
Mississippi Department of Insurance Hurricane Katrina Mediation Program. This
program is experiencing a successful resolution rate of approximately 50% for
all litigants who participate.

    However, even with the success of both mediation programs, there are
insureds who still do not have their Hurricane Katrina claims resolved.
Representatives of the Department have been working on multiple fronts in an
effort to find other means to have claims paid and lawsuits resolved so
Mississippi can continue its rebuilding and recovery.

    Therefore, on March 30, 2007, Emergency Regulation 2007-3 was promulgated
by the Commissioner of Insurance. On July 27, 2007, the Emergency Regulation
was extended for ninety (90) days. Due to the success of the non-binding
arbitration program, the Commissioner of Insurance hereby files to make
Emergency Regulation 2007-3 a permanent Regulation.

    This Regulation establishes a special non-binding arbitration program for
personal lines residential insurance claims resulting from Hurricane Katrina.
It creates procedures for notice of the right to arbitration, request for
arbitration, assignment of arbitrators, payment for arbitration, and the
conduct of arbitration proceedings.

    This program will allow insureds another avenue to try and have their
claim resolved without requiring the insured to settle or extinguishing their
right to file legal action if the matter is not resolved. It will also allow
Judge Senter and any other court of competent jurisdiction to order any
litigant before their Court to participate in this non-binding arbitration
program in addition or as an alternative to non-binding mediation.

    Except as otherwise provided in this Regulation, the procedures
established by this Regulation are available to all first party claimants who
have not commenced either litigation or the appraisal process who have
personal lines claims resulting from damage to residential property in
Mississippi caused by Hurricane Katrina. Insureds who have elected to commence
the appraisal process under their policies must first complete that process
prior to being eligible to request the arbitration procedures established
hereunder. This Regulation does not supersede an insured's right to commence
an appraisal process under their policy or to request non-binding mediation.
This Regulation does not apply to commercial insurance (including
forced-placed lender protection programs), private passenger motor vehicle
insurance or to liability coverage contained in property insurance policies.

    The arbitration procedures established under this Regulation shall not be
available to the insured where the underlying issue is whether the policy was
canceled, nonrenewed or lapsed prior to the loss resulting from Hurricane
Katrina. Insureds may submit these issues to the Consumer Assistance Division
of the Department for review.

    Section 3. Definitions

    (a) "Administrator" means the American Arbitration Association.

    (b) "Claim" means any matter on which there is a dispute or for which the
insurer has denied payment. Unless the parties agree to arbitrate a claim
involving a lesser amount, a claim involves a dispute in which the difference
between the positions of the parties is $5000.00 or more. Claim does not
include a dispute with respect to which the insurer has reported allegations
of fraud to the Department or any law enforcement agency, based on an
investigation by the insurer's special investigative unit.

    (c) "Department" means the Mississippi Department of Insurance or its
designee.

    (d) "Insurer" means only those companies subject to the jurisdiction of
the Department as provided in Miss. Code Ann. Section 83-5-1 (Rev. 1999), and
which provide personal residential property insurance coverage in the State of
Mississippi. The term insurer shall include eligible non-admitted
insurers/surplus lines insurers doing business in Mississippi pursuant to
Section 83-21-17 et seq. (Rev. 1999), and the Mississippi Windstorm
Underwriting Association. The term insurer shall not include the National
Flood Insurance Program.

    (e) "Arbitrator" means an individual selected by the Administrator
designated by the Department to arbitrate disputes pursuant to this
regulation. Arbitrators will be selected from a panel of arbitrators
established and maintained by the Administrator.

    (f) "Party" or "Parties" means the insured and his or her insurer,
including the Mississippi Windstorm Underwriting Association. The terms Party
or Parties shall not include the National Flood Insurance Program.

    Section 4. Notification of the Right to Arbitrate

    Insurers are to send to all insureds who have a disputed Hurricane Katrina
claim insurers a Notification of the Right to Arbitrate within fourteen (14)
days of the date of the adoption of this Regulation. A sample notification
letter for use by insurers is attached hereto as Exhibit "A".  Use of this
letter by insurers will satisfy the notification requirements of this Section.

    Insurers that previously sent a Notification of the Right to Arbitrate to
their insureds pursuant to the requirements of Section 4 of Emergency
Regulation 2007-3 are not required to send an additional notice to insureds
upon the adoption of Regulation 2007-3.

    Section 5. Request for Arbitration

    After ten (10) days from the date of the notice, an insured may request
arbitration by writing the Administrator at American Arbitration Association,
Attn: MS Insurance Arbitration, 13455 Noel Road, Suite 1750, Dallas, TX 75240;
by calling the Administrator at 1-800-426 8792; by faxing a request to the
Administrator at 972-490-9008; or by contacting the Administrator on-line at
Msinsarbitration@adr.org.

    The insured should provide the following information, if known:

    (a) Name, address, and daytime telephone number of the insured and
location of the property if different from the address given;

    (b) The claim and policy number for the insured;

    (c) A brief description of the nature of the dispute;

    (d) The name of the insurer and the name, address and phone number of the
insured's contact person for scheduling arbitration; and,

    (e) Information with respect to any other policies of insurance that may
provide coverage of the insured property for named perils such as flood or
windstorm.

    Section 6. Arbitrator and Scheduling of Arbitration

    A. Appointment of Arbitrator

    A list of available arbitrators will be posted online at www.adr.org. The
parties are encouraged to agree to an arbitrator from this list and to advise
the Administrator within ten (10) days of the Request of Arbitration of their
agreement. If the parties are unable to agree upon an arbitrator, the
Administrator shall make the appointment from members of the panel.

    B. Disqualification of Arbitrator

    The parties shall be given written notice at least twenty (20) days prior
to the Arbitration Conference of the name of the Arbitrator. The parties shall
have seven (7) days to file a written request that the Arbitrator be
disqualified. A written request for disqualification may be made for good
cause; specifically, good cause shall consist of any substantive conflict of
interest between a party and the arbitrator; an inability of the arbitrator to
handle the conference competently, with diligence or good faith; or other
reason provided by applicable law. Any request for disqualification must be
made in good faith. Any request to disqualify not made in good faith will
result in the request for disqualification being denied. If an arbitrator is
disqualified for good cause, a new arbitrator will be named within five (5)
days. The Administrator shall make the determination if an arbitrator should
be disqualified.

    C. Scheduling of Arbitration

    The Administrator will schedule the arbitration conference. The
Administrator will attempt to facilitate reduced travel and expense to the
parties and the arbitrator when selecting an arbitrator and scheduling the
arbitration conference. The Administrator shall confer with the arbitrator and
all parties prior to scheduling an arbitration conference. The parties shall
receive at least twenty (20) days written notice of the date, time, and place
of the arbitration conference, and the designation of the arbitrator. The
insurer shall notify the Administrator as soon as possible after settlement of
any claim that is scheduled for arbitration pursuant to this Regulation.

    Section 7. Arbitration Conference

    A. Exchange of Information

    At least two (2) business days prior to the hearing, the parties shall
exchange copies of all exhibits they intend to submit at the hearing. The
arbitrator shall resolve disputes concerning the exchange of exhibits.

    B. Attendance at Conference

    The Arbitrator shall maintain the privacy of the conference. Any person
having a direct interest in the arbitration is entitled to attend the
conference. The arbitrator shall have the power to require the exclusion of
any witness, other than a party or other essential person, during the
testimony of any other witness. It shall be discretionary with the arbitrator
to determine the propriety of the attendance of any other person other than a
party and its representative.  However, the Department reserves the right to
have a representative present at any arbitration conference conducted pursuant
to this Regulation.

    The Arbitrator may postpone any conference upon agreement of the parties,
upon request of a party for good cause shown, or upon the arbitrator's own
initiative. Good cause shall consist of severe illness, injury, or other
emergency which could not be controlled by the insured or the insurer and,
with respect to an insurer, could not reasonably be remedied prior to the
conference by providing a replacement representative or otherwise.

    C. Representation

    A party may be represented by counsel or their authorized representative.
A public adjuster contracted by the insured may attend the conference, but the
insured must also be present at the conference. A party intending to be
represented shall notify the other party and the administrator of the name and
address of the representative at least five (5) days prior to the date set for
conference.

    D. Conduct of Proceeding

    The arbitrator shall have the right to require witnesses to testify under
oath administered by any duly qualified person. The insured shall present
evidence to support its claim. The insurer shall then present evidence to
support its defense. Witnesses for each party shall also submit to questions
from the arbitrator and the adverse party. The arbitrator has the discretion
to vary this procedure, provided that the parties are treated with equality
and that each party has the right to be heard and is given a fair opportunity
to present its case.

    The arbitrator, in its discretion, shall conduct the proceedings with a
view to expediting the resolution of the dispute and may direct the order of
proof, bifurcate proceedings and direct the parties to focus their
presentations on issues the decisions of which could dispose of all or part of
the case.

    E. Evidence

    The parties may offer such evidence as is relevant and material to the
dispute and shall produce such evidence as the arbitrator may deem necessary
to an understanding and determination of the dispute. Conformity to legal
rules of evidence shall not be necessary. All evidence shall be taken in the
presence of the arbitrator and all the parties, except where any of the
parties is absent, in default or has waived the right to be present. However,
the arbitrator may receive and consider the evidence of witnesses by
affidavit, but shall give it only such weight as the arbitrator deems it
entitled to after consideration of any objection made to its admission.

    The arbitrator shall determine the admissibility, relevance and
materiality of the evidence offered and may exclude evidence deemed by the
arbitrator to be cumulative or irrelevant. The arbitrator shall take into
account applicable principles of legal privilege, such as those involving the
confidentiality of communications between a lawyer and client.

    The representative of the insurer attending the conference must know the
facts and circumstances of the claim and be knowledgeable of the provisions of
the policy. An insurer will be deemed to have failed to appear if the
insurer's representative lacks authority to settle the full amount of the
claim.

    F. Confidentiality

    Confidential or privileged information disclosed to an arbitrator by the
parties or by witnesses in the course of arbitration shall not be divulged by
the arbitrator. All records, reports, or other documents received by an
arbitrator while serving in that capacity shall be confidential.  The
arbitrator shall not be compelled to divulge such records or testify in regard
to the arbitration in any adversary proceeding or judicial forum. All
statements made and documents reviewed at the arbitration conference shall be
deemed settlement negotiations in anticipation of litigation.

    Neither the Department, the Administrator, or any arbitrator in a
proceeding under this Regulation is a necessary or proper party in judicial
proceedings related to the arbitration.

    G. Mediation

    At any stage of the proceedings, the parties may agree to conduct a
mediation conference under the Mississippi Department of Insurance Hurricane
Katrina Mediation Program as established pursuant to Regulation 2005-2, as
amended. The mediator shall not be an arbitrator appointed to the case. Where
the parties to a pending arbitration agree to mediate under this Regulation,
no additional administrative fee shall be required to initiate the mediation.

    Section 8. Cost of Arbitration

    A. Administrative Fee

    Within five (5) days of the insurer's receipt of the request for
arbitration, the insurer shall pay a non-refundable administrative fee in the
amount of $250.00 to the Administrator, which shall be used to defer the
expenses of the Administrator.

    B. Fee to Arbitrator

    Arbitrators shall receive $600.00 for a three (3) hour arbitration
conference, which shall be paid by the insurer. Arbitrators shall not receive
costs or expenses.

    The insurer shall pay $600.00 to the Administrator for the arbitrator's
fee not later than five (5) days prior to the date of the arbitration
conference. If the arbitration is cancelled for any reason more than 120 hours
prior to the scheduled arbitration time and date, the insurer shall pay $50.00
to the Administrator for the arbitrator's fee instead of $200.00 per hour. If
the conference is cancelled within 120 hours of the scheduled time, the
insurer shall pay $600.00 to tile Administrator for the arbitrator's fee.

    C. Length of Arbitration

    Each arbitration shall be scheduled for three (3) hours. The parties and
the arbitrator may agree to extend the arbitration conference time. If an
arbitration conference is extended beyond three (3) hours, the Arbitrator
shall receive $200.00 an hour for any time over the three (3) hour conference.
The insurer shall pay the additional costs to the Administrator within five
(5) days after the arbitration conference.

    D. Failure to Appear

    If the insured fails to appear without good cause as determined by the
Administrator, the insured may have the conference rescheduled only upon the
insured's payment of the arbitration fees for the rescheduled conference. If
the insurer fails to appear at the conference, without good cause as
determined by the Administrator, the insurer shall pay the insured's actual
expenses incurred in attending the conference and shall pay the arbitrator's
fee whether or not good cause exists. Failure of a party to arrive at the
arbitration conference within 30 minutes of the conference's starting time
shall be considered a failure to appear.

    Good cause shall consist of severe illness, injury, or other emergency
which could not be controlled by the insured or the insurer and, with respect
to an insurer, could not reasonably be remedied prior to the conference by
providing a replacement representative.

    If an insurer fails to appear at conferences with such frequency as to
evidence a general business practice of failure to appear, the insurer shall
be subject to penalties under Miss. Code Ann. Section 83-5-29 et seq. and
other applicable law.

    Section 9. Post Arbitration Hearing

    A. Findings of the Arbitrator

    Within fourteen (14) days of the Arbitration conference, the arbitrator
shall submit to the Administrator and the parties a written findings of fact.
The written findings of fact shall state what remedy or relief that the
arbitrator deems as just and equitable and within the scope of the agreement
of the parties. The Findings of the Arbitrator are confidential and shall not
be used in any other proceeding. The arbitrator shall not make any finding
relating to the award of punitive damages.

    Within seven (7) days of the issuance of the Findings of the Arbitrator,
the parties shall contact the Administrator in writing to either accept or
refuse the Findings. If the parties accept the Findings, and an award is to be
made to the insured, the insurer has seven (7) days to disburse the award to
the insured.

    B: Settlement of Parties

    If at anytime throughout this process the parties are able to reach a
settlement, the arbitrator shall include a copy of the settlement agreement
with the status report. If a settlement is reached, the insured shall have
three (3) business days to rescind any settlement agreement provided that the
insured has not cashed or deposited any check or draft disbursed to him or her
for the disputed matters as a result of the arbitration conference. A
settlement agreement can be rescinded by contacting the Mississippi Department
of Insurance at (601) 359-3581. If a settlement agreement is reached and is
not rescinded, it shall act as a release of all specific claims that were
presented and actually settled. However, the release shall not constitute a
final waiver of rights of the insured with respect to claims for damages or
expenses if circumstances that are reasonably unforeseen arise resulting in
additional costs that would have been covered under the policy but for the
release. If an award is to be made to the insured, the insurer has seven (7)
days to disburse the award to the insured.

    C. Non-binding Arbitration

    This program is non-binding; therefore, neither the insured nor insurer
must settle the claim or accept the Findings of the Arbitrator. Nothing in
this Regulation shall preclude an insured's right to pursue any other remedy,
including but not limited to, mediation, the appraisal process set forth in
the insured's insurance policy, litigation, or any other dispute resolution
procedure available under Mississippi law.

    Section 10. Designation of Administrator

    The Department has designated the American Arbitration Association as its
Administrator to carry out certain duties and responsibilities under this
Regulation.

    Section 11. Court Ordered Arbitration

    As stated above, this Regulation shall apply and be available to all first
party claimants who have not commenced litigation; however, notwithstanding
other provisions of this Regulation, this non-binding arbitration program
shall be available to any party ordered to participate in this program by a
court of competent jurisdiction.

    Section 12. Immunity

    Parties to an arbitration under this Regulation shall be deemed to have
consented that neither the Department, the Administrator nor any arbitrator
shall be liable to any party in any action for damages or injunctive relief
for any act or omission in connection with any arbitration under this
Regulation.

    Section 13. Severability

    If a court holds any subsection or portion of a subsection of this
Regulation or the applicability thereof to any person or circumstance invalid,
the remainder of the Regulation shall not be affected thereby.

    Section 14. Effective Date

    This Regulation shall be effective upon adoption with the Office of the
Secretary of State of the State of Mississippi.

                             NOTIFICATION LETTER

    [Date]

    [Policyholder Name and Address

    Right to Arbitration

    Dear Policyholder:

    George Dale, Commissioner of Insurance for the State of Mississippi, has
adopted a regulation to facilitate fair and timely handling of residential
property insurance claims arising out of Hurricane Katrina that devastated so
many homes in Mississippi. The regulation gives you the right to attend a
non-binding arbitration conference with your insurer in an effort to settle
any dispute you have with your insurer about your claim. Please note that in
order to request an arbitration conference, you must have a disputed claim,
meaning that the difference between the positions of you and your insurance
company is $5000.00 or more. You can start the arbitration process ten (10)
days after the date of this notice if you have a disputed claim by contacting
the Administrator, American Arbitration Association. An independent
arbitrator, who has no connection with your insurer, will be in charge of the
arbitration conference.

    Please be aware that from the date of this notice, there is a ten (10) day
period that must lapse before you can request arbitration. To request
arbitration, you may contact the Arbitration Administrator in writing at
American Arbitration Association, ATTN: MS Insurance Arbitration, 13455 Noel
Road, Suite 1750, Dallas, TX 75240; by phone at 1-800-426-8792; by fax at
972-490-9008; or on-line at Msinsarbitration@adr.org. Your request should
include the following information:

    * Your claim and policy number;

    * The address and location of the property;

    * A daytime telephone number, address, and, if possible, an e-mail address
where you can be reached should the Arbitration Administrator need to contact
you;

    * A brief description of the nature of the dispute;

    * The name of the insurer and the name, address and phone number of the
insured or the insured's contact person for scheduling arbitration; and

    * Information with respect to any other policies of insurance that may
provide coverage of the insured property for named perils such as flood or
windstorm.

    Once a request for arbitration is received, the Administrator will contact
you to schedule your arbitration conference.

    If you have further questions concerning this letter, you may contact
[name of the insurer and contact person or division] at [phone number].

    Sincerely,

    [Insurer]

WHAT'S NEW
Description of Changes
There are no recorded changes for this document.

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