MO Department of Insurance Sets New Rules After Joplin Tornado
JEFFERSON CITY - The Missouri Department of Insurance set new rules for smaller farm mutual companies Tuesday.
The new rule makes sure insurance companies located in small, rural towns will not be completely wiped out of surplus and ran out of money when paying their claims in certain instances like the Joplin tornado in May 2011.
These smaller insurance companies will be required to have insurance themselves to make sure future losses will not deplete their surplus funds by more than 20 percent in one year.
After the Joplin tornado, one small farm mutual insurance company almost went bankrupt because they did not have sufficient enough funds to pay their customer's claims.
"It's really important that these companies be protected because they serve a very important role in our state. A lot of rural home and business owners have a hard time finding property insurance coverage, so it's very important that these farm mutuals stay around," said Travis Ford, spokesman for the department of insurance.
The new insurance rules will go into effect January 1.
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