Summary — SB 2272 (North Dakota) — North Dakota Insurance Incentive Program
Status and procedural history
- Introduced: March 11, 2025 (Bill Information).
- Committee action: Committee report and first/engrossed versions create a new chapter to Title 26.1 and amend related statutes.
- Final recorded action: Second reading — failed to pass (yeas 3, nays 43).
Purpose
- Establish a state “North Dakota insurance incentive program” to provide matching capital grants to property insurers to increase the availability and affordability of property insurance in North Dakota.
Key provisions
1. New statutory chapter creating the program and fund
- Creates the North Dakota insurance incentive fund (“fund”) in the state treasury. The fund includes transfers/appropriations and earnings and is a continuing appropriation to the Department of Insurance for program administration and grants.
Sources, transfers, and investment
- Amends the list of funds the state investment board may invest to include the insurance incentive fund.
- Amends transfers from the insurance regulatory trust fund so balances above a threshold are to be transferred to the insurance incentive fund (committee text indicates transfer of balances exceeding $1 million; the new fund itself is subject to a biennial excess-transfer rule described below).
- After the biennium is closed, any fund balance in the insurance incentive fund exceeding $20 million must be transferred to the general fund (unless otherwise provided by law).
Grant program mechanics
- Purpose: matching capital grants to qualified property insurers.
- Grant sizes: individual grants must be at least $2 million and no more than $10 million (per invitation). The commissioner will allocate 20% of total funds available to domestic insurers.
- Up to three rounds of solicitation: if funds remain after the first or second invitation, the commissioner may re-invite applications (insurers already awarded may apply for additional grants up to the $10M cap).
- Matching requirement: grants must match insurer-committed capital on a 1:1 basis (one dollar state to one dollar insurer).
- Limits: matching grants may not exceed 20% of an insurer’s capital and surplus.
- Minimum insurer commitment: an insurer must commit at least $2 million of capital to participate.
Eligibility and financial safeguards
- Awards only to insurers that meet minimum capital requirements (capital surplus > $10 million), maintain satisfactory risk-based capital ratios, and have an adequate risk-based reinsurance program.
- Grants may be made only to insurers with satisfactory prior property-insurance experience, or to new insurers whose management demonstrates such experience.
- Surplus lines insurers are eligible to apply.
Production and performance requirements
- Insurers receiving grants must write designated property insurance in the state (residential, commercial, monoline, or package policies) and include wind/hail coverage equivalent to other perils.
- Premium-production requirement: generally, insurers must write net written premiums equaling at least $2 of premium for each $1 of (newly allocated insurer capital + state grant).
- The commissioner must adopt monitoring rules and may recover grant funds pro rata for failure to meet requirements; the commissioner may seek return of unearned grant money after five consecutive years of noncompliance.
Other administrative rules
- The commissioner may implement the program through public–private partnerships and adopt rules to administer the program.
- Any unexpended/unencumbered money or unearned matching capital funds must revert to the state general fund.
Who would be affected
- Primary: property insurers (including surplus lines insurers) that choose to expand writing property insurance in North Dakota and qualify for matching grants.
- Secondary: North Dakota policyholders (potentially greater availability and affordability of property insurance) and the state general fund (through transfers/reversions and initial financing of the incentive fund).
Fiscal and timing notes
- The program depends on monies appropriated/transferred into the insurance incentive fund; excess fund balances over $20 million after a biennium revert to the general fund.
- The bill creates continuing appropriation authority to the Department of Insurance to administer the fund and grants.
- The structure includes safeguards (capital requirements, premium ratios, clawbacks) intended to protect state funds.
Outcome
- SB 2272 did not pass final legislative consideration on second reading (yeas 3, nays 43). If reintroduced, key elements likely to resurface would include matching capital grants, insurer eligibility requirements, and fund governance.
