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chapter-40•Chapter 40 — Insurance
Unofficial online text published by the Kansas Office of Revisor of Statutes; the printed volumes of the Kansas Statutes Annotated are the authoritative version. Current through the 2025 session laws.
This act shall be known as the insurance code of the state of Kansas.
History: L. 1927, ch. 231, 40-101; June 1.
There is hereby established the Kansas department of insurance. The chief officer of the department shall be the commissioner of insurance. The commissioner of insurance shall be charged with the administration of all laws relating to insurance, insurance companies and fraternal benefit societies doing business in this state and all other duties that are or may be imposed upon such officer by law.
History: L. 1927, ch. 231, 40-102; L. 1945, ch. 322, § 4; L. 1949, ch. 431, § 4; L. 1953, ch. 383, § 9; L. 1959, ch. 337, § 11; L. 1961, ch. 413, § 9; L. 1965, ch. 458, § 29; L. 1967, ch. 443, § 20; L. 1968, ch. 325, § 1; L. 1972, ch. 153, § 49; L. 1973, ch. 175, § 67; L. 1974, ch. 361, § 59; L. 1976, ch. 380, § 17; L. 1978, ch. 308, § 48; L. 1978, ch. 350, § 1; L. 1982, ch. 354, § 19; L. 1985, ch. 278, § 12; L. 1992, ch. 116, § 27; L. 1992, ch. 296, § 10; L. 1995, ch. 256, § 10; L. 1998, ch. 196, § 2; L. 2008, ch. 159, § 12; L. 2023, ch. 69, § 7; L. 2025, ch. 87, § 4; July 1.
(a) The Kansas insurance department, as established by K.S.A. 42-102*, and amendments thereto, is hereby renamed the Kansas department of insurance. All powers, duties and functions of the Kansas insurance department are hereby transferred and imposed upon the Kansas department of insurance.
(b) Whenever the Kansas insurance department, or words of like effect, are referred to or designated by a statute, contract or other document, and such reference or designation is in regard to any function, power or duty of the Kansas insurance department, such reference or designation shall be deemed to apply to the Kansas department of insurance.
(c) All rules and regulations, order and directives of the commissioner of insurance of the Kansas insurance department that are in effect on July 1, 2025, shall continue to be effective and shall be deemed to be rules and regulations, orders and directives of the commissioner of insurance of the Kansas department of insurance until amended, revoked or nullified pursuant to law.
History: L. 2025, ch. 87, § 1; July 1.
The commissioner of insurance shall have general supervision, control and regulation of corporations, companies, associations, societies, exchanges, partnerships, or persons authorized to transact the business of insurance, indemnity or suretyship in this state and shall have the power to make all reasonable rules and regulations necessary to enforce the laws of this state relating thereto.
History: L. 1927, ch. 231, 40-103; June 1.
The commissioner of insurance shall have supervision of all transactions relating to the organization or reorganization of insurance companies organized under the laws of this state, and shall also supervise the sale of all stock certificates, bonds or other evidences of interest or indebtedness issued by any such companies. The commissioner of insurance shall supervise in this state the sale of stock certificates, bonds or other evidences of interest or indebtedness by companies organized under the laws of any other state or country.
History: L. 1927, ch. 231, 40-104; L. 1931, ch. 201, § 1; May 28.
All laws relating to the powers, duties, authority and jurisdiction of the commissioner of insurance of this state not hereby repealed are hereby adopted and the present superintendent of insurance is declared to be the commissioner of insurance for the term for which he was elected as such superintendent. All pending actions brought by or against the superintendent of insurance may be continued without change in title and shall be binding upon the parties to the same extent as though substitution of his new style of office had been made. All insurance companies as defined in section 40-201 of this code and fraternal benefit societies which have been heretofore granted charters by the state charter board and which are now licensed by the superintendent of insurance shall be deemed legally organized and existing and shall be in no way affected by any provision of this act concerning the organization of such companies or fraternal benefit societies.
History: L. 1927, ch. 231, 40-105; June 1.
History: L. 1929, ch. 202, § 1; Repealed, L. 1947, ch. 278, § 20, October 1.
History: L. 1929, ch. 202, § 2; Repealed, L. 1951, ch. 290, § 1; June 30.
History: L. 1933, ch. 203, §§ 1, 2; Repealed, L. 1965, ch. 293, § 1; June 30.
(a) At the general election held in 1978 and each four years thereafter, there shall be elected a commissioner of insurance for the state of Kansas, whose term of office shall be four years beginning on the second Monday in January next succeeding such commissioner's election. In case of a vacancy in such office, within three calendar days after receiving a concurrent resolution adopted pursuant to K.S.A. 2025 Supp. 25-325, and amendments thereto, or a report submitted pursuant to K.S.A. 2025 Supp. 25-324, and amendments thereto, the governor shall appoint one of the three persons recommended as candidates in such concurrent resolution or report to serve for the unexpired term and until a successor is elected and qualified. No person shall be appointed pursuant to this section unless such person is a resident of this state and shall have been registered with the same political party for the immediately preceding six years as that of the commissioner of insurance elected at the immediately preceding election for such office. If the commissioner of insurance elected at the immediately preceding election for such office was not registered with any political party, then any suitable person who is a resident of this state may be appointed pursuant to K.S.A. 2025 Supp. 25-323 through 25-325, and amendments thereto.
(b) No person appointed pursuant to subsection (a) shall take office unless such appointment is certified by the secretary of state. The secretary shall not certify any person as being appointed to fill a vacancy in the office of commissioner of insurance for the state of Kansas unless such person is appointed in accordance with this section.
History: L. 1927, ch. 231, 40-106; L. 1976, ch. 179, § 1; L. 2025, ch. 25, § 6; April 10.
Before entering upon the duties of his office the commissioner of insurance shall take the proper official oath, which shall be filed and recorded in the office of the secretary of state.
History: L. 1927, ch. 231, 40-107; L. 1957, ch. 271, § 1; L. 1967, ch. 434, § 11; July 1.
The commissioner of insurance shall make an annual report of the general conduct and condition of the insurance companies, including fraternal benefit societies, doing business in this state and shall publish such report on the department's website. The commissioner of insurance shall keep and preserve in a permanent form a full record of the commissioner's proceedings, including a concise statement of the condition of each company reported, visited or examined by the commissioner.
History: L. 1927, ch. 231, 40-108; L. 1943, ch. 269, § 10; L. 1997, ch. 46, § 1; L. 2025, ch. 94, § 12; July 1.
The commissioner of insurance shall be an elector of this state, and shall be a person well versed and experienced in the business of insurance and matters relating thereto; and he shall give his personal presence and attention to the duties of his office; but in no case shall such commissioner of insurance be in the employment of any insurance company or have any official connection with any insurance company, or any financial interest in any insurance company other than as a policyholder.
History: L. 1927, ch. 231, 40-109; June 1.
(a) The commissioner of insurance is hereby authorized to appoint an assistant commissioner of insurance, actuaries, two special attorneys who shall have been regularly admitted to practice, an executive secretary, policy examiners, two field representatives, and a secretary to the commissioner. Such appointees shall each receive an annual salary to be determined by the commissioner of insurance, within the limits of available appropriations. The commissioner is also authorized to appoint, within the provisions of the civil service law, and available appropriations, other employees as necessary to administer the provisions of this act. The field representatives authorized by this section may be empowered to conduct inquiries, investigations or to receive complaints. Such field representatives shall not be empowered to make, or direct to be made, an examination of the affairs and financial condition of any insurance company in the process of organization, or applying for admission or doing business in this state.
(b) The appointees authorized by this section shall take the proper official oath and shall be in no way interested, except as policyholders, in any insurance company. In the absence of the commissioner of insurance the assistant commissioner shall perform the duties of the commissioner of insurance, but shall in all cases execute papers in the name of the commissioner of insurance, as assistant. The commissioner of insurance shall be responsible for all acts of an official nature done and performed by the commissioner's assistant or any person employed in such office. All the appointees authorized by this section shall hold their office at the will and pleasure of the commissioner of insurance.
(c) (1) The commissioner shall appoint a chief information security officer who shall be responsible for establishing security standards and policies to protect the department's information technology systems and infrastructure. The chief information security officer shall:
(A) Develop a cybersecurity program for the department that complies with the national institute of standards and technology cybersecurity framework (CSF) 2.0, as in effect on July 1, 2024. The chief information security officer shall ensure that such programs achieve a CSF tier of 3.0 prior to July 1, 2028, and a CSF tier of 4.0 prior to July 1, 2030;
(B) ensure that the commissioner and all employees complete cybersecurity awareness training annually and that if an employee does not complete the required training, such employee's access to any state-issued hardware or the state network is revoked; and
(C) (i) (a) coordinate with the United States cybersecurity and infrastructure security agency to perform annual audits of the department for compliance with applicable state and federal laws, rules and regulations and department policies and standards; and
(b) make an audit request to such agency annually, regardless of whether or not such agency has the capacity to perform the requested audit.
(ii) Results of audits conducted pursuant to this paragraph shall be confidential and shall not be subject to discovery or disclosure pursuant to the open records act, K.S.A. 45-215 et seq., and amendments thereto.
(2) The provisions of this subsection shall expire on July 1, 2026.
History: L. 1927, ch. 231, 40-110; L. 1931, ch. 8, § 5; L. 1933, ch. 286, § 12; L. 1937, ch. 329, § 4; L. 1939, ch. 207, § 1; L. 1941, ch. 255, § 1; L. 1943, ch. 277, § 1; L. 1945, ch. 323, § 1; L. 1947, ch. 416, § 1; L. 1949, ch. 423, § 2; L. 1955, ch. 240, § 1; L. 1959, ch. 208, § 1; L. 1963, ch. 257, § 1; L. 1965, ch. 294, § 1; L. 1998, ch. 174, § 31; L. 2007, ch. 141, § 1; L. 2024, ch. 95, § 9; July 1.
The seal of the commissioner of insurance shall be one inch and three-fourths in diameter, surrounded by the words "Commissioner of Insurance of Kansas," with such device as the governor and the commissioner of insurance may prescribe, an impression of which shall be filed in the office of the secretary of state; and every certificate, assignment or authority executed by the commissioner of insurance in pursuance of any authority conferred by law, and sealed with his seal of office, shall be received as evidence, and may be recorded in the proper recording offices in the same manner and with like effect as a deed regularly acknowledged before an officer authorized by law to take acknowledgments; and copies of any paper or record in the office of the commissioner of insurance, certified by him, and authenticated by his seal, shall in all cases be evidence equally and in like manner as the original.
History: L. 1927, ch. 231, 40-111; June 1.
(a) For the purpose of maintaining the insurance department and the payment of expenses incident thereto, there is hereby established the insurance department service regulation fund in the state treasury, which shall be administered by the commissioner of insurance. All expenditures from the insurance department service regulation fund shall be made in accordance with appropriation acts upon warrants of the director of accounts and reports issued pursuant to vouchers approved by the commissioner of insurance or by a person or persons designated by the commissioner.
(b) On and after January 1, 2026, all fees received by the commissioner of insurance pursuant to any statute shall be remitted to the state treasurer in accordance with the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount in the state treasury to the credit of the insurance department service regulation fund.
(c) Except as otherwise provided by this section, the commissioner of insurance shall make an annual assessment on each group of affiliated insurers whose certificates of authority to do business in this state are in good standing at the time of the assessment. The total amount of all such assessments for a fiscal year shall be equal to the amount sufficientthat, when combined with the total amount to be credited to the insurance department service regulation fund pursuant to subsection (b) is equal to the amount approved by the legislature to fund the insurance company regulation program. With respect to each group of affiliated insurers, such assessment shall be in proportion to the amount of total assets of the group of affiliated insurers as reported to the commissioner of insurance pursuant to K.S.A. 40-225, and amendments thereto, for the immediately preceding calendar year, shall not be less than $500 and shall not be more than the amount equal to .0000015 of the amount of total assets of the group of affiliated insurers or $25,000, whichever is less. The total assessment for any fiscal year shall not increase by any amount greater than 15% of the total budget approved by the legislature to fund the insurance company regulation program for the fiscal year immediately preceding the fiscal year for which the assessment is made. In the event the total amount of the assessment would be less than the aggregate amount resulting by assessing the $500 minimum on each insurer, the commissioner may establish a lower minimum to be assessed equally on each insurer.
(d) If, by the laws of any state other than Kansas or by the retaliatory laws of any state other than Kansas, any insurer domiciled in Kansas shall be required to pay any fee or tax in such other state of licensure, and the fee or tax is due and payable either because the insurance department service regulation fee imposed by this section on insurers licensed in Kansas and organized or domiciled in such other state is greater than the comparable fee or tax assessed in such other state, or such other state has no comparable fee or tax but requires payment on a retaliatory basis, then to the extent such fee or tax amounts are legally due and are paid in such other state, any insurer domiciled in Kansas may claim a dollar-for-dollar credit for such fees paid against insurer's annual premium taxes due the state of Kansas under K.S.A. 40-252, and amendments thereto, or privilege fee due the state of Kansas under K.S.A. 40-3213, and amendments thereto, but such credit shall only be calculated on the amount that would not have been required to be paid in such other state of licensure in the absence of the existence of the insurance department service regulation fee imposed by this section, and in no event shall the credit permitted by this section exceed 90% of the insurer's annual premium tax or privilege fee due the state of Kansas. The insurance commissioner shall prescribe the forms for reporting such credits.
(e) Assessments payable under this section shall be past due if not paid to the insurance department within 45 days of the billing date of such assessment. A penalty equal to 10% of the amount assessed shall be imposed upon any past due payment and the total amount of the assessment and penalty shall bear interest at the rate of 1.5% per month or any portion thereof.
(f) When there exists in the insurance department service regulation fund a deficiency that would render such fund temporarily insufficient during any fiscal year to meet the insurance department's funding requirements, the commissioner of insurance shall certify the amount of the insufficiency. Upon receipt of any such certification, the director of accounts and reports shall transfer an amount of moneys equal to the amount so certified from the state general fund to the insurance department service regulation fund. On June 30 of any fiscal year during which an amount or amounts are certified and transferred under this subsection, the director of accounts and reports shall provide for the repayment of the amounts so transferred and shall transfer the amount equal to the total of all such amounts transferred during the fiscal year from the insurance department service regulation fund to the state general fund.
(g) Any unexpended balance in the insurance department service regulation fund at the close of a fiscal year shall remain credited to the insurance department service regulation fund for use in the succeeding fiscal year and shall be used to reduce future assessments or to accommodate cash flow demands on the fund.
(h) The commissioner of insurance shall exempt the assessment of any insurer that, as of December 31 of the calendar year preceding the assessment, has a surplus of less than two times the minimum amount of surplus required for a certificate of authority on and after May 1, 1994, and is subject to the premium tax or privilege fee liability imposed on insurers organized under the laws of this state. The commissioner of insurance may also exempt or defer, in whole or in part, the assessment of any other insurer if, in the opinion of the commissioner of insurance, immediate payment of the total assessment would be detrimental to the solvency of the insurer.
(i) As used in this section:
(1) "Affiliates" or "affiliated" has the meaning ascribed by K.S.A. 40-3302, and amendments thereto;
(2) "group" or "group of affiliated insurers" means the affiliated insurers of a group and also includes an individual, unaffiliated insurer; and
(3) "insurer" means any insurance company, as defined by K.S.A. 40-201, and amendments thereto, any fraternal benefit society, as defined by K.S.A. 40-738, and amendments thereto, any reciprocal or interinsurance exchange under K.S.A. 40-1601 through 40-1614, and amendments thereto, any mutual insurance company organized to provide health care provider liability insurance under K.S.A. 40-12a01 through 40-12a09, and amendments thereto, any nonprofit dental service corporation under K.S.A. 40-19a01 through 40-19a14, and amendments thereto, any nonprofit medical and hospital service corporation under K.S.A. 40-19c01 through 40-19c11, and amendments thereto, any health maintenance organization, as defined by K.S.A. 40-3202, and amendments thereto, or any captive insurance company, as defined by K.S.A. 40-4301, and amendments thereto, that is authorized to do business in Kansas.
History: L. 1992, ch. 154, § 1; L. 1997, ch. 8, § 2; L. 1998, ch. 174, § 32; L. 1999, ch. 95, § 1; L. 2001, ch. 5, § 113; L. 2025, ch. 99, § 13; July 1.
History: L. 1992, ch. 154, § 1; L. 1997, ch. 175, § 1; Repealed, L. 1999, ch. 95, § 15; July 1.
(a) There is hereby established within the insurance department a criminal anti-fraud division of the Kansas insurance department. The criminal anti-fraud division shall accept information and complaints regarding possible insurance fraud. The criminal anti-fraud division shall also investigate possible violations of Kansas criminal statutes pertaining to and related to insurance fraud. The criminal anti-fraud division shall prepare and refer criminal cases to the attorney general, or in consultation with the attorney general to the proper county or district attorney, who may, in such prosecutor's discretion, with or without such a reference, institute the appropriate criminal proceedings under the laws of this state. The commissioner may pay extradition and witness expenses and other costs associated with the case.
(b) Complaints of insurance fraud shall be accepted from Kansas consumers, other divisions within the insurance department, other state and federal law enforcement agencies, and insurance companies. The criminal anti-fraud division's investigators shall prepare clear and concise reports concerning investigations and preserve evidence.
(c) The criminal anti-fraud division shall assist in the preparation and presentation of criminal cases as requested by the attorney general or county or district attorney. The criminal anti-fraud division shall perform other such duties in the prevention, detection, investigation and prosecution of insurance fraud as may be necessary. Such preparation may include affidavits, interviews, preservation of evidence and securing the attendance of individuals involved in the case. In presenting the prosecution's case, members of the criminal anti-fraud division may testify as to the facts of the case.
History: L. 2007, ch. 146, § 1; L. 2017, ch. 81, § 6; July 1.
For the purposes of this article the term "insurance company" shall, unless otherwise provided, apply to all corporations, companies, associations, societies, persons or partnerships writing contracts of insurance, indemnity or suretyship upon any type of risk or loss. "Insurance company" does not include fraternal benefit societies as defined in K.S.A. 40-738, and amendments thereto, or hospitals or hospital associations that have been in operation for not less than 10 years.
History: L. 1927, ch. 231, 40-201; L. 1935, ch. 193, § 1; L. 2023, ch. 41, § 1; July 1.
(a) The marketing, sale, offering for sale, issuance, making, proposing to make and administration of a service contract shall not be construed to be the business of insurance and shall be exempt from regulation as insurance pursuant to chapter 40 of the Kansas Statutes Annotated, and amendments thereto.
(b) For the purposes of this section:
(1) "Service contract" means a contract or agreement for a separate or additional consideration, for any specified duration, to service, repair, replace or maintain all or any part of any structural component, appliance or utility system of any residential property, consumer good or other property; or to indemnify for service, repair, replacement or maintenance for consumer good or other property, due to a defect in materials, workmanship, normal wear and tear; or as a result of power surges or as a result of accidental damage from the handling of any consumer good or other property, with or without additional provision for indemnity payments, when service repair or replacement is not reasonably, commercially or economically feasible. A service contract may also include additional provisions for incidental payment of indemnity under limited circumstances, including, but not limited to, towing, rental and emergency road service.
(2) "Service contract" also includes any nonconsumer commercial service contract.
(3) "Service contract" includes, but is not limited to, a contract that offers any one or more of the following services:
(A) The repair or replacement of tires or wheels on a motor vehicle damaged as a result of coming into contact with road hazards;
(B) the removal of dents, dings or creases on a motor vehicle that can be repaired using the process of paintless dent removal without affecting the existing paint finish and without replacing vehicle body panels, sanding, bonding or painting; and
(C) the replacement of a motor vehicle key or key-fob in the event that the key or key-fob becomes inoperable or is lost or stolen.
(4) "Service contract" does not include an automobile club service contract. As used in this paragraph, "automobile club service contract" means a service contract that provides, in consideration of dues, assessments or periodic payments of money, promises to assist in matters relating to travel and the operation, use and maintenance of an automobile in the supply of features or services or reimbursement thereof, which may include:
(A) Such services as community traffic safety services, travel and touring service, theft or reward service, map service, towing service, emergency road service, bail bond service and legal fee reimbursement service in the defense of traffic offenses, none of which enumerated features or services, if provided by the promisor itself, shall be subject to the insurance laws of this state;
(B) the purchase of accidental injury and death benefits insurance coverage issued, as provided by applicable statutes, by an insurance company authorized to do business in Kansas; or
(C) such other features or services not deemed by the commissioner to constitute the business of insurance.
(5) "Road hazard" means a hazard that is encountered while driving a motor vehicle, including, but not be limited to, potholes, rocks, wood debris, metal parts, glass, plastic, curbs or composite scraps.
(c) (1) No service contract that is exempt from regulation as insurance pursuant to chapter 40 of the Kansas Statutes Annotated, and amendments thereto, pursuant to this section shall contain any provision for consequential damages unless such consequential damages are caused by the failure of service, repair, replacement or maintenance rendered under the service contract.
(2) No service contract that is exempt from regulation as insurance pursuant to chapter 40 of the Kansas Statutes Annotated, and amendments thereto, pursuant to this section shall contain any provision, except as exempt by this section, that would otherwise be covered by a contract of property or liability insurance issued in this state.
History: L. 2005, ch. 140, § 1; L. 2006, ch. 73, § 1; L. 2017, ch. 72, § 3; L. 2021, ch. 108, § 2; July 1.
Nothing contained in this code shall apply to:
(a) Grand or subordinate lodges of any fraternal benefit society that admits to membership only persons engaged in one or more hazardous occupations in the same or similar line of business or to fraternal benefit societies as defined in and organized under article 7 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, unless they be expressly designated;
(b) the employees of a particular person, firm, or corporation;
(c) mercantile associations that simply guarantee insurance to each other in the same lines of trade and do not solicit insurance from the general public;
(d) the Swedish mutual aid association of Rapp, Osage county, Kansas;
(e) the Scandia mutual protective insurance company of Chanute, Kansas;
(f) the Seneca and St. Benedict mutual fire insurance company of Nemaha county, Kansas;
(g) the mutual insurance system practiced in the Mennonite church, in accordance with an old custom, either by the congregation themselves or by special associations, of its members in Kansas;
(h) the Kansas state high-school activities association;
(i) the mutual aid association of the church of the brethren;
(j) a voluntary noncontractual mutual aid arrangement whereby the needs of participants are announced and accommodated through subscriptions to a monthly publication;
(k) a self-funded health plan established or maintained for its employees by the state or a subdivision of the state, a school district, any public authority or by a county or city government or any political subdivision, agency or instrumentality thereof; or
(l) a self-funded health plan established or maintained for its employees by a church or by a convention or association of churches that is exempt from tax under section 501 of the internal revenue code.
History: L. 1927, ch. 231, 40-202; L. 1931, ch. 202, § 1; L. 1935, ch. 194, § 1; L. 1941, ch. 256, § 1; L. 1947, ch. 271, § 1; L. 1951, ch. 291, § 1; L. 1970, ch. 173, § 1; L. 1994, ch. 108, § 1; L. 2008, ch. 134, § 4; L. 2025, ch. 99, § 14; July 1.
No insurance company or fraternal benefit society organized under the laws of this state shall adopt the name of any existing company or society, or any name so similar as to mislead the public. No foreign insurance company or society shall be licensed in this state which bears the name of any company or society already licensed in this state, or of any insurance company or fraternal benefit society organized under the laws of this state, or any name so similar as to mislead the public. The commissioner shall require the name of every domestic insurer to be submitted to him prior to commencement of business and may reject any name so submitted when it is so similar to that of any other corporation as to mislead or tend to mislead the public.
History: L. 1927, ch. 231, 40-203; L. 1968, ch. 4, § 1; L. 1994, ch. 48, § 1; July 1.
It shall be unlawful for any insurance company or health maintenance organization, its agents or representatives, to offer the stock of such company for sale unless it shall have first obtained from the commissioner of insurance a permit authorizing and providing the terms of such sale. Any share of stock issued by an insurance company or health maintenance organization without a permit of the commissioner authorizing the same in effect at the time of issue, shall be void. Any share of stock issued under a permit of the commissioner shall be void unless its provisions conform to the provisions, if any, required by the permit.
History: L. 1927, ch. 231, 40-204; L. 1965, ch. 295, § 1; L. 1996, ch. 169, § 1; July 1.
Each insurance company or health maintenance organization applicant for a permit to offer its stock for sale shall file with the commissioner an application therefor, verified by its president and secretary. The application shall set forth:
(a) The name of the company and the address of its principal office.
(b) The names and addresses of its officers.
(c) An itemized account of its financial condition, including the amount and character of its assets and liabilities.
(d) A detailed statement of the plan by which it proposes to offer its stock for sale and if the company has written no business in this state within the three years last preceding the date of the application, a detailed statement of any plan upon which it proposes to transact business in this state.
(e) A description of the stock it proposes to issue.
(f) Copies of any contracts, agreements or documents of any nature which have been made or are proposed to be made by the company or by those persons managing it or owning more than 10% of its stock which concern the stock to be offered.
(g) A copy of any prospectus or advertisement or other description of its operation proposed to be used in connection with the offer of stock.
(h) Such additional information concerning the company, its condition and affairs as the commissioner requires.
Upon the filing of such application the commissioner shall examine it and the papers and documents filed therewith. The commissioner may, if deemed advisable, cause to be made a detailed examination, audit and investigation of the applicant and its affairs.
The commissioner shall issue a permit if the commissioner finds that:
(1) The plan by which the applicant proposes to offer its stock and transact its business is not unfair, unjust or inequitable.
(2) The applicant company intends to fairly and honestly transact its business.
(3) The stock the applicant company proposes to issue and the methods to be used by it are not such as will work a fraud upon the purchaser thereof, or upon other stockholders or policyholders of the applicant company.
Otherwise, the commissioner shall issue an order denying the application and notify the applicant in writing of such decision. The commissioner may prescribe in the permit the amounts, considerations, terms and conditions governing the issue and disposal of the stock and the permit shall authorize such issue and disposal only in accordance with its provisions. The commissioner may impose conditions requiring the deposit in escrow of stock and the impoundment of the proceeds from the sale thereof, limiting the expense in connection with the sale thereof, and otherwise requiring such method of dealing as the commissioner deems reasonable and either necessary or advisable to insure the disposition of the proceeds of such stock in the manner and for the purposes provided in the permit.
Every permit shall recite in bold type that the issuance thereof is permissive only and does not constitute a recommendation or endorsement of the stock permitted to be issued. The commissioner shall not issue a permit for the sale of any stock of a domestic insurer or health maintenance organization in any case where the commissioner finds that the expense of organization and promotion of the company or the expense of the proposed sale of stock will exceed 12½% of the total amount actually paid for the capital stock.
Every insurer authorized by the commissioner to sell its stock shall thereafter, at such times and in such form as the commissioner requires, make and file in the commissioner's office a report setting forth:
(a) The stock sold by it under the authority of any permit issued by the commissioner;
(b) the proceeds derived therefrom;
(c) the disposition of such proceeds; and
(d) such other information concerning its property, officers or affairs, and relating to or affecting the value of such securities as the commissioner requires.
The commissioner may from time to time for cause order the amendment, alteration or suspension of any permit granted pursuant to this act. After issuing such order the commissioner may on the commissioner's motion, or if within 15 days requested in writing by the company affected the commissioner shall conduct a hearing in accordance with the provisions of the Kansas administrative procedure act. If upon the completion of such hearing the commissioner finds that cause for such order still exists, the commissioner may continue the order in effect or if the order has been one of suspension the commissioner may revoke the permit. Otherwise the prior order shall be vacated. The commissioner of insurance shall be specifically authorized to adopt such rules and regulations as are reasonable and necessary to carry out the purposes and provisions of this act.
History: L. 1927, ch. 231, 40-205; L. 1965, ch. 295, § 2; L. 1988, ch. 356, § 74; L. 1996, ch. 169, § 2; July 1.
(a) No person shall perform any act toward selling the stock of any insurance company or health maintenance organization unless such person first obtains from the commissioner of insurance written authority to engage in the business of selling the stock of such company. Such applicant shall first be appointed in writing by the president or secretary of the company for which such applicant intends to sell stock. The applicant for such license shall file with the commissioner of insurance the applicant's written application for a license authorizing the applicant to engage in the business of selling such stock. The applicant shall make sworn answers to such interrogatories as the commissioner of insurance shall require. The fee charged for the issuance of such license shall not exceed $100 and shall be paid to the commissioner of insurance by the company requesting such license.
(b) Not later than December 1 of each year, the commissioner shall set and cause to be published in the Kansas register the fee required pursuant to this section for the next calendar year.
History: L. 1931, ch. 208, § 1; L. 1996, ch. 169, § 3; L. 2025, ch. 87, § 5; July 1.
The commissioner of insurance shall have the power to deny any applicant's application, if the applicant is not of a good business reputation, if the best interests of the public will not be served under such license, or for any other good cause appearing to the commissioner of insurance. Any applicant may request a hearing on the question of granting or refusing a license. Upon such request, the commissioner of insurance shall conduct a hearing in accordance with the provisions of the Kansas administrative procedure act.
History: L. 1931, ch. 208, § 2; L. 1984, ch. 313, § 70; July 1, 1985.
Whenever the commissioner of insurance is in possession of information indicating that any licensed agent is not of good business repute, or does not serve the interest of the public under such license, or for any other good cause, the commissioner of insurance may issue an order requiring such agent to show cause why the agent's license should not be revoked, and in any such order the commissioner of insurance shall fix the time and place for a hearing which shall be conducted in accordance with the provisions of the Kansas administrative procedure act. After the hearing, the commissioner of insurance shall have the right to continue or revoke the license according to the findings made at such hearing.
History: L. 1931, ch. 208, § 3; L. 1984, ch. 313, § 71; July 1, 1985.
Any person aggrieved by the commission's decision shall have the right to appeal the decision in accordance with the provisions of the Kansas judicial review act.
History: L. 1931, ch. 208, § 4; L. 1984, ch. 313, § 72; L. 2010, ch. 17, § 66; July 1.
The punishment for failure of a person to have a license as required by this act shall be a fine of not to exceed $500, or imprisonment in the county jail not to exceed six months, or both.
History: L. 1931, ch. 208, § 5; March 16.
History: L. 1927, ch. 231, 40-206; Repealed, L. 1965, ch. 295, § 3; June 30.
The board of directors or other managing body of every insurance company organized under the laws of this state shall require the secretary, and all other officers having the care and handling of the funds and securities of the company, to give a good and sufficient bond to cover the term for which they are elected, appointed or employed, conditioned for the faithful accounting and disbursement of all money that may come into their hands; such bond to be in an amount named and to be approved by the board of directors, and other governing body, and to be held by a custodian to be designated by such board or body, and the expense of providing such a bond may be charged to the operating expense of the company.
History: L. 1927, ch. 231, 40-207; June 1.
Every insurance company organized under the laws of this state having fulfilled the conditions precedent required by this code shall notify the commissioner of insurance who shall, prior to issuing any certificate of authority, make an examination, or cause the same to be made by some disinterested person appointed by him for that purpose. The corporators or officers of such company shall be required to certify under oath to the person making such examination that the money, notes, stocks, bonds, mortgages, deeds of trust and all obligations exhibited to him are the bona fide property of the company.
History: L. 1927, ch. 231, 40-208; June 1.
(a) Any insurance company organized under the laws of any other country, state or territory, upon application, may be authorized to transact business in this state, when possessed of the required amount of paid-up capital and surplus, or surplus only if a mutual company, and:
(1) Has made the deposit required by this code with the department of insurance of this or any other state in the United States;
(2) participates to the extent possible in the insurance regulatory information system administered by the national association of insurance commissioners;
(3) has submitted an examination report of its financial condition and affairs which has been conducted by the insurance department of the state of domicile within five years of the date of application unless the commissioner determines that an earlier report will satisfy the purpose of this provision;
(4) demonstrates that any majority ownership interests are in sound financial condition;
(5) is not owned, managed or controlled by persons previously convicted of criminal activity involving fraud or embezzlement or offenses of a similar nature;
(6) has been in operation at least three years and has been the subject of an examination of its affairs and financial condition other than its organizational examination. This requirement does not apply to subsidiary or affiliate companies with substantially the same management of an admitted company, a continuing corporation resulting from merger or consolidation or a company whose admission is determined by the commissioner to be in the best public interest;
(7) the company will not require immediate regulatory attention by the department upon admission pursuant to K.S.A. 40-222b, and amendments thereto.
(b) The authority shall not be granted, continued or renewed to any insurance company which is controlled, as such word is defined in subsection (c) of K.S.A. 40-3302, and amendments thereto, by another state of the United States or by a foreign government, or by any political subdivision of either.
(c) Every such company shall file a certified copy of its charter or deed of settlement with the commissioner of insurance, together with a statement, under oath of the president, vice-president or other chief officer and the secretary of the company for which they act, stating the name of the company, the place where located, and the amount of its capital, with a detailed statement of the facts and items required from companies organized under the laws of this state and a copy of the last annual report, if any was made, under any law of the state or country in which such company was incorporated.
(d) Upon the application of any such insurance company for a certificate of authority to transact business in this state, the commissioner of insurance shall be satisfied that the company is possessed of money and other admitted assets in excess of its liabilities, as herein provided, and that it has otherwise complied with all the other requirements of this code. The commissioner shall thereupon issue a certificate of authority to such company authorizing it to transact the classes of insurance permitted under its articles of incorporation and by the provisions of this code.
(e) The funds of any such insurance company, in excess of the minimum paid-up capital required by this code, may at all times be invested in such securities as are or may be authorized by the laws of the state in which such company is organized or in which it has and maintains its United States deposit.
(f) (1) Except as provided in paragraph (2), the commissioner of insurance may, upon renewal of a certificate of authority waive any of the above requirements except those relating to assets, capital and surplus.
(2) The commissioner of insurance may, at the commissioner's discretion, waive any of the above requirements for prescription drug plan sponsors as defined by 42 U.S.C. § 1395w-151, as in effect on January 1, 2006.
(g) Whenever any insurance company organized under the laws of any other country, state or territory is issued a certificate of authority to transact insurance in this state by the commissioner of insurance pursuant to this section, such company shall not be required to comply with the provisions of the general corporation code relating to foreign corporations, nor shall any such company be required to file with the secretary of state its articles of incorporation, charter, bylaws or other documents, or any amendments thereof, unless specifically required to do so by law.
History: L. 1927, ch. 231, 40-209; L. 1957, ch. 272, § 1; L. 1972, ch. 53, § 4; L. 1982, ch. 190, § 1; L. 1984, ch. 161, § 1; L. 2006, ch. 75, § 1; L. 2007, ch. 150, § 3; July 1.
History: L. 1931, ch. 210, § 1; L. 1970, ch. 174, § 1; Repealed, L. 1994, ch. 102, § 1; July 1.
That this act is supplemental to and in no wise derogatory of or amending or repealing any existing statutes prescribing the powers and duties of the state insurance department.
History: L. 1931, ch. 210, § 2; May 28.
To determine whether any insurance company organized under the laws of any government or state, other than one of the United States, may be permitted to transact the business of insurance, indemnity or suretyship in this state, the commissioner of insurance shall observe and be governed by the following rule: Such company shall be credited with all assets, at their actual value, which it may have deposited for the security of its policyholders within the United States in the insurance departments or with the chief financial officers of the several states of the United States, and with all assets it may have deposited for like purpose with and in the name of trustees appointed by such company, residents of the United States, approved by the chief officer of the insurance department of the state where such trustees reside or the commissioner of insurance of this state: Provided, That the plainly expressed terms and conditions of the deed or instrument under and by virtue of which such deposit is made and held by trustees are such that, until all liabilities secured by such deposit are canceled, there shall at all times be one or more acting trustees thereunder competent and authorized to hold, control and manage such trust to the full extent and for all the purposes for which it was created.
Any of the assets of the trust may be released therefrom upon substitution of other legally qualified assets of at least equivalent value. Assets in excess of the deposits required by law may be released from the trust upon the authority of the supervisory official designated in the trust agreement, which trust agreement shall have been approved by the chief officer of the insurance department of the state where such deed is filed or the commissioner of insurance of this state. A statement showing all assets deposited or released from the trust shall be furnished the commissioner of insurance of this state at such times as he, in his discretion may require, but not less than once each year: And provided further, That such company shall only have credit for such assets so deposited as are permitted under the laws of its domicile, but such assets shall be of a quality substantially as high as those permitted for investment by like domestic insurers.
History: L. 1927, ch. 231, 40-210; L. 1951, ch. 292, § 1; June 30.
No insurance company organized under the laws of any government or state other than one of the United States, shall be permitted to transact the business of insurance in this state unless the aggregate of such deposits shall be at least one hundred thousand dollars in excess of all its liabilities in the United States for unpaid losses, unearned premiums on risks not expired, and all other liabilities in the United States.
History: L. 1927, ch. 231, 40-211; June 1.
In considering the liabilities of any insurance company organized under the laws of any government or state other than one of the United States, it shall not be credited with risks reinsured, except for such risks as are reinsured in companies doing business in the United States, and which are or might, under the statutes of this state, be permitted to do business in this state.
History: L. 1927, ch. 231, 40-212; June 1.
It shall be unlawful for any insurance company or any agent thereof who shall have accepted premium notes in payment for policies of insurance to sell or assign such note or notes prior to the delivery of the policy or policies to the insured.
History: L. 1927, ch. 231, 40-213; June 1.
It shall be unlawful for any person, company, corporation or fraternal benefit society to transact the business of insurance, indemnity or suretyship, or do any act toward transacting such business, unless such person, company, corporation or fraternal benefit society shall have been duly authorized under the laws of this state to transact such business and shall have received proper written authority from the commissioner of insurance in conformity with the provisions of the laws of this state relative to insurance, indemnity and suretyship, and further, it shall be unlawful for any insurance company to effect contracts of insurance in this state on the life or person of residents of this state or on property located in this state except through persons duly licensed and certified in accordance with the insurance laws of this state and subject to the provisions of K.S.A. 40-245, and amendments thereto. Neither the enrollment of individuals under a group policy nor the inclusion of insurance in a credit transaction under an arrangement for its purchase by the creditor in compliance with the applicable provisions of the uniform consumer credit code shall constitute the effecting of a contract of insurance.
It shall be unlawful for any insurance company organized under the laws of this state to do business in any other state or territory of the United States without being first legally admitted and authorized to do business under the laws of such state or territory, and the insurance commissioner may revoke the license of any insurance company organized under the laws of this state and doing business in another state or territory without being first authorized so to do, and may require said company to pay the taxes upon the business so unlawfully written to the state or territory in which the business was written as provided by the laws of said state or territory. A company shall be considered admitted and authorized for the purposes of this section when it has been legally authorized to operate in such other state or territory as a nonadmitted insurer.
History: L. 1927, ch. 231, 40-214; L. 1929, ch. 196, § 1; L. 1959, ch. 209, § 1; L. 1974, ch. 184, § 2; L. 1979, ch. 133, § 1; July 1.
All certificates and licenses granted under this code shall continue in force until suspended, revoked, or otherwise terminated by the commissioner of insurance.
History: L. 1927, ch. 231, 40-215; L. 1978, ch. 167, § 1; July 1.
(a) (1) No insurance company shall hereafter transact business in this state until certified copies of its charter and amendments thereto shall have been filed with and approved by the commissioner of insurance. A copy of the bylaws and amendments thereto of insurance companies organized under the laws of this state shall also be filed with and approved by the commissioner of insurance. The commissioner may also require the filing of such other documents and papers as are necessary to determine compliance with the laws of this state.
(2) (A) Except as provided in subparagraph (B), each contract of insurance or indemnity issued or delivered in this state shall be effective on filing, or any subsequent date selected by the insurer, unless the commissioner disapproves such contract of insurance or indemnity within 30 days after filing because the contract of insurance or indemnity does not comply with Kansas law.
(B) The following contracts of insurance or indemnity shall not be subject to the provisions of subsection (A):
(i) Contracts pertaining to large risks as defined in K.S.A. 40-955, and amendments thereto, which are exempt from the filing requirements of this section;
(ii) personal lines contracts filed in accordance with paragraph (3);
(iii) any form filing for the basic coverage required by K.S.A. 40-3401 et seq., and amendments thereto; and
(iv) form filing for workers compensation.
No form filing listed in clauses (iii) and (iv) shall be used in this state by any insurer until such form filing has been approved by the commissioner.
(3) Each personal lines contract of insurance or indemnity issued or delivered in this state shall be on file for a period of 30 days before becoming effective unless the commissioner disapproves such personal lines contract of insurance or indemnity within 30 days after filing because the contract of insurance or indemnity does not comply with Kansas law. For the purposes of this paragraph, the term "personal lines" means insurance for noncommercial automobile, homeowners, dwelling, fire and renters insurance policies as defined by the commissioner by rules and regulations.
(4) Under such rules and regulations as the commissioner of insurance shall adopt, the commissioner may, by written order, suspend or modify the requirement of filing forms of contracts of insurance or indemnity, which cannot practicably be filed before they are used. Such orders, rules and regulations shall be made known to insurers and rating organizations affected thereby. The commissioner may make an examination to ascertain whether any forms affected by such order meet the standards of this code.
(5) The failure of any insurance company to comply with this section shall not constitute a defense to any action brought on its contracts. An insurer may satisfy its obligation to file its contracts of insurance or indemnity either individually or by authorizing the commissioner to accept on its behalf the filings made by a licensed rating organization or another insurer.
(b) The commissioner of insurance shall allow any insurance company authorized to transact business in this state to deliver to any person in this state any contract of insurance or indemnity, including any explanatory materials, written in any language other than the English language under the following conditions:
(1) The insured or applicant for insurance who is given a copy of the same contract of insurance or indemnity or explanatory materials written in the English language;
(2) the English language version of the contract for insurance or indemnity or explanatory materials delivered shall be the controlling version; and
(3) any contract of insurance or indemnity or explanatory materials written in any language other than English shall contain a disclosure statement printed in both the English language and the other language used, stating the English version of the contract of insurance or indemnity is the official or controlling version and that the version is written in any language other than English is furnished for informational purposes only.
(c) All contracts of insurance or indemnity that are required to be filed with the commissioner of insurance shall be accompanied by any version of such contract of insurance or indemnity written in any language other than the English language.
(d) Any insurance company or insurer, including any agent or employee thereof, who knowingly misrepresents the content of a contract of insurance or indemnity or explanatory materials written in a language other than the English language shall be deemed to have violated the unfair trade practice law.
(e) For the purposes of this section, the term "contract of insurance or indemnity" includes any rider, endorsement or application pertaining to such contract of insurance or indemnity.
(f) (1) If at any time after a filing becomes effective, the commissioner finds that such filing does not comply with this act, after the commissioner shall send written notice to every insurer and rating organization making such filing that a hearing concerning such filing will be held in not less than 10 days.
(2) After the hearing, the commissioner shall issue an order stating:
(A) The reasons why such filing failed to comply with the act; and
(B) the date, within a reasonable time after the date the order is issued, upon which such filing shall no longer be effective.
(3) A copy of the commissioner's order shall be sent to every insurer and rating organization that made such filing.
(4) No order issued pursuant to this subsection shall affect any contract or policy made or issued under such filing prior to the date specified upon which such filing shall no longer be effective.
History: L. 1927, ch. 231, 40-216; L. 1967, ch. 248, § 2; L. 1979, ch. 134, § 1; L. 1999, ch. 63, § 1; L. 2004, ch. 159, § 5; L. 2006, ch. 130, § 1; L. 2007, ch. 150, § 1; L. 2008, ch. 54, § 1; L. 2014, ch. 101, § 1; L. 2023, ch. 41, § 2; July 1.
The policies of any insurance company not organized under the laws of this state may, with the approval of the commissioner of insurance, contain any provision which the laws of the state, territory, district, or country under which the company is organized require in such policies, and the policies of any insurance company organized under the law of this state, may, when issued or delivered in any other state, territory, district, or country, contain any provisions required by the laws of the state, territory, district or country in which the same are issued or delivered.
History: L. 1927, ch. 231, 40-217; June 1.
(a) Every insurance company, or fraternal benefit society, on applying for authority to transact business in this state, and as a condition precedent to obtaining such authority, shall file in the insurance department its irrevocable written consent that any action or garnishment proceeding may be commenced against such company or fraternal benefit society in the proper court of any county in this state in which the cause of action shall arise or in which the plaintiff may reside by the service of process on the commissioner of insurance of this state, and stipulating and agreeing that such service shall be taken and held in all courts to be as valid and binding as if due service had been made upon the president or chief officer of such corporation. Such consent shall be executed by the president and secretary of the company and shall be accompanied by a duly certified copy of the order or resolution of the board of directors, trustees or managers authorizing the president and secretary to execute the same. The summons or order of garnishment, accompanied by a fee not to exceed $25, shall be directed to the commissioner of insurance, and shall require the defendant or garnishee to answer or otherwise respond by a certain day, not less than 40 days from the date the summons or order of garnishment is served on the commissioner. Not later than December 1 of each year, the commissioner shall set and cause to be published in the Kansas register the fee required pursuant to this subsection for the next calendar year.
(b) Service on the commissioner of insurance of any process, notice or demand against an insurance company or fraternal benefit society shall be made by delivering to and leaving with the commissioner or the commissioner's designee, the original of the process and two copies of the process and the petition, notice of demand, or the clerk of the court may send the original process and two copies of both the process and petition, notice or demand directly to the commissioner by certified mail, return receipt requested. In the event that any process, notice or demand is served on the commissioner, the commissioner shall immediately cause a copy thereof to be forwarded by certified mail, return receipt requested to the insurance company or fraternal benefit society address to its general agent if such agent resides in this state or to the secretary of the insurance company or fraternal benefit society sued at its registered or principal office in any state in which it is domesticated. The commissioner of insurance shall make return of the summons to the court from whence it issued, showing the date of its receipt, the date of forwarding such copies, and the name and address of each person to whom a copy was forwarded. Such return shall be under the hand and seal of office, and shall have the same force and effect as a due and sufficient return made on process directed to a sheriff. The commissioner of insurance shall keep a suitable record in which shall be docketed every action commenced against an insurance company, the time when commenced, the date and manner of service; also the date of the judgment, its amount and costs, and the date of payment thereof, which shall be certified from time to time by the clerk of the court.
History: L. 1927, ch. 231, 40-218; L. 1963, ch. 258, § 1; L. 1992, ch. 154, § 2; L. 1999, ch. 133, § 1; L. 2007, ch. 122, § 1; L. 2008, ch. 143, § 2; L. 2025, ch. 87, § 6; July 1.
Whenever any insurance company shall become liable to pay any loss to any person in this state, and shall neglect or refuse for three months after final judgment to pay the same, there being no appeal pending, and no supersedeas bond filed, the company may be enjoined from doing any business in this state until the judgment is fully paid.
History: L. 1927, ch. 231, 40-219; June 1.
It shall be unlawful for any person who is a resident of this state to bring or maintain any action arising in this state, at law or in equity, against any insurance company organized under the laws of this state except in some court of competent jurisdiction of this state; and any such insurance company shall be entitled to a writ of injunction against the maintenance of any such action and against the enforcement of any judgment which may be procured in violation of this section.
History: L. 1927, ch. 231, 40-220; June 1.
History: L. 1927, ch. 231, 40-221; L. 1965, ch. 296, § 1; Repealed, L. 1967, ch. 249, § 2; July 1.
(a) Credit for reinsurance shall be allowed a domestic ceding insurer as either an asset or a reduction from liability on account of reinsurance ceded only when the reinsurer meets the requirements of paragraph (1), (2), (3), (4), (5), (6) or (7). Credit shall be allowed under paragraph (1), (2) or (3) only as respects cessions of those kinds or classes of business that the assuming insurer is licensed or otherwise permitted to write or assume in its state of domicile or, in the case of a United States branch of an alien assuming insurer, in the state through which it is entered and licensed to transact insurance or reinsurance. Credit shall be allowed only under paragraph (3) or (4) if the applicable requirements of paragraph (8) have been satisfied.
(1) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is licensed to transact insurance or reinsurance in this state.
(2) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is accredited by the commissioner as a reinsurer in this state. In order to be eligible for accreditation, an assuming insurer must:
(A) File with the commissioner evidence of the assuming insurer's submission to this state's jurisdiction;
(B) submit to this state's authority to examine the assuming insurer's books and records;
(C) be licensed to transact insurance or reinsurance in at least one state, or in the case of a United States branch of an alien assuming insurer, be entered through and licensed to transact insurance or reinsurance in at least one state;
(D) file annually with the commissioner a copy of the assuming insurer's annual statement filed with the insurance department of the assuming insurer's state of domicile and a copy of the assuming insurer's most recent audited financial statement; and
(E) demonstrate to the satisfaction of the commissioner that it has adequate financial capacity to meet the assuming insurer's reinsurance obligations and is otherwise qualified to assume reinsurance from domestic insurers. An assuming insurer is deemed to meet this requirement as of the time of the assuming insurer's application if it maintains a surplus as regards policyholders in an amount not less than $20,000,000 and its accreditation has not been denied by the commissioner within 90 days after submission of its application.
(3) (A) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is domiciled in, or in the case of a United States branch of an alien assuming insurer is entered through, a state that employs standards regarding credit for reinsurance substantially similar to those applicable under this statute and the assuming insurer or United States branch of an alien assuming insurer:
(i) Maintains a surplus as regards policyholders in an amount not less than $20,000,000; and
(ii) submits to the authority of this state to examine the assuming insurer's books and records.
(B) The requirement of subsection (a)(3)(A)(i) does not apply to reinsurance ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system.
(4) (A) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that maintains a trust fund in a qualified United States financial institution, as defined in subsection (c)(2), for the payment of the valid claims of the assuming insurer's United States ceding insurers, their assigns and successors in interest. To enable the commissioner to determine the sufficiency of the trust fund, the assuming insurer shall report annually to the commissioner information substantially the same as that required to be reported on the national association of insurance commissioners annual statement form by licensed insurers. The assuming insurer shall submit to examination of its books and records by the commissioner and bear the expense of examination;
(B) (i) credit for reinsurance shall not be granted under this subsection unless the form of the trust and any amendments to the trust have been approved by either of the following:
(a) The commissioner of the state where the trust is domiciled; or
(b) the commissioner of another state who, pursuant to the terms of the trust instrument, has accepted principal regulatory oversight of the trust.
(ii) The form of the trust and any trust amendments also shall be filed with the commissioner of every state in which the ceding insurer's beneficiaries of the trust are domiciled. The trust instrument shall provide that contested claims shall be valid and enforceable upon the final order of any court of competent jurisdiction in the United States. The trust shall vest legal title to the trust's assets in its trustees for the benefit of the assuming insurer's United States ceding insurers, their assigns and successors in interest. The trust and the assuming insurer shall be subject to examination as determined by the commissioner.
(iii) The trust shall remain in effect for as long as the assuming insurer has outstanding obligations due under the reinsurance agreements subject to the trust. No later than February 28 of each year, the trustee of the trust shall report to the commissioner in writing the balance of the trust and the listing of the trust's investments at the preceding year-end and shall certify the date of termination of the trust, if so planned, or certify that the trust will not expire prior to the following December 31.
(C) The following requirements apply to the following categories of the assuming insurer:
(i) The trust fund for a single assuming insurer shall consist of funds in trust in an amount not less than the assuming insurer's liabilities attributable to reinsurance ceded by United States ceding insurers, and, in addition, the assuming insurer shall maintain a trusteed surplus of not less than $20,000,000, except as provided in subsection (a)(4)(C)(ii).
(ii) At any time after the assuming insurer has permanently discontinued underwriting new business secured by the trust for at least three full years, the commissioner with principal regulatory oversight of the trust may authorize a reduction in the required trusteed surplus, but only after a finding, based on an assessment of the risk, that the new required surplus level is adequate for the protection of United States ceding insurers, policyholders and claimants in light of reasonably foreseeable adverse loss development. The risk assessment may involve an actuarial review, including an independent analysis of reserves and cash flows, and shall consider all material risk factors, including, when applicable, the lines of business involved, the stability of the incurred loss estimates and the effect of the surplus requirements on the assuming insurer's liquidity or solvency. The minimum required trusteed surplus shall not be reduced to an amount less than 30% of the assuming insurer's liabilities attributable to reinsurance ceded by United States ceding insurers covered by the trust;
(iii) (a) in the case of a group including incorporated and individual unincorporated underwriters, all of the following requirements are met:
(1) For reinsurance ceded under reinsurance agreements with an inception, amendment or renewal date on or after January 1, 1993, the trust shall consist of a trusteed account in an amount not less than the respective underwriters' several liabilities attributable to business ceded by United States domiciled ceding insurers to any underwriter of the group;
(2) for reinsurance ceded under reinsurance agreements with an inception date on or before December 31, 1992, and not amended or renewed after that date, notwithstanding the other provisions of this act, the trust shall consist of a trusteed account in an amount not less than the respective underwriters' several insurance and reinsurance liabilities attributable to business written in the United States; and
(3) in addition to the trusts described in subsections (a)(4)(B)(iii)(a)(1) and (a)(4)(B)(iii)(a)(2), the group shall maintain in trust a trusteed surplus of which $100,000,000 shall be held jointly for the benefit of the United States domiciled ceding insurers of any member of the group for all years of account.
(b) The incorporated members of the group shall not be engaged in any business other than underwriting as a member of the group and shall be subject to the same level of regulation and solvency control by the group's domiciliary regulator as are the unincorporated members of the group; and
(c) within 90 days after its financial statements are due to be filed with the group's domiciliary regulator, the group shall provide to the commissioner an annual certification by the group's domiciliary regulator of the solvency of each underwriter member, or if a certification is unavailable, financial statements prepared by independent public accountants of each underwriter member of the group.
(iv) In the case of a group of incorporated underwriters under common administration, the group shall meet all of the following requirements:
(a) Have continuously transacted an insurance business outside the United States for at least three years immediately prior to making application for accreditation;
(b) maintain an aggregate policyholders' surplus of at least $10,000,000,000;
(c) maintain a trust fund in an amount not less than the group's several liabilities attributable to business ceded by United States domiciled ceding insurers to any member of the group pursuant to reinsurance contracts issued in the name of the group;
(d) in addition, maintain a joint trusteed surplus of which $100,000,000 shall be held jointly for the benefit of United States domiciled ceding insurers of any member of the group as additional security for these liabilities; and
(e) within 90 days after the group's financial statements are due to be filed with the group's domiciliary regulator, make available to the commissioner an annual certification of each underwriter member's solvency by the member's domiciliary regulator and financial statements of each underwriter member of the group prepared by its independent public accountant.
(5) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that has been certified by the commissioner as a reinsurer in this state and the reinsurer secures its obligations in accordance with the following requirements:
(A) In order to be eligible for certification, the assuming insurer shall meet all of the following requirements:
(i) Be domiciled and licensed to transact insurance or reinsurance in a qualified jurisdiction, as determined by the commissioner pursuant to subsection (a)(5)(C);
(ii) maintain minimum capital and surplus, or its equivalent, in an amount to be determined by the commissioner pursuant to regulation;
(iii) maintain financial strength ratings from two or more rating agencies deemed acceptable by the commissioner pursuant to regulation;
(iv) agree to submit to the jurisdiction of this state, appoint the commissioner as the assuming insurer's agent for service of process in this state, and agree to provide security for 100% of the assuming insurer's liabilities attributable to reinsurance ceded by United States ceding insurers if the assuming insurer resists enforcement of a final United States judgment;
(v) agree to meet applicable information filing requirements as determined by the commissioner, both with respect to an initial application for certification and on an ongoing basis; and
(vi) satisfy any other requirements for certification deemed relevant by the commissioner.
(B) An association including incorporated and individual unincorporated underwriters may be a certified reinsurer. In order to be eligible for certification, in addition to satisfying the requirements of subsection (a)(5)(A) and all of the following requirements:
(i) The association shall satisfy its minimum capital and surplus requirements through the capital and surplus equivalents, net of liabilities, of the association and its members, that shall include a joint central fund that may be applied to any unsatisfied obligation of the association or any of its members, in an amount determined by the commissioner to provide adequate protection;
(ii) the incorporated members of the association shall not be engaged in any business other than underwriting as a member of the association and shall be subject to the same level of regulation and solvency control by the association's domiciliary regulator as are the unincorporated members of the association; and
(iii) within 90 days after the association's financial statements are due to be filed with the association's domiciliary regulator, the association shall provide to the commissioner an annual certification by the association's domiciliary regulator of the solvency of each underwriter member. If a certification is unavailable, financial statements prepared by independent public accountants of each underwriter member of the association shall be provided instead.
(C) The commissioner shall create and publish a list of qualified jurisdictions under which an assuming insurer licensed and domiciled in such jurisdiction is eligible to be considered for certification by the commissioner as a certified reinsurer.
(i) In order to determine whether the domiciliary jurisdiction of a non-U.S. assuming insurer is eligible to be recognized as a qualified jurisdiction, the commissioner shall evaluate the appropriateness and effectiveness of the reinsurance supervisory system of the jurisdiction, both initially and on an ongoing basis, and consider the rights, benefits and the extent of reciprocal recognition afforded by the non-U.S. jurisdiction to reinsurers licensed and domiciled in the United States. In order to be recognized as a qualified jurisdiction, a jurisdiction must agree to share information and cooperate with the commissioner with respect to all certified reinsurers domiciled within that jurisdiction. A jurisdiction shall not be recognized as a qualified jurisdiction if the commissioner has determined that the jurisdiction does not adequately and promptly enforce final United States judgments and arbitration awards. Additional factors may be considered in the discretion of the commissioner.
(ii) A list of qualified jurisdictions shall be published through the national association of insurance commissioners' process. The commissioner shall consider this list in determining qualified jurisdictions. If the commissioner recognizes a jurisdiction as qualified that does not appear on the list of qualified jurisdictions, the commissioner shall provide thoroughly documented justification in accordance with criteria to be developed under rules and regulations.
(iii) United States jurisdictions that meet the requirement for accreditation under the national association of insurance commissioners' financial standards and accreditation program shall be recognized as qualified jurisdictions.
(iv) If a certified reinsurer's domiciliary jurisdiction ceases to be a qualified jurisdiction, the commissioner has the discretion to suspend the reinsurer's certification indefinitely, in lieu of revocation.
(D) The commissioner shall assign a rating to each certified reinsurer, giving due consideration to the financial strength ratings that have been assigned by rating agencies deemed acceptable to the commissioner pursuant to rules and regulations. The commissioner shall publish a list of all certified reinsurers and their ratings.
(E) A certified reinsurer shall secure obligations assumed from United States ceding insurers under this subsection at a level consistent with the certified reinsurer's rating, as specified in rules and regulations promulgated by the commissioner.
(i) In order for a domestic ceding insurer to qualify for full financial statement credit for reinsurance ceded to a certified reinsurer, the certified reinsurer shall maintain security in a form acceptable to the commissioner and consistent with the provisions of subsection (b), or in a multi-beneficiary trust in accordance with subsection (a)(4), except as otherwise provided in this subsection.
(ii) If a certified reinsurer maintains a trust to fully secure its obligations subject to subsection (a)(4), and chooses to secure its obligations incurred as a certified reinsurer in the form of a multi-beneficiary trust, the certified reinsurer shall maintain separate trust accounts for its obligations incurred under reinsurance agreements issued or renewed as a certified reinsurer with reduced security as permitted by this subsection or comparable laws of other United States jurisdictions and for its obligations subject to subsection (a)(4). It shall be a condition to the grant of certification under subsection (a)(5) that the certified reinsurer shall have bound itself, by the language of the trust and agreement with the commissioner who has principal regulatory oversight of each such trust account, to fund, upon termination of any such trust account, any deficiency of any other such trust account out of the remaining surplus of the terminated trust account.
(iii) The minimum trusteed surplus requirements provided in subsection (a)(4) are not applicable with respect to a multi-beneficiary trust maintained by a certified reinsurer for the purpose of securing obligations incurred under this subsection, except that such trust shall maintain a minimum trusteed surplus of $10,000,000.
(iv) With respect to obligations incurred by a certified reinsurer under this subsection, if the security is insufficient, the commissioner shall reduce the allowable credit by an amount proportionate to the deficiency, and the commissioner has the discretion to impose further reductions in allowable credit upon finding there is a material risk that the certified reinsurer's obligations will not be paid in full when due.
(v) For purposes of this subsection, a certified reinsurer whose certification has been terminated for any reason shall be treated as a certified reinsurer required to secure 100% of its obligations.
(a) As used in this paragraph, the term "terminated" includes revocation, suspension, voluntary surrender and inactive status.
(b) If the commissioner continues to assign a higher rating as permitted by other provisions of this subsection, this requirement does not apply to a certified reinsurer in inactive status or to a reinsurer whose certification has been suspended.
(F) If an assuming insurer applying for certification as a reinsurer in this state has been certified as a reinsurer in an another jurisdiction accredited by the national association of insurance commissioners, the commissioner has the discretion to defer to that jurisdiction's certification, and has the discretion to defer to the rating assigned by that jurisdiction, and such assuming insurer shall be considered to be a certified reinsurer in this state.
(G) A certified reinsurer that ceases to assume new business in this state may request to maintain the reinsurer's certification in inactive status in order to continue to qualify for a reduction in amount of security required for the reinsurer's in force business. An inactive certified reinsurer shall continue to comply with all applicable requirements of this subsection, and the commissioner shall assign a rating that takes into account, if relevant, the reasons why the reinsurer is not assuming new business.
(6) (A) Credit shall be allowed when the reinsurance is ceded to an assuming insurer meeting each of the conditions set forth below.
(i) The assuming insurer must have its head office or be domiciled in, as applicable, and be licensed in a reciprocal jurisdiction. A "reciprocal jurisdiction" is a jurisdiction that meets one of the following:
(a) A non-U.S. jurisdiction that is subject to an in-force covered agreement with the United States, each within its legal authority, or, in the case of a covered agreement between the United States and the European Union, is a member state of the European Union. For purposes of this subsection, a "covered agreement" is an agreement entered into pursuant to Dodd-Frank wall street reform and consumer protection act, 31 U.S.C. §§ 313 and 314, that is currently in effect or in a period of provisional application and addresses the elimination, under specified conditions, of collateral requirements as a condition for entering into any reinsurance agreement with a ceding insurer domiciled in this state or for allowing the ceding insurer to recognize credit for reinsurance;
(b) a United States jurisdiction that meets the requirements for accreditation under the national association of insurance commissioners financial standards and accreditation program; or
(c) a qualified jurisdiction, as determined by the commissioner pursuant to subsection (a)(5)(C), that is not otherwise described in subsection (a)(6)(A)(i)(a) or (b) and that meets certain additional requirements, consistent with the terms and conditions of in-force covered agreements, as specified by the commissioner.
(ii) The assuming insurer shall have and maintain, on an ongoing basis, minimum capital and surplus, or its equivalent, calculated according to the methodology of its domiciliary jurisdiction, in an amount to be set forth by the commissioner. If the assuming insurer is an association, including incorporated and individual unincorporated underwriters, it shall have and maintain, on an ongoing basis, minimum capital and surplus equivalents, net of liabilities, calculated according to the methodology applicable in its domiciliary jurisdiction, and a central fund containing a balance in amounts to be set forth by the commissioner.
(iii) The assuming insurer shall have and maintain, on an ongoing basis, a minimum solvency or capital ratio, as applicable, to be set forth by the commissioner. If the assuming insurer is an association, including incorporated and individual unincorporated underwriters, it shall have and maintain, on an ongoing basis, a minimum solvency or capital ratio in the reciprocal jurisdiction where the assuming insurer has its head office or is domiciled, as applicable, and is also licensed.
(iv) The assuming insurer shall agree and provide adequate assurance to the commissioner, in a form specified by the commissioner, as follows:
(a) The assuming insurer shall provide prompt written notice and explanation to the commissioner if it falls below the minimum requirements set forth in subsection (a)(6)(A)(ii) or (iii), or if any regulatory action is taken against the assuming insurer for serious noncompliance with applicable law;
(b) the assuming insurer shall consent in writing to the jurisdiction of the courts of this state and to the appointment of the commissioner as the assuming insurer's agent for service of process. The commissioner may require that consent for service of process be provided to the commissioner and included in each reinsurance agreement. Nothing in this provision shall limit, or in any way alter, the capacity of parties to a reinsurance agreement to agree to alternative dispute resolution mechanisms, except to the extent such agreements are unenforceable under applicable insolvency or delinquency laws;
(c) the assuming insurer shall consent in writing to pay all final judgments, wherever enforcement is sought, obtained by a ceding insurer or its legal successor, that have been declared enforceable in the jurisdiction where the judgment was obtained;
(d) each reinsurance agreement shall include a provision requiring the assuming insurer to provide security in an amount equal to 100% of the assuming insurer's liabilities attributable to reinsurance ceded pursuant to that agreement if the assuming insurer resists enforcement of a final judgment that is enforceable under the law of the jurisdiction in which it was obtained or a properly enforceable arbitration award, whether obtained by the ceding insurer or by its legal successor on behalf of its resolution estate; and
(e) the assuming insurer shall confirm that it is not presently participating in any solvent scheme of arrangement that involves this state's ceding insurers, agree to notify the ceding insurer and the commissioner and to provide security in an amount equal to 100% of the assuming insurer's liabilities to the ceding insurer, should the assuming insurer enter into such a solvent scheme of arrangement. Such security shall be in a form consistent with the provisions of subsections (a)(5) and (b) and as specified by the commissioner.
(v) The assuming insurer or its legal successor shall provide, if requested by the commissioner, on behalf of itself and any legal predecessors, certain documentation to the commissioner, as specified by the commissioner.
(vi) The assuming insurer shall maintain a practice of prompt payment of claims under reinsurance agreements.
(vii) The assuming insurer's supervisory authority must confirm to the commissioner on an annual basis, as of the preceding December 31 or at the annual date otherwise statutorily reported to the reciprocal jurisdiction, that the assuming insurer complies with the requirements set forth in subsection (a)(6)(A)(ii) or (iii).
(viii) Nothing in this provision precludes an assuming insurer from providing the commissioner with information on a voluntary basis.
(B) The commissioner shall timely create and publish a list of reciprocal jurisdictions.
(i) A list of reciprocal jurisdictions is published through the national association of insurance commissioners committee process. The commissioner's list shall include any reciprocal jurisdiction, as defined under subsections (a)(6)(A)(i)(a) and (b), and shall consider any other reciprocal jurisdiction included on the national association of insurance commissioners list. The commissioner may approve a jurisdiction that does not appear on the national association of insurance commissioners list of reciprocal jurisdictions in accordance with criteria to be developed by the commissioner.
(ii) The commissioner may remove a jurisdiction from the list of reciprocal jurisdictions upon a determination that the jurisdiction no longer meets the requirements of a reciprocal jurisdiction, in accordance with a process set forth by the commissioner, except that the commissioner shall not remove from the list a reciprocal jurisdiction, as defined under subsections (a)(6)(A)(i)(a) and (b). Upon removal of a reciprocal jurisdiction from this list, credit for reinsurance ceded to an assuming insurer that has its home office or is domiciled in that jurisdiction shall be allowed, if otherwise allowed pursuant to this section.
(C) The commissioner shall timely create and publish a list of assuming insurers that have satisfied the conditions set forth in this subsection and to which cessions shall be granted credit in accordance with this subsection. The commissioner may add an assuming insurer to such list if a national association of insurance commissioners accredited jurisdiction has added such assuming insurer to a list of such assuming insurers or if, upon initial eligibility, the assuming insurer submits the information to the commissioner as required under subsection (a)(6)(A)(iv) and complies with any additional requirements that the commissioner may impose, except to the extent that they conflict with an applicable covered agreement.
(D) If the commissioner determines that an assuming insurer no longer meets one or more of the requirements under this subsection, the commissioner may revoke or suspend the eligibility of the assuming insurer for recognition under this subsection.
(i) While an assuming insurer's eligibility is suspended, no reinsurance agreement issued, amended or renewed after the effective date of the suspension qualifies for credit except to the extent that the assuming insurer's obligations under the contract are secured in accordance with subsection (b).
(ii) If an assuming insurer's eligibility is revoked, no credit for reinsurance may be granted after the effective date of the revocation with respect to any reinsurance agreements entered into by the assuming insurer, including reinsurance agreements entered into prior to the date of revocation, except to the extent that the assuming insurer's obligations under the contract are secured in a form acceptable to the commissioner and consistent with the provisions of subsection (b).
(E) If subject to a legal process of rehabilitation, liquidation or conservation, as applicable, the ceding insurer, or its representative, may seek and, if determined appropriate by the court in which the proceedings are pending, may obtain an order requiring that the assuming insurer post security for all outstanding ceded liabilities.
(F) Nothing in this subsection shall limit or in any way alter the capacity of parties to a reinsurance agreement to agree on requirements for security or other terms in that reinsurance agreement, except as expressly prohibited by this section or other applicable law or regulation.
(G) Credit may be taken under this subsection only for reinsurance agreements entered into, amended or renewed on or after July 1, 2021, and only with respect to losses incurred and reserves reported on or after the later of the date on which the assuming insurer has met all eligibility requirements pursuant to subsection (a)(6)(A), or the effective date of the new reinsurance agreement, amendment or renewal.
(H) This paragraph does not alter or impair a ceding insurer's right to take credit for reinsurance, to the extent that credit is not available under this subsection, as long as the reinsurance qualifies for credit under any other applicable provision of this section.
(I) Nothing in this subsection shall:
(i) Authorize an assuming insurer to withdraw or reduce the security provided under any reinsurance agreement except as permitted by the terms of the agreement; or
(ii) limit, or in any way alter, the capacity of parties to any reinsurance agreement to renegotiate the agreement.
(7) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that does not meet the requirements of subsections (a)(1) through (a)(6), but only as to the insurance of risks located in jurisdictions where the reinsurance is required by applicable law or regulation of that jurisdiction.
(8) If the assuming insurer is not licensed, accredited or certified to transact insurance or reinsurance in this state, the credit permitted by subsections (a)(3) and (a)(4) of this section shall not be allowed, unless the assuming insurer agrees in the reinsurance agreement to do all of the following:
(A) (i) In the event of the failure of the assuming insurer to perform its obligations under the terms of the reinsurance agreement, the assuming insurer, at the request of the ceding insurer, will: Submit to the jurisdiction of any court of competent jurisdiction in any state of the United States; comply with all requirements necessary to give the court jurisdiction; and abide by the final decision of the court or of any appellate court in the event of an appeal; and
(ii) the assuming insurer will designate the commissioner or a designated attorney as its true and lawful attorney to receive lawful process in any action, suit or proceeding instituted by or on behalf of the ceding insurer.
(B) This subsection is not intended to conflict with or override the obligation of the parties to a reinsurance agreement to arbitrate their disputes, if the obligation is created in the agreement.
(9) If the assuming insurer does not meet the requirements of subsection (a)(1), (a)(2), (a)(3) or (a)(6), the credit permitted by subsection (a)(4) or (a)(5) shall not be allowed unless the assuming insurer agrees in a trust agreement to the following conditions:
(A) Notwithstanding any other provisions in the trust instrument, if the trust fund is inadequate because the trust fund contains an amount less than the amount required by subsection (a)(4)(C), or if the grantor of the trust has been declared insolvent or has been placed into receivership, rehabilitation, liquidation or similar proceedings under the laws of the trust's state or country of domicile, the trustee shall comply with an order of the commissioner with regulatory oversight over the trust or with an order of a court of competent jurisdiction directing the trustee to transfer all of the assets of the trust fund to the commissioner with regulatory oversight over the trust.
(B) The assets shall be distributed and claims shall be filed with and valued by the commissioner with regulatory oversight in accordance with the laws of the state in which the trust is domiciled that are applicable to the liquidation of domestic insurance companies.
(C) If the commissioner with regulatory oversight over the trust determines that the assets of the trust fund or any part of the trust fund are not necessary to satisfy the claims of the United States ceding insurers of the grantor of the trust, the assets of the trust or part of those assets shall be returned by the commissioner with regulatory oversight over the trust to the trustee for distribution in accordance with the trust agreement.
(D) The grantor shall waive any right otherwise available to it under United States law that is inconsistent with the provisions of this subsection.
(10) Credit for reinsurance ceded to a certified reinsurer is limited to reinsurance contracts entered or renewed on or after the effective date of the certification of the assuming insurer by the commissioner.
(11) If an accredited or certified reinsurer ceases to meet the requirements of this section for accreditation or certification, the commissioner may suspend or revoke the reinsurer's accreditation or certification.
(A) The commissioner shall give the reinsurer notice and opportunity for a hearing prior to such suspension or revocation. The suspension or revocation shall not take effect until after the commissioner's order on hearing, unless one of the following applies:
(i) The reinsurer waives its right to a hearing;
(ii) the commissioner's order is based on regulatory action by the reinsurer's domiciliary jurisdiction or by the voluntary surrender or termination of the reinsurer's eligibility to transact insurance or reinsurance business in its domiciliary jurisdiction or in the primary certifying state of the reinsurer under subsection (a)(5)(F); or
(iii) the commissioner finds that an emergency requires immediate action and a court of competent jurisdiction has not stayed the commissioner's action.
(B) While a reinsurer's accreditation or certification is suspended, a reinsurance contract issued or renewed after the effective date of the suspension does not qualify for credit, except to the extent that the reinsurer's obligations under the reinsurance contract are secured in accordance with subsection (b). If a reinsurer's accreditation or certification is revoked, credit for reinsurance shall not be granted after the effective date of the revocation, except to the extent that the reinsurer's obligations under the contract are secured in accordance with subsection (a)(5)(A) or (a)(5)(B).
(12) (A) A domestic ceding insurer shall take steps to manage its reinsurance recoverables proportionate to its own book of business. A domestic ceding insurer shall notify the commissioner within 30 days after reinsurance recoverables from any single assuming insurer, or group of affiliated assuming insurers, exceeds 50% of the domestic ceding insurer's last reported surplus to policyholders, or after it is determined that reinsurance recoverables from any single assuming insurer, or group of affiliated assuming insurers, is likely to exceed this limit. The notification shall demonstrate that the exposure is safely managed by the domestic ceding insurer.
(B) A domestic ceding insurer shall take steps to diversify its reinsurance program. A domestic ceding insurer shall notify the commissioner within 30 days after ceding to any single assuming insurer, or group of affiliated assuming insurers, more than 20% of the ceding insurer's gross written premium in the prior calendar year, or after the domestic ceding insurer has determined that the reinsurance ceded to any single assuming insurer, or group of affiliated assuming insurers, is likely to exceed this limit. The notification shall demonstrate that the exposure is safely managed by the domestic ceding insurer.
(b) An asset or a reduction from liability for the reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of subsection (a) shall be allowed in an amount not exceeding the liabilities carried by the ceding insurer. The reduction shall be in the amount of funds held by or on behalf of the ceding insurer, including funds held in trust for the ceding insurer, under a reinsurance contract with the assuming insurer as security for the payment of obligations under the contract, if the security is held in the United States subject to withdrawal solely by, and under the exclusive control of, the ceding insurer; or, in the case of a trust, held in a qualified United States financial institution, as defined in subsection (c)(2). The security may be in the form of any of the following:
(1) Cash;
(2) a security listed by the securities valuation office of the national association of insurance commissioners, including those securities deemed exempt from filing, as defined by the purposes and procedures manual of the national association of insurance commissioners investment analysis office, and qualifying as admitted assets;
(3) (A) clean, irrevocable, unconditional letters of credit, issued or confirmed by a qualified United States financial institution, as defined in subsection (c)(1), effective no later than December 31 of the year for which the filing is being made, and in the possession of, or in trust for, the ceding insurer on or before the filing date of the ceding insurer's annual statement; or
(B) a letter of credit meeting applicable standards of issuer acceptability as of the date of the letter of credit's issuance, or confirmation, shall, notwithstanding the issuing or confirming, institution's subsequent failure to meet applicable standards of issuer acceptability, continue to be acceptable as security until their expiration, extension, renewal, modification or amendment, whichever first occurs; or
(4) any other form of security acceptable to the commissioner.
(c) (1) For purposes of subsection (b)(3), a "qualified United States financial institution" means an institution that meets all of the following requirements:
(A) Is organized or, in the case of a United States office of a foreign banking organization, licensed under the laws of the United States or any state thereof;
(B) is regulated, supervised and examined by United States federal or state authorities having regulatory authority over banks and trust companies; and
(C) has been determined by either the commissioner or the securities valuation office of the national association of insurance commissioners to meet the standards of financial condition and standing as are considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit will be acceptable to the commissioner.
(2) For purposes of those provisions of this law specifying those institutions that are eligible to act as a fiduciary of a trust, a "qualified United States financial institution" means an institution that meets all of the following requirements:
(i) Is organized, or in the case of a United States branch or agency office of a foreign banking organization, is licensed under the laws of the United States or any state of the United States and has been granted authority to operate with fiduciary powers; and
(ii) is regulated, supervised and examined by federal or state authorities having regulatory authority over banks and trust companies.
(d) The commissioner is hereby authorized to adopt any rules and regulations necessary to implement the provisions of this law.
History: L. 1965, ch. 296, § 2; L. 1967, ch. 249, § 1; L. 1970, ch. 175, § 1; L. 1974, ch. 185, § 1; L. 1985, ch. 157, § 1; L. 1995, ch. 155, § 1; L. 1996, ch. 78, § 1; L. 1998, ch. 174, § 29; L. 1999, ch. 66, § 1; L. 2002, ch. 20, § 1; L. 2017, ch. 72, § 4; L. 2021, ch. 108, § 3; L. 2022, ch. 46, § 2; July 1.
(a)
Purpose.
The actions and information required by this section are declared to be necessary and appropriate in the public interest and for the protection of the ceding insurers in this state.
(b)
Severability.
If any provision of this section, or the application of the provision to any person or circumstance, is held invalid, the remainder of the act, and the application of the provision to persons or circumstances other than those to which it is held invalid, shall not be affected.
(c)
Credit for reinsurance – reinsurer licensed in this state.
Pursuant to K.S.A.
40-221a(a), and amendments thereto, the commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that was licensed in this state as of any date on which statutory financial statement credit for reinsurance is claimed.
(d)
Credit for reinsurance – accredited reinsurers.
(1) Pursuant to K.S.A.
40-221a(a)(2), and amendments thereto, the commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that is accredited as a reinsurer in this state as of the date on which statutory financial statement credit for reinsurance is claimed. An accredited reinsurer shall:
(A) File a properly executed form ar-1 in accordance with the instructions and as prescribed and adopted by the national association of insurance commissioners and the commissioner of insurance as evidence of its submission to this state's jurisdiction and to this state's authority to examine its books and records;
(B) file with the commissioner a certified copy of a certificate of authority or other acceptable evidence that it is licensed to transact insurance or reinsurance in at least one state, or, in the case of a United States branch of an alien assuming insurer, is entered through and licensed to transact insurance or reinsurance in at least one state;
(C) file annually with the commissioner a copy of its annual statement filed with the insurance department of its state of domicile or, in the case of an alien assuming insurer, with the state through which it is entered and in which it is licensed to transact insurance or reinsurance, and a copy of its most recent audited financial statement; and
(D) maintain a surplus as regards policyholders in an amount not less than $20,000,000, or obtain the affirmative approval of the commissioner upon a finding that it has adequate financial capacity to meet its reinsurance obligations and is otherwise qualified to assume reinsurance from domestic insurers.
(2) If the commissioner determines that the assuming insurer has failed to meet or maintain any of these qualifications, the commissioner may, upon written notice and opportunity for hearing, suspend or revoke the accreditation. Credit shall not be allowed a domestic ceding insurer under this section if the assuming insurer's accreditation has been revoked by the commissioner, or if the reinsurance was ceded while the assuming insurer's accreditation was under suspension by the commissioner.
(e)
Credit for reinsurance
– reinsurer domiciled in another state.
(1) Pursuant to K.S.A.
40-221a(a)(3), and amendments thereto, the commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that, as of any date on which statutory financial statement credit for reinsurance is claimed:
(A) Is domiciled in or, in the case of a United States branch of an alien assuming insurer, is entered through, a state that employs standards regarding credit for reinsurance substantially similar to those applicable under K.S.A.
40-221a, and amendments thereto, and this section;
(B) maintains a surplus as regards policyholders in an amount not less than $20,000,000; and
(C) files a properly executed form ar-1, in accordance with the instructions and as prescribed and adopted by the national association of insurance commissioners and the commissioner of insurance, with the commissioner as evidence of its submission to this state's authority to examine its books and records.
(2) The provisions of this section relating to surplus as regards policyholders shall not apply to reinsurance ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system. As used in this section, "substantially similar" standards means credit for reinsurance standards that the commissioner determines are equal to or exceed the standards of K.S.A.
40-221a, and amendments thereto, and this section.
(f)
Credit for reinsurance – reinsurers maintaining trust funds.
(1) Pursuant to K.S.A.
40-221a(a)(4), and amendments thereto, the commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that, as of any date on which statutory financial statement credit for reinsurance is claimed, and thereafter for so long as credit for reinsurance is claimed, maintains a trust fund in an amount prescribed below in a qualified United States financial institution, as defined in K.S.A.
40-221a(c)(2), and amendments thereto, for the payment of the valid claims of its United States-domiciled ceding insurers, their assigns and successors in interest. The assuming insurer shall report annually to the commissioner substantially the same information as that required to be reported on the national association of insurance commissioners annual statement form by licensed insurers, to enable the commissioner to determine the sufficiency of the trust fund.
(2) The following requirements apply to the following categories of assuming insurer:
(A) The trust fund for a single assuming insurer shall consist of funds in trust in an amount not less than the assuming insurer's liabilities attributable to reinsurance ceded by United States-domiciled insurers and, in addition, the assuming insurer shall maintain a trusteed surplus of not less than $20,000,000, except as provided in subparagraph (B).
(B) At any time after the assuming insurer has permanently discontinued underwriting new business secured by the trust for at least three full years, the commissioner with principal regulatory oversight of the trust may authorize a reduction in the required trusteed surplus, but only after a finding, based on an assessment of the risk, that the new required surplus level is adequate for the protection of United States ceding insurers, policyholders and claimants in light of reasonably foreseeable adverse loss development. The risk assessment may involve an actuarial review, including an independent analysis of reserves and cash flows, and shall consider all material risk factors, including, when applicable, the lines of business involved, the stability of the incurred loss estimates and the effect of the surplus requirements on the assuming insurer's liquidity or solvency. The minimum required trusteed surplus may not be reduced to an amount less than 30% of the assuming insurer's liabilities attributable to reinsurance ceded by United States ceding insurers covered by the trust.
(C) (i) The trust fund for a group including incorporated and individual unincorporated underwriters shall consist of:
(a) For reinsurance ceded under reinsurance agreements with an inception date, amendment or renewal date on or after January 1, 1993, funds in trust in an amount not less than the respective underwriters' several liabilities attributable to business ceded by United States-domiciled ceding insurers to any underwriter of the group;
(b) for reinsurance ceded under reinsurance agreements with an inception date on or before December 31, 1992, and not amended or renewed after that date, notwithstanding the other provisions of this section, funds in trust in an amount not less than the respective underwriters' several insurance and reinsurance liabilities attributable to business written in the United States; and
(c) in addition to these trusts, the group shall maintain a trusteed surplus of which $100,000,000 shall be held jointly for the benefit of the United States-domiciled ceding insurers of any member of the group for all the years of account.
(ii) The incorporated members of the group shall not be engaged in any business other than underwriting as a member of the group and shall be subject to the same level of regulation and solvency control by the group's domiciliary regulator as are the unincorporated members. The group shall, within 90 days after its financial statements are due to be filed with the group's domiciliary regulator, provide to the commissioner:
(a) An annual certification by the group's domiciliary regulator of the solvency of each underwriter member of the group; or
(b) if a certification is unavailable, a financial statement, prepared by independent public accountants, of each underwriter member of the group.
(D) (i) The trust fund for a group of incorporated insurers under common administration, whose members possess aggregate policyholders surplus of $10,000,000,000 as calculated and reported in substantially the same manner as prescribed by the annual statement instructions and accounting practices and procedures manual of the national association of insurance commissioners and that has continuously transacted an insurance business outside the United States for at least three years immediately prior to making application for accreditation, shall:
(a) Consist of funds in trust in an amount not less than the assuming insurers' several liabilities attributable to business ceded by United States-domiciled ceding insurers to any members of the group pursuant to reinsurance contracts issued in the name of such group;
(b) maintain a joint trusteed surplus of which $100,000,000 shall be held jointly for the benefit of United States-domiciled ceding insurers of any member of the group; and
(c) file a properly executed form ar-1, in accordance with the instructions and as prescribed and adopted by the national association of insurance commissioners and the commissioner of insurance, as evidence of the submission to this state's authority to examine the books and records of any of its members and shall certify that any member examined will bear the expense of any such examination.
(ii) Within 90 days after the statements are due to be filed with the group's domiciliary regulator, the group shall file with the commissioner an annual certification of each underwriter member's solvency by the member's domiciliary regulators and financial statements, prepared by independent public accountants, of each underwriter member of the group.
(3) (A) Credit for reinsurance shall not be granted unless the form of the trust and any amendments to the trust have been approved by either the commissioner of the state where the trust is domiciled or the commissioner of another state who, pursuant to the terms of the trust instrument, has accepted responsibility for regulatory oversight of the trust. The form of the trust and any trust amendments also shall be filed with the commissioner of every state in which the ceding insurer beneficiaries of the trust are domiciled. The trust instrument shall provide that:
(i) Contested claims shall be valid and enforceable out of funds in trust to the extent remaining unsatisfied 30 days after entry of the final order of any court of competent jurisdiction in the United States;
(ii) legal title to the assets of the trust shall be vested in the trustee for the benefit of the grantor's United States ceding insurers, their assigns and successors in interest;
(iii) the trust shall be subject to examination as determined by the commissioner;
(iv) the trust shall remain in effect for as long as the assuming insurer, or any member or former member of a group of insurers, shall have outstanding obligations under reinsurance agreements subject to the trust; and
(v) not later than February 28 of each year, the trustee of the trust shall report to the commissioner in writing setting forth the balance in the trust and listing the trust's investments at the preceding year-end, and shall certify the date of termination of the trust, if so planned, or certify that the trust shall not expire prior to the following December 31.
(B) (i) Notwithstanding any other provisions in the trust instrument, if the trust fund is inadequate because it contains an amount less than the amount required by this subsection or if the grantor of the trust has been declared insolvent or placed into receivership, rehabilitation, liquidation or similar proceedings under the laws of its state or country of domicile, the trustee shall comply with an order of the commissioner with regulatory oversight over the trust or with an order of a court of competent jurisdiction directing the trustee to transfer to the commissioner with regulatory oversight over the trust or other designated receiver all of the assets of the trust fund.
(ii) The assets shall be distributed by and claims shall be filed with and valued by the commissioner with regulatory oversight over the trust in accordance with the laws of the state in which the trust is domiciled applicable to the liquidation of domestic insurance companies.
(iii) If the commissioner with regulatory oversight over the trust determines that the assets of the trust fund or any part thereof are not necessary to satisfy the claims of the United States beneficiaries of the trust, the commissioner with regulatory oversight over the trust shall return the assets, or any part thereof, to the trustee for distribution in accordance with the trust agreement.
(iv) The grantor shall waive any right otherwise available to it under United States law that is inconsistent with this provision.
(4) For purposes of this section, the term "liabilities" means the assuming insurer's gross liabilities attributable to reinsurance ceded by United States-domiciled insurers, excluding liabilities that are otherwise secured by acceptable means, and includes:
(A) For business ceded by domestic insurers authorized to write accident and health and property and casualty insurance:
(i) Losses and allocated loss expenses paid by the ceding insurer, recoverable from the assuming insurer;
(ii) reserves for losses reported and outstanding;
(iii) reserves for losses incurred but not reported;
(iv) reserves for allocated loss expenses; and
(v) unearned premiums.
(B) For business ceded by domestic insurers authorized to write life, health and annuity insurance:
(i) Aggregate reserves for life policies and contracts net of policy loans and net due and deferred premiums;
(ii) aggregate reserves for accident and health policies;
(iii) deposit funds and other liabilities without life or disability contingencies; and
(iv) liabilities for policy and contract claims.
(5) Assets deposited in trusts established pursuant to K.S.A.
40-221a(a), and amendments thereto, and this subsection shall be valued according to their current fair market value and shall consist only of cash in United States dollars, certificates of deposit issued by a United States financial institution, as defined in K.S.A.
40-221a(c), and amendments thereto, clean, irrevocable, unconditional and "evergreen" letters of credit issued or confirmed by a qualified United States financial institution, as defined in K.S.A.
40-221a(c), and amendments thereto, and investments of the type specified in this subsection, but investments in or issued by an entity controlling, controlled by or under common control with either the grantor or beneficiary of the trust shall not exceed 5% of total investments. Not more than 20% of the total of the investments in the trust may be foreign investments authorized under subparagraph (A)(v), (C), (F)(ii) or (G), and not more than 10% of the total of the investments in the trust may be securities denominated in foreign currencies. For purposes of applying the preceding sentence, a depository receipt denominated in United States dollars and representing rights conferred by a foreign security shall be classified as a foreign investment denominated in a foreign currency. The assets of a trust established to satisfy the requirements of K.S.A.
40-221a(a), and amendments thereto, shall be invested only as follows:
(A) Government obligations that are not in default as to principal or interest, that are valid and legally authorized and that are issued, assumed or guaranteed by:
(i) The United States or by any agency or instrumentality of the United States;
(ii) a state of the United States;
(iii) a territory, possession or other governmental unit of the United States;
(iv) an agency or instrumentality of a governmental unit referred to in clauses (ii) and (iii) if the obligations shall be by law, statutory or otherwise, payable, as to both principal and interest, from taxes levied or by law required to be levied or from adequate special revenues pledged or otherwise appropriated or by law required to be provided for making these payments, but shall not be obligations eligible for investment under this paragraph if payable solely out of special assessments on properties benefited by local improvements; or
(v) the government of any other country that is a member of the organization for economic cooperation and development and whose government obligations are rated "A" or higher, or the equivalent, by a rating agency recognized by the securities valuation office of the national association of insurance commissioners.
(B) Obligations that are issued in the United States, or that are dollar denominated and issued in a non-U.S. market, by a solvent United States institution, other than an insurance company, or that are assumed or guaranteed by a solvent United States institution, other than an insurance company and that are not in default as to principal or interest if the obligations:
(i) Are rated "A" or higher, or the equivalent, by a securities rating agency recognized by the securities valuation office of the national association of insurance commissioners, or if not so rated, are similar in structure and other material respects to other obligations of the same institution that are so rated;
(ii) are insured by at least one authorized insurer, other than the investing insurer or a parent, subsidiary or affiliate of the investing insurer, licensed to insure obligations in this state and, after considering the insurance, are rated "AAA," or the equivalent, by a securities rating agency recognized by the securities valuation office of the national association of insurance commissioners; or
(iii) have been designated as class one or class two by the securities valuation office of the national association of insurance commissioners.
(C) Obligations issued, assumed or guaranteed by a solvent non-U.S. institution chartered in a country that is a member of the organization for economic cooperation and development or obligations of United States corporations issued in a non-U.S. currency, provided that in either case the obligations are rated "A" or higher, or the equivalent, by a rating agency recognized by the securities valuation office of the national association of insurance commissioners.
(D) An investment made pursuant to the provisions of subparagraph (A), (B) or (C) shall be subject to the following additional limitations:
(i) An investment in or loan upon the obligations of an institution other than an institution that issues mortgage-related securities shall not exceed 5% of the assets of the trust;
(ii) an investment in any one mortgage-related security shall not exceed 5% of the assets of the trust;
(iii) the aggregate total investment in mortgage-related securities shall not exceed 25% of the assets of the trust; and
(iv) preferred or guaranteed shares issued or guaranteed by a solvent United States institution are permissible investments if all of the institution's obligations are eligible as investments under subparagraphs (B)(i) and (B)(iii), but shall not exceed 2% of the assets of the trust.
(E) As used in this section:
(i) "Mortgage-related security" means an obligation that is rated "AA" or higher, or the equivalent, by a securities rating agency recognized by the securities valuation office of the national association of insurance commissioners and that either:
(a) Represents ownership of one or more promissory notes or certificates of interest or participation in the notes, including any rights designed to assure servicing of, or the receipt or timeliness of receipt by the holders of the notes, certificates, or participation of amounts payable under, the notes, certificates or participation, that:
(1) Are directly secured by a first lien on a single parcel of real estate, including stock allocated to a dwelling unit in a residential cooperative housing corporation, upon which is located a dwelling or mixed residential and commercial structure, or on a residential manufactured home, as defined in 42 U.S.C. § 5402(6), whether the manufactured home is considered real or personal property under the laws of the state in which it is located; and
(2) were originated by a savings and loan association, savings bank, commercial bank, credit union, insurance company, or similar institution that is supervised and examined by a federal or state housing authority, or by a mortgagee approved by the United States secretary of housing and urban development pursuant to 12 U.S.C. §§ 1709 and 1715b, or, where the notes involve a lien on the manufactured home, by an institution or by a financial institution approved for insurance by the United States secretary of housing and urban development pursuant to 12 U.S.C. § 1703; or
(b) is secured by one or more promissory notes or certificates of deposit or participations in the notes, with or without recourse to the insurer of the notes, and, by its terms, provides for payments of principal in relation to payments, or reasonable projections of payments, or notes meeting the requirements of subclauses (a)(1) and (a)(2);
(ii) "promissory note," when used in connection with a manufactured home, shall also include a loan, advance or credit sale as evidenced by a retail installment sales contract or other instrument.
(F)
Equity interests.
(i) Investments in common shares or partnership interests of a solvent United States institution are permissible if:
(a) Its obligations and preferred shares, if any, are eligible as investments under this subsection; and
(b) the equity interests of the institution, except an insurance company, are registered on a national securities exchange as provided in the federal securities exchange act of 1934, 15 U.S.C. §§ 78a to 78kk, or otherwise registered pursuant to that act, and if otherwise registered, price quotations for them are furnished through a nationwide automated quotations system approved by the financial industry regulatory authority, or its successor organization. A trust shall not invest in equity interests under this subparagraph an amount exceeding 1% of the assets of the trust even though the equity interests are not so registered and are not issued by an insurance company;
(ii) investments in common shares of a solvent institution organized under the laws of a country that is a member of the organization for economic cooperation and development, if:
(a) All its obligations are rated "A" or higher, or the equivalent, by a rating agency recognized by the securities valuation office of the national association of insurance commissioners; and
(b) the equity interests of the institution are registered on a securities exchange regulated by the government of a country that is a member of the organization for economic cooperation and development;
(iii) an investment in or loan upon any one institution's outstanding equity interests shall not exceed 1% of the assets of the trust. The cost of an investment in equity interests made pursuant to this subparagraph, when added to the aggregate cost of other investments in equity interests held pursuant to this paragraph, shall not exceed 10% of the assets in the trust.
(G) Obligations issued, assumed or guaranteed by a multinational development bank, provided the obligations are rated "A," or higher, or the equivalent, by a rating agency recognized by the securities valuation office of the national association of insurance commissioners.
(H)
Investment companies.
(i) Securities of an investment company registered pursuant to the investment company act of 1940, 15 U.S.C. § 80a, are permissible investments if the investment company:
(a) Invests at least 90% of its assets in the types of securities that qualify as an investment under subparagraph (A), (B) or (C) or invests in securities that are determined by the commissioner to be substantively similar to the types of securities set forth in subparagraph (A), (B) or (C); or
(b) invests at least 90% of its assets in the types of equity interests that qualify as an investment under subparagraph (F)(i).
(ii) investments made by a trust in investment companies under this paragraph shall not exceed the following limitations:
(a) An investment in an investment company qualifying under clause (i)(a) shall not exceed 10% of the assets in the trust and the aggregate amount of investment in qualifying investment companies shall not exceed 25% of the assets in the trust; and
(b) investments in an investment company qualifying under clause (i)(b) shall not exceed 5% of the assets in the trust and the aggregate amount of investment in qualifying investment companies shall be included when calculating the permissible aggregate value of equity interests pursuant to subparagraph (F)(i);
(I)
Letters of credit.
(i) In order for a letter of credit to qualify as an asset of the trust, the trustee shall have the right and the obligation pursuant to the deed of trust or some other binding agreement, as duly approved by the commissioner, to immediately draw down the full amount of the letter of credit and hold the proceeds in trust for the beneficiaries of the trust if the letter of credit will otherwise expire without being renewed or replaced; and
(ii) the trust agreement shall provide that the trustee shall be liable for its negligence, willful misconduct or lack of good faith. The failure of the trustee to draw against the letter of credit in circumstances where such draw would be required shall be deemed to be negligence or willful misconduct.
(6) A specific security provided to a ceding insurer by an assuming insurer pursuant to subsection (k) shall be applied, until exhausted, to the payment of liabilities of the assuming insurer to the ceding insurer holding the specific security prior to, and as a condition precedent for, presentation of a claim by the ceding insurer for payment by a trustee of a trust established by the assuming insurer pursuant to this section.
(g)
Credit for reinsurance – certified reinsurers.
(1) Pursuant to K.S.A.
40-221a(a)(5), and amendments thereto, the commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that has been certified as a reinsurer in this state at all times for which statutory financial statement credit for reinsurance is claimed under this section. The credit allowed shall be based upon the security held by or on behalf of the ceding insurer in accordance with a rating assigned to the certified reinsurer by the commissioner. The security shall be in a form consistent with the provisions of K.S.A.
40-221a(a)(5) and
40-221a(b), and amendments thereto, and subsection (k), (l) or (m). The amount of security required in order for full credit to be allowed shall correspond with the following requirements:
(A) Ratings Security Required
Secure - 1 0%
Secure - 2 10%
Secure - 3 20%
Secure - 4 50%
Secure - 5 75%
Secure - 6 100%
(B) Affiliated reinsurance transactions shall receive the same opportunity for reduced security requirements as all other reinsurance transactions.
(C) The commissioner shall require the certified reinsurer to post for the benefit of the ceding insurer or its estate, 100% security upon the entry of an order of rehabilitation, liquidation or conservation against the ceding insurer.
(D) In order to facilitate the prompt payment of claims, a certified reinsurer shall not be required to post security for catastrophe recoverables for a period of one year from the date of the first instance of a liability reserve entry by the ceding company as a result of a loss from a catastrophic occurrence as recognized by the commissioner. The one-year deferral period shall be contingent upon the certified reinsurer continuing to pay claims in a timely manner. Reinsurance recoverables for only the following lines of business as reported on the national association of insurance commissioners annual financial statement related specifically to the catastrophic occurrence shall be included in the deferral:
(i) Line 1: Fire.
(ii) Line 2: Allied lines.
(iii) Line 3: Farmowners multiple peril.
(iv) Line 4: Homeowners multiple peril.
(v) Line 5: Commercial multiple peril.
(vi) Line 9: Inland marine.
(vii) Line 12: Earthquake.
(viii) Line 21: Auto physical damage.
(E) Credit for reinsurance under this section shall apply only to reinsurance contracts entered into or renewed on or after the effective date of the certification of the assuming insurer. Any reinsurance contract entered into prior to the effective date of the certification of the assuming insurer that is subsequently amended after the effective date of the certification of the assuming insurer, or a new reinsurance contract, covering any risk for which collateral was provided previously, shall only be subject to this section with respect to losses incurred and reserves reported from and after the effective date of the amendment or new contract.
(F) Nothing in this section shall prohibit the parties to a reinsurance agreement from agreeing to provisions establishing security requirements that exceed the minimum security requirements established for certified reinsurers under this section.
(2)
Certification procedure.
(A) The commissioner shall post notice on the insurance department's website promptly upon receipt of any application for certification, including instructions on how members of the public may respond to the application. The commissioner shall not take final action on the application until at least 30 days after posting the notice required by this paragraph.
(B) The commissioner shall issue written notice to an assuming insurer that has made application and been approved as a certified reinsurer. Included in such notice shall be the rating assigned the certified reinsurer in accordance with subsection (g)(2)(A). The commissioner shall publish a list of all certified reinsurers and their ratings.
(C) In order to be eligible for certification, the assuming insurer shall meet the following requirements:
(i) The assuming insurer must be domiciled and licensed to transact insurance or reinsurance in a qualified jurisdiction, as determined by the commissioner pursuant to subsection (g)(3);
(ii) the assuming insurer shall maintain capital and surplus, or its equivalent, of no less than $250,000,000 calculated in accordance with subsection (g)(2)(D)(viii). This requirement may also be satisfied by an association including incorporated and individual unincorporated underwriters having minimum capital and surplus equivalents, net of liabilities, of at least $250,000,000 and a central fund containing a balance of at least $250,000,000;
(iii) the assuming insurer shall maintain financial strength ratings from two or more rating agencies deemed acceptable by the commissioner. These ratings shall be based on interactive communication between the rating agency and the assuming insurer and shall not be based solely on publicly available information. These financial strength ratings shall be one factor used by the commissioner in determining the rating that is assigned to the assuming insurer. Acceptable rating agencies include the following:
(a) Standard & poor's;
(b) Moody's investors service;
(c) Fitch ratings;
(d) a.m. best company; or
(e) any other nationally recognized statistical rating organization; and
(iv) the certified reinsurer shall comply with any other requirements reasonably imposed by the commissioner.
(D) Each certified reinsurer shall be rated on a legal entity basis, with due consideration being given to the group rating where appropriate, except that an association including incorporated and individual unincorporated underwriters that has been approved to do business as a single certified reinsurer may be evaluated on the basis of its group rating. Factors that may be considered as part of the evaluation process include, but are not limited to, the following:
(i) The certified reinsurer's financial strength rating from an acceptable rating agency. The maximum rating that a certified reinsurer may be assigned shall correspond to its financial strength rating as outlined in the table below. The commissioner shall use the lowest financial strength rating received from an approved rating agency in establishing the maximum rating of a certified reinsurer. A failure to obtain or maintain at least two financial strength ratings from acceptable rating agencies shall result in loss of eligibility for certification;
(ii) the business practices of the certified reinsurer in dealing with its ceding insurers, including its record of compliance with reinsurance contractual terms and obligations;
| Ratings | Best | S&P | Moody's | Fitch | | --- | --- | --- | --- | --- | | Secure - 1 | A++ | AAA | Aaa | AAA | | Secure - 2 | A+ | AA+, AA* AA- | Aa1, Aa2, Aa3 | AA+, AA, AA- | | Secure - 3 | A | A+, A | A1, A2 | A+, A | | Secure - 4 | A- | A- | A3 | A- | | Secure - 5 | B++, B+ | BBB+, BBB* BBB- | Baa1, Baa2, Baa3 | BBB+, BBB, BBB- | | Vulnerable - 6 | B, B-, C++, C+* C, C-, D* E, F | BB+, BB, BB-, B+, B, B**, CCC, CC, C, D, R | Ba1, Ba2, Ba3, B1, B2, B3, Caa, Ca, C | BB+, BB, BB-, B+, B* B-, CCC+, CC, CCC-, DD |
(iii) for certified reinsurers domiciled in the United States, a review of the most recent applicable national association of insurance commissioners annual statement blank, either schedule f, for property and casualty reinsurers, or schedule s, for life and health reinsurers, in accordance with the instructions and as prescribed and adopted by the national association of insurance commissioners and the commissioner of insurance;
(iv) for certified reinsurers not domiciled in the United States, a review annually of form cr-f, for property and casualty reinsurers, in accordance with the instructions and as prescribed and adopted by the national association of insurance commissioners and the commissioner of insurance or form cr-s, for life and health reinsurers, in accordance with the instructions and as prescribed and adopted by the national association of insurance commissioners and the commissioner of insurance;
(v) the reputation of the certified reinsurer for prompt payment of claims under reinsurance agreements, based on an analysis of ceding insurers' schedule f reporting of overdue reinsurance recoverables, including the proportion of obligations that are more than 90 days past due or are in dispute, with specific attention given to obligations payable to companies that are in administrative supervision or receivership;
(vi) regulatory actions against the certified reinsurer;
(vii) the report of the independent auditor on the financial statements of the insurance enterprise, on the basis described in clause (viii);
(viii) for certified reinsurers not domiciled in the United States, audited financial statements, regulatory filings, and actuarial opinion, as filed with the non-U.S. jurisdiction supervisor, with a translation into English. Upon the initial application for certification, the commissioner will consider audited financial statements for the last two years filed with its non-U.S. jurisdiction supervisor;
(ix) the liquidation priority of obligations to a ceding insurer in the certified reinsurer's domiciliary jurisdiction in the context of an insolvency proceeding;
(x) a certified reinsurer's participation in any solvent scheme of arrangement, or similar procedure, that involves United States ceding insurers. The commissioner shall receive prior notice from a certified reinsurer that proposes participation by the certified reinsurer in a solvent scheme of arrangement; and
(xi) any other information deemed relevant by the commissioner.
(E) Based on the analysis conducted under subparagraph (D)(v) of a certified reinsurer's reputation for prompt payment of claims, the commissioner may make appropriate adjustments in the security the certified reinsurer is required to post to protect its liabilities to United States ceding insurers, provided that the commissioner shall, at a minimum, increase the security the certified reinsurer is required to post by one rating level under subparagraph (D)(i) if the commissioner finds that:
(i) More than 15% of the certified reinsurer's ceding insurance clients have overdue reinsurance recoverables on paid losses of 90 days or more that are not in dispute and that exceed $100,000 for each cedent; or
(ii) the aggregate amount of reinsurance recoverables on paid losses that are not in dispute that are overdue by 90 days or more exceeds $50,000,000.
(F) The assuming insurer shall submit a properly executed form cr-1 in accordance with the instructions and as prescribed and adopted by the national association of insurance commissioners and the commissioner of insurance as evidence of its submission to the jurisdiction of this state, appointment of the commissioner as an agent for service of process in this state, and agreement to provide security for 100% of the assuming insurer's liabilities attributable to reinsurance ceded by United States ceding insurers if it resists enforcement of a final United States judgment. The commissioner shall not certify any assuming insurer that is domiciled in a jurisdiction that the commissioner has determined does not adequately and promptly enforce final United States judgments or arbitration awards.
(G) The certified reinsurer shall agree to meet applicable information filing requirements as determined by the commissioner, both with respect to an initial application for certification and on an ongoing basis. All information submitted by certified reinsurers that is not otherwise public information subject to disclosure shall be exempted from disclosure under the open records act, K.S.A.
45-215, et seq., and amendments thereto, and shall be withheld from public disclosure. The provisions of this subparagraph providing for the confidentiality of public records shall expire on July 1, 2026, unless the legislature reviews and continues such provisions in accordance with K.S.A.
45-229, and amendments thereto. The applicable information filing requirements are, as follows:
(i) Notification within 10 days of any regulatory actions taken against the certified reinsurer, any change in the provisions of its domiciliary license or any change in rating by an approved rating agency, including a statement describing such changes and the reasons therefor;
(ii) annually, form cr-f or cr-s, in accordance with the instructions and as prescribed and adopted by the national association of insurance commissioners and the commissioner of insurance as applicable;
(iii) annually, the report of the independent auditor on the financial statements of the insurance enterprise, on the basis described in clause (iv);
(iv) annually, the most recent audited financial statements, regulatory filings and actuarial opinion, as filed with the certified reinsurer's supervisor, with a translation into English. Upon the initial certification, audited financial statements for the last two years filed with the certified reinsurer's supervisor;
(v) at least annually, an updated list of all disputed and overdue reinsurance claims regarding reinsurance assumed from United States domestic ceding insurers;
(vi) a certification from the certified reinsurer's domestic regulator that the certified reinsurer is in good standing and maintains capital in excess of the jurisdiction's highest regulatory action level; and
(vii) any other information that the commissioner may reasonably require.
(H) Change in rating or revocation of certification.
(i) In the case of a downgrade by a rating agency or other disqualifying circumstance, the commissioner upon written notice shall assign a new rating to the certified reinsurer in accordance with the requirements of subsection (g)(2)(D)(i).
(ii) The commissioner shall have the authority to suspend, revoke or otherwise modify a certified reinsurer's certification at any time if the certified reinsurer fails to meet its obligations or security requirements under this section, or if other financial or operating results of the certified reinsurer, or documented significant delays in payment by the certified reinsurer lead the commissioner to reconsider the certified reinsurer's ability or willingness to meet its contractual obligations.
(iii) If the rating of a certified reinsurer is upgraded by the commissioner, the certified reinsurer may meet the security requirements applicable to its new rating on a prospective basis, but the commissioner shall require the certified reinsurer to post security under the previously applicable security requirements as to all contracts in force on or before the effective date of the upgraded rating. If the rating of a certified reinsurer is downgraded by the commissioner, the commissioner shall require the certified reinsurer to meet the security requirements applicable to its new rating for all business it has assumed as a certified reinsurer.
(iv) Upon revocation of the certification of a certified reinsurer by the commissioner, the assuming insurer shall be required to post security in accordance with subsection (k) in order for the ceding insurer to continue to take credit for reinsurance ceded to the assuming insurer. If funds continue to be held in trust in accordance with subsection (f), the commissioner may allow additional credit equal to the ceding insurer's pro rata share of such funds, discounted to reflect the risk of uncollectibility and anticipated expenses of trust administration. Notwithstanding the change of a certified reinsurer's rating or revocation of its certification, a domestic insurer that has ceded reinsurance to that certified reinsurer may not be denied credit for reinsurance for a period of three months for all reinsurance ceded to that certified reinsurer, unless the reinsurance is found by the commissioner to be at high risk of uncollectibility.
(3) Qualified jurisdictions.
(A) If, upon conducting an evaluation under this section with respect to the reinsurance supervisory system of any non-U.S. assuming insurer, the commissioner determines that the jurisdiction qualifies to be recognized as a qualified jurisdiction, the commissioner shall publish notice and evidence of such recognition in an appropriate manner. The commissioner may establish a procedure to withdraw recognition of those jurisdictions that are no longer qualified.
(B) In order to determine whether the domiciliary jurisdiction of a non-U.S. assuming insurer is eligible to be recognized as a qualified jurisdiction, the commissioner shall evaluate the reinsurance supervisory system of the non-U.S. jurisdiction, both initially and on an ongoing basis, and consider the rights, benefits and the extent of reciprocal recognition afforded by the non-U.S. jurisdiction to reinsurers licensed and domiciled in the United States. The commissioner shall determine the appropriate approach for evaluating the qualifications of such jurisdictions, and create and publish a list of jurisdictions whose reinsurers may be approved by the commissioner as eligible for certification. A qualified jurisdiction shall agree to share information and cooperate with the commissioner with respect to all certified reinsurers domiciled within that jurisdiction. Additional factors to be considered in determining whether to recognize a qualified jurisdiction, in the discretion of the commissioner, include, but are not limited to, the following:
(i) The framework under which the assuming insurer is regulated;
(ii) the structure and authority of the domiciliary regulator with regard to solvency regulation requirements and financial surveillance;
(iii) the substance of financial and operating standards for assuming insurers in the domiciliary jurisdiction;
(iv) the form and substance of financial reports required to be filed or made publicly available by reinsurers in the domiciliary jurisdiction and the accounting principles used;
(v) the domiciliary regulator's willingness to cooperate with United States regulators in general and the commissioner in particular;
(vi) the history of performance by assuming insurers in the domiciliary jurisdiction;
(vii) any documented evidence of substantial problems with the enforcement of final judgments in the domiciliary jurisdiction. A jurisdiction shall not be considered to be a qualified jurisdiction if the commissioner has determined that it does not adequately and promptly enforce final United States judgments or arbitration awards;
(viii) any relevant international standards or guidance with respect to mutual recognition of reinsurance supervision adopted by the international association of insurance supervisors or successor organization; and
(ix) any other matters deemed relevant by the commissioner.
(C) A list of qualified jurisdictions shall be published through the national association of insurance commissioners committee process. The commissioner shall consider this list in determining qualified jurisdictions. If the commissioner approves a jurisdiction as qualified that does not appear on the list of qualified jurisdictions, the commissioner shall provide thoroughly documented justification with respect to the criteria provided under paragraphs (3)(B)(i) through (ix).
(D) United States jurisdictions that meet the requirements for accreditation under the national association of insurance commissioners financial standards and accreditation program shall be recognized as qualified jurisdictions.
(4) Recognition of certification issued by a national association of insurance commissioners accredited jurisdiction.
(A) If an applicant for certification has been certified as a reinsurer in a national association of insurance commissioners-accredited jurisdiction, the commissioner has the discretion to defer to that jurisdiction's certification and to defer to the rating assigned by that jurisdiction, if the assuming insurer submits a properly executed form cr-1 in accordance with the instructions and as prescribed and adopted by the national association of insurance commissioners and the commissioner of insurance and such additional information as the commissioner requires. The assuming insurer shall be considered to be a certified reinsurer in this state.
(B) Any change in the certified reinsurer's status or rating in the other jurisdiction shall apply automatically in this state as of the date it takes effect in the other jurisdiction. The certified reinsurer shall notify the commissioner of any change in its status or rating within 10 days after receiving notice of the change.
(C) The commissioner may withdraw recognition of the other jurisdiction's rating at any time and assign a new rating in accordance with subsection (g)(2)(H).
(D) The commissioner may withdraw recognition of the other jurisdiction's certification at any time, with written notice to the certified reinsurer. Unless the commissioner suspends or revokes the certified reinsurer's certification in accordance with subsection (g)(2)(H), the certified reinsurer's certification shall remain in good standing in this state for a period of three months, and such period shall be extended if additional time is necessary to consider the assuming insurer's application for certification in this state.
(5) Mandatory funding clause.
In addition to the clauses required under subsection (n) reinsurance contracts entered into or renewed under this section shall include a proper funding clause, that requires the certified reinsurer to provide and maintain security in an amount sufficient to avoid the imposition of any financial statement penalty on the ceding insurer under this section for reinsurance ceded to the certified reinsurer.
(6) The commissioner shall comply with all reporting and notification requirements that may be established by the national association of insurance commissioners with respect to certified reinsurers and qualified jurisdictions.
(h) Credit for reinsurance – reciprocal jurisdictions.
(1) Pursuant to K.S.A.
40-221a(a)(6), and amendments thereto, the commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that is licensed to write reinsurance by, and has its head office or is domiciled in, a reciprocal jurisdiction, and that meets the other requirements of this section.
(2) A "reciprocal jurisdiction" is a jurisdiction, as designated by the commissioner pursuant to subsection (h)(4), that meets one of the following:
(A) A non-U.S. jurisdiction that is subject to an in-force covered agreement with the United States, each within its legal authority, or, in the case of a covered agreement between the United States and the European union, is a member state of the European union. For purposes of this subsection, a "covered agreement" is an agreement entered into pursuant to the dodd-frank wall street reform and consumer protection act, 31 U.S.C. §§ 313 and 314, that is currently in effect or in a period of provisional application and addresses the elimination, under specified conditions, of collateral requirements as a condition for entering into any reinsurance agreement with a ceding insurer domiciled in this state or for allowing the ceding insurer to recognize credit for reinsurance;
(B) a United States jurisdiction that meets the requirements for accreditation under the national association of insurance commissioners financial standards and accreditation program; or
(C) a qualified jurisdiction, as determined by the commissioner pursuant to K.S.A.
40-221a(a)(5)(C), and amendments thereto, and subsection (g)(3), that is not otherwise described in subparagraph (A) or (B) and that the commissioner determines meets all of the following additional requirements:
(i) Provides that an insurer that has its head office or is domiciled in such qualified jurisdiction shall receive credit for reinsurance ceded to a United States-domiciled assuming insurer in the same manner as credit for reinsurance is received for reinsurance assumed by insurers domiciled in such qualified jurisdiction;
(ii) does not require a United States-domiciled assuming insurer to establish or maintain a local presence as a condition for entering into a reinsurance agreement with any ceding insurer subject to regulation by the non-U.S. jurisdiction or as a condition for allowing the ceding insurer to recognize credit for such reinsurance;
(iii) recognizes the United States state regulatory approach to group supervision and group capital, by providing written confirmation by a competent regulatory authority, in such qualified jurisdiction, that insurers and insurance groups that are domiciled or maintain their headquarters in this state or another jurisdiction accredited by the national association of insurance commissioners shall be subject only to worldwide prudential insurance group supervision including worldwide group governance, solvency and capital and reporting, as applicable, by the commissioner or the commissioner of the domiciliary state and shall not be subject to group supervision at the level of the worldwide parent undertaking of the insurance or reinsurance group by the qualified jurisdiction; and
(iv) provides written confirmation by a competent regulatory authority in such qualified jurisdiction that information regarding insurers and their parent, subsidiary or affiliated entities, if applicable, shall be provided to the commissioner in accordance with a memorandum of understanding or similar document between the commissioner and such qualified jurisdiction, including, but not limited to, the international association of insurance supervisors multilateral memorandum of understanding or other multilateral memoranda of understanding coordinated by the national association of insurance commissioners.
(3) Credit shall be allowed when the reinsurance is ceded from an insurer domiciled in this state to an assuming insurer meeting each of the conditions set forth below.
(A) The assuming insurer shall be licensed to transact reinsurance by, and have its head office or be domiciled in, a reciprocal jurisdiction.
(B) The assuming insurer shall have and maintain on an ongoing basis minimum capital and surplus, or its equivalent, calculated on at least an annual basis as of the preceding December 31 or at the annual date otherwise statutorily required to be reported to the reciprocal jurisdiction, and confirmed as set forth in paragraph (3)(G) according to the methodology of its domiciliary jurisdiction, in the following amounts:
(i) Not less than $250,000,000; or
(ii) if the assuming insurer is an association, including incorporated and individual unincorporated underwriters:
(a) Minimum capital and surplus equivalent, net of liabilities, or own funds of the equivalent of at least $250,000,000; and
(b) a central fund containing a balance of the equivalent of at least $250,000,000.
(C) The assuming insurer shall have and maintain on an ongoing basis a minimum solvency or capital ratio, as applicable, as follows:
(i) If the assuming insurer has its head office or is domiciled in a reciprocal jurisdiction, as defined in subsection (h)(2)(A), the ratio specified in the applicable covered agreement;
(ii) if the assuming insurer is domiciled in a reciprocal jurisdiction, as defined in subsection (h)(2)(B), a risk-based capital ratio of 300% of the authorized control level, calculated in accordance with the formula developed by the national association of insurance commissioners; or
(iii) if the assuming insurer is domiciled in a reciprocal jurisdiction, as defined in subsection (h)(2)(C), after consultation with the reciprocal jurisdiction and considering any recommendations published through the national association of insurance commissioners committee process, such solvency or capital ratio as the commissioner determines to be an effective measure of solvency.
(D) The assuming insurer shall agree to and provide adequate assurance, in the form of a properly executed form rj-1 in accordance with the instructions and as prescribed and adopted by the national association of insurance commissioners and the commissioner of insurance, of its agreement to the following:
(i) The assuming insurer shall agree to provide prompt written notice and explanation to the commissioner if it falls below the minimum requirements set forth in subparagraph (B) or (C) or if any regulatory action is taken against it for serious noncompliance with applicable law; and
(ii) the assuming insurer shall consent in writing to the jurisdiction of the courts of this state and to the appointment of the commissioner as agent for service of process.
(a) The commissioner may also require that such consent be provided and included in each reinsurance agreement under the commissioner's jurisdiction.
(b) Nothing in this provision shall limit or in any way alter the capacity of parties to a reinsurance agreement to agree to alternative dispute resolution mechanisms, except to the extent such agreements are unenforceable under applicable insolvency or delinquency laws.
(iii) The assuming insurer shall consent in writing to pay all final judgments, wherever enforcement is sought, obtained by a ceding insurer, that have been declared enforceable in the territory where the judgment was obtained.
(iv) Each reinsurance agreement shall include a provision requiring the assuming insurer to provide security in an amount equal to 100% of the assuming insurer's liabilities attributable to reinsurance ceded pursuant to that agreement if the assuming insurer resists enforcement of a final judgment that is enforceable under the law of the jurisdiction in which it was obtained or a properly enforceable arbitration award, whether obtained by the ceding insurer or by its legal successor on behalf of its estate, if applicable, assuming insurer resists enforcement of a final judgment that is enforceable under the law of the jurisdiction in which it was obtained or a properly enforceable arbitration award, whether obtained by the ceding insurer or by its legal successor on behalf of its estate, if applicable.
(v) The assuming insurer shall confirm that it is not presently participating in any solvent scheme of arrangement that involves this state's ceding insurers and agree to notify the ceding insurer and the commissioner and to provide 100% security to the ceding insurer consistent with the terms of the scheme, if the assuming insurer enters into such a solvent scheme of arrangement. Such security shall be in a form consistent with the provisions of K.S.A.
40-221a(a)(5) and (b), and amendments thereto, and subsections (k), (l) and (m). For purposes of this section, the term "solvent scheme of arrangement" means a foreign or alien statutory or regulatory compromise procedure subject to requisite majority creditor approval and judicial sanction in the assuming insurer's home jurisdiction either to finally commute liabilities of duly noticed classed members or creditors of a solvent debtor, or to reorganize or restructure the debts and obligations of a solvent debtor on a final basis, and that may be subject to judicial recognition and enforcement of the arrangement by a governing authority outside the ceding insurer's home jurisdiction.
(vi) The assuming insurer shall agree in writing to meet the applicable information filing requirements as set forth in subparagraph (E).
(E) The assuming insurer or its legal successor shall provide, if requested by the commissioner, on behalf of itself and any legal predecessors, the following documentation to the commissioner:
(i) For the two years preceding entry into the reinsurance agreement and annually thereafter, the assuming insurer's annual audited financial statements, in accordance with the applicable law of the jurisdiction of its head office or domiciliary jurisdiction, as applicable, including the external audit report;
(ii) for the two years preceding entry into the reinsurance agreement, the solvency and financial condition report or actuarial opinion, if filed with the assuming insurer's supervisor;
(iii) prior to entry into the reinsurance agreement and not more than semi-annually thereafter, an updated list of all disputed and overdue reinsurance claims outstanding for 90 days or more, regarding reinsurance assumed from ceding insurers domiciled in the United States; and
(iv) prior to entry into the reinsurance agreement and not more than semi-annually thereafter, information regarding the assuming insurer's assumed reinsurance by the ceding insurer, ceded reinsurance by the assuming insurer, and reinsurance recoverable on paid and unpaid losses by the assuming insurer to allow for the evaluation of the criteria set forth in subparagraph (F).
(F) The assuming insurer shall maintain a practice of prompt payment of claims under reinsurance agreements. The lack of prompt payment will be evidenced if any of the following criteria is met:
(i) More than 15% of the reinsurance recoverables from the assuming insurer are overdue and in dispute as reported to the commissioner;
(ii) more than 15% of the assuming insurer's ceding insurers or reinsurers have overdue reinsurance recoverable on paid losses of 90 days or more that are not in dispute and that exceed $100,000 for each ceding insurer, or as otherwise specified in a covered agreement; or
(iii) the aggregate amount of reinsurance recoverable on paid losses that are not in dispute, but are overdue by 90 days or more, exceeds $50,000,000, or as otherwise specified in a covered agreement.
(G) The assuming insurer's supervisory authority shall confirm to the commissioner on an annual basis that the assuming insurer complies with the requirements set forth in subparagraphs (B) and (C).
(H) Nothing in this provision precludes an assuming insurer from providing the commissioner with information on a voluntary basis.
(4) The commissioner shall timely create and publish a list of reciprocal jurisdictions.
(A) A list of reciprocal jurisdictions is published through the national association of insurance commissioners' committee process. The commissioner's list shall include any reciprocal jurisdiction, as defined under subsections (h)(2)(A) and (B), and shall consider any other reciprocal jurisdiction included on the NAIC list. The commissioner may approve a jurisdiction that does not appear on the national association of insurance commissioners' list of reciprocal jurisdictions as provided by applicable law, regulation, or in accordance with criteria published through the national association of insurance commissioner committee process.
(B) The commissioner may remove a jurisdiction from the list of reciprocal jurisdictions upon a determination that the jurisdiction no longer meets one or more of the requirements of a reciprocal jurisdiction, as provided by applicable law, regulation, or in accordance with a process published through the national association of insurance commissioner committee process, except that the commissioner shall not remove from the list a reciprocal jurisdiction, as defined under subsections (h)(2)(A) and (B). Upon removal of a reciprocal jurisdiction from this list credit for reinsurance ceded to an assuming insurer domiciled in that jurisdiction shall be allowed, if otherwise allowed pursuant to K.S.A.
40-221a, and amendments thereto, or this section.
(5) The commissioner shall timely create and publish a list of assuming insurers that have satisfied the conditions set forth in this section and to which cessions shall be granted credit in accordance with this section.
(A) If a national association of insurance commissioners accredited jurisdiction has determined that the conditions set forth in paragraph (3) have been met, the commissioner has the discretion to defer to that jurisdiction's determination, and add such assuming insurer to the list of assuming insurers to which cessions shall be granted credit in accordance with this subsection. The commissioner may accept financial documentation filed with another national association of insurance commissioners accredited jurisdiction or with the national association of insurance commissioners in satisfaction of the requirements of paragraph (3).
(B) When requesting that the commissioner defer to another national association of insurance commissioners accredited jurisdiction's determination, an assuming insurer shall submit a properly executed form rj-1 in accordance with the instructions and as prescribed and adopted by the national association of insurance commissioners and the commissioner of insurance and additional information as the commissioner may require. A state that has received such a request shall notify other states through the national association of insurance commissioners committee process and provide relevant information with respect to the determination of eligibility.
(6) If the commissioner determines that an assuming insurer no longer meets one or more of the requirements under this section, the commissioner may revoke or suspend the eligibility of the assuming insurer for recognition under this section.
(A) While an assuming insurer's eligibility is suspended, no reinsurance agreement issued, amended or renewed after the effective date of the suspension qualifies for credit except to the extent that the assuming insurer's obligations under the contract are secured in accordance with subsection (j).
(B) If an assuming insurer's eligibility is revoked, no credit for reinsurance may be granted after the effective date of the revocation with respect to any reinsurance agreements entered into by the assuming insurer, including reinsurance agreements entered into prior to the date of revocation, except to the extent that the assuming insurer's obligations under the contract are secured in a form acceptable to the commissioner and consistent with the provisions of subsection (j).
(7) Before denying statement credit or imposing a requirement to post security with respect to subsection (h)(6) or adopting any similar requirement that will have substantially the same regulatory impact as security, the commissioner shall:
(A) Communicate with the ceding insurer, the assuming insurer, and the assuming insurer's supervisory authority that the assuming insurer no longer satisfies one of the conditions listed in paragraph (3);
(B) provide the assuming insurer with 30 days from the initial communication to submit a plan to remedy the defect, and 90 days from the initial communication to remedy the defect, except in exceptional circumstances in which a shorter period is necessary for policyholder and other consumer protection;
(C) after the expiration of 90 days or less, as set out in subparagraph (B), if the commissioner determines that no or insufficient action was taken by the assuming insurer, the commissioner may impose any of the requirements as set out in this subsection; and
(D) provide a written explanation to the assuming insurer of any of the requirements set out in this subsection.
(8) If subject to a legal process of rehabilitation, liquidation or conservation, as applicable, the ceding insurer, or its representative, may seek and, if determined appropriate by the court in which the proceedings are pending, may obtain an order requiring that the assuming insurer post security for all outstanding liabilities.
(i)
Credit for reinsurance required by law.
Pursuant to K.S.A.
40-221a(a)(7), and amendments thereto, the commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of K.S.A.
40-221a(a)(1) through (6), and amendments thereto, but only as to the insurance of risks located in jurisdictions where the reinsurance is required by the applicable law or regulation of that jurisdiction. As used in this section, "jurisdiction" means state, district or territory of the United States and any lawful national government.
(j) Asset or reduction from liability for reinsurance ceded to an unauthorized assuming insurer not meeting the requirements of subsections (c) through (i).
(1) Pursuant to K.S.A.
40-221a(b), and amendments thereto, the commissioner shall allow a reduction from liability for reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of K.S.A.
40-221a(a), and amendments thereto, in an amount not exceeding the liabilities carried by the ceding insurer. The reduction shall be in the amount of funds held by or on behalf of the ceding insurer, including funds held in trust for the exclusive benefit of the ceding insurer, under a reinsurance contract with such assuming insurer as security for the payment of obligations under the reinsurance contract. The security shall be held in the United States subject to withdrawal solely by, and under the exclusive control of, the ceding insurer or, in the case of a trust, held in a qualified United States financial institution, as defined in K.S.A.
40-221a(c)(2), and amendments thereto. This security may be in the form of any of the following:
(A) Cash;
(B) securities listed by the securities valuation office of the national association of insurance commissioners, including those deemed exempt from filing, as defined by the purposes and procedures manual of the securities valuation office and qualifying as admitted assets;
(C) clean, irrevocable, unconditional and "evergreen" letters of credit issued or confirmed by a qualified United States institution, as defined in K.S.A.
40-221a(c), and amendments thereto, effective no later than December 31 of the year for which filing is being made, and in the possession of, or in trust for, the ceding insurer on or before the filing date of its annual statement. Letters of credit meeting applicable standards of issuer acceptability as of the dates of their issuance, or confirmation, shall, notwithstanding the issuing, or confirming, institution's subsequent failure to meet applicable standards of issuer acceptability, continue to be acceptable as security until their expiration, extension, renewal, modification or amendment, whichever occurs first; or
(D) any other form of security acceptable to the commissioner.
(2) An admitted asset or a reduction from liability for reinsurance ceded to an unauthorized assuming insurer pursuant to this section shall be allowed only when the requirements of subsection (n) and the applicable portions of subsection (k), (l) or (m) have been satisfied.
(k) Trust agreements qualified under subsection (j).
(1) As used in this subsection:
(A) "Beneficiary" means the entity for whose sole benefit the trust has been established and any successor of the beneficiary by operation of law. If a court of law appoints a successor in interest to the named beneficiary, then the named beneficiary includes and is limited to the court appointed domiciliary receiver, including conservator, rehabilitator or liquidator.
(B) "Grantor" means the entity that has established a trust for the sole benefit of the beneficiary. When established in conjunction with a reinsurance agreement, the grantor is the unlicensed, unaccredited assuming insurer.
(C) "Obligations" means:
(i) Reinsured losses and allocated loss expenses paid by the ceding company, but not recovered from the assuming insurer;
(ii) reserves for reinsured losses reported and outstanding;
(iii) reserves for reinsured losses incurred but not reported; and
(iv) reserves for allocated reinsured loss expenses and unearned premiums.
(2)
Required conditions.
(A) The trust agreement shall be entered into between the beneficiary, the grantor and a trustee, that shall be a qualified United States financial institution, as defined in K.S.A.
40-221a(c)(2), and amendments thereto.
(B) The trust agreement shall create a trust account into which assets shall be deposited.
(C) All assets in the trust account shall be held by the trustee at the trustee's office in the United States.
(D) The trust agreement shall provide that:
(i) The beneficiary shall have the right to withdraw assets from the trust account at any time, without notice to the grantor, subject only to written notice from the beneficiary to the trustee;
(ii) no other statement or document shall be required to be presented to withdraw assets, except that the beneficiary may be required to acknowledge receipt of withdrawn assets;
(iii) it is not subject to any conditions or qualifications outside of the trust agreement; and
(iv) it shall not contain references to any other agreements or documents except as provided for in subparagraphs (K) and (L).
(E) The trust agreement shall be established for the sole benefit of the beneficiary.
(F) The trust agreement shall require the trustee to:
(i) Receive assets and hold all assets in a safe place;
(ii) determine that all assets are in such form that the beneficiary, or the trustee upon direction by the beneficiary, may whenever necessary negotiate any such assets, without consent or signature from the grantor or any other person or entity;
(iii) furnish to the grantor and the beneficiary a statement of all assets in the trust account upon its inception and at intervals no less frequent than the end of each calendar quarter;
(iv) notify the grantor and the beneficiary within 10 days, of any deposits to or withdrawals from the trust account;
(v) upon written demand of the beneficiary, immediately take any and all steps necessary to transfer absolutely and unequivocally all right, title and interest in the assets held in the trust account to the beneficiary and deliver physical custody of the assets to the beneficiary; and
(vi) allow no substitutions or withdrawals of assets from the trust account, except on written instructions from the beneficiary, except that the trustee may, without the consent of but with notice to the beneficiary, upon call or maturity of any trust asset, withdraw such asset upon condition that the proceeds are paid into the trust account.
(G) The trust agreement shall provide that at least 30 days, but not more than 45 days, prior to termination of the trust account, written notification of termination shall be delivered by the trustee to the beneficiary.
(H) The trust agreement shall be made subject to, and governed by, the laws of the state in which the trust is domiciled.
(I) The trust agreement shall prohibit invasion of the trust corpus for the purpose of paying a commission to, or reimbursing the expenses of, the trustee. In order for a letter of credit to qualify as an asset of the trust, the trustee shall have the right and the obligation pursuant to the deed of trust or some other binding agreement, as duly approved by the commissioner, to immediately draw down the full amount of the letter of credit and hold the proceeds in trust for the beneficiaries of the trust if the letter of credit will otherwise expire without being renewed or replaced.
(J) The trust agreement shall provide that the trustee shall be liable for its negligence, willful misconduct or lack of good faith. The failure of the trustee to draw against the letter of credit in circumstances where such draw would be required shall be deemed to be negligence or willful misconduct.
(K) Notwithstanding other provisions of this section, when a trust agreement is established in conjunction with a reinsurance agreement covering risks other than life, annuities and accident and health, where it is customary practice to provide a trust agreement for a specific purpose, the trust agreement may provide that the ceding insurer shall undertake to use and apply amounts drawn upon the trust account, without diminution because of the insolvency of the ceding insurer or the assuming insurer, only for the following purposes:
(i) To pay or reimburse the ceding insurer for the assuming insurer's share under the specific reinsurance agreement regarding any losses and allocated loss expenses paid by the ceding insurer, but not recovered from the assuming insurer, or for unearned premiums due to the ceding insurer if not otherwise paid by the assuming insurer;
(ii) to make payment to the assuming insurer of any amounts held in the trust account that exceed 102% of the actual amount required to fund the assuming insurer's obligations under the specific reinsurance agreement; or
(iii) where the ceding insurer has received notification of termination of the trust account and where the assuming insurer's entire obligations under the specific reinsurance agreement remain unliquidated and undischarged 10 days prior to the termination date, to withdraw amounts equal to the obligations and deposit those amounts in a separate account, in the name of the ceding insurer in any qualified United States financial institution, as defined in K.S.A.
40-221a(c)(2), and amendments thereto, apart from its general assets, in trust for such uses and purposes specified in clauses (i) and (ii) as may remain executory after such withdrawal and for any period after the termination date.
(L) Notwithstanding other provisions of this subsection, when a trust agreement is established to meet the requirements of subjection (j) in conjunction with a reinsurance agreement covering life, annuities or accident and health risks, where it is customary to provide a trust agreement for a specific purpose, the trust agreement may provide that the ceding insurer shall undertake to use and apply amounts drawn upon the trust account, without diminution because of the insolvency of the ceding insurer or the assuming insurer, only for the following purposes:
(i) To pay or reimburse the ceding insurer for:
(a) The assuming insurer's share under the specific reinsurance agreement of premiums returned, but not yet recovered from the assuming insurer, to the owners of policies reinsured under the reinsurance agreement on account of cancellations of the policies; and
(b) the assuming insurer's share under the specific reinsurance agreement of surrenders and benefits or losses paid by the ceding insurer, but not yet recovered from the assuming insurer, under the terms and provisions of the policies reinsured under the reinsurance agreement;
(ii) to pay to the assuming insurer amounts held in the trust account in excess of the amount necessary to secure the credit or reduction from liability for reinsurance taken by the ceding insurer; or
(iii) where the ceding insurer has received notification of termination of the trust and where the assuming insurer's entire obligations under the specific reinsurance agreement remain unliquidated and undischarged 10 days prior to the termination date, to withdraw amounts equal to the assuming insurer's share of liabilities, to the extent that the liabilities have not yet been funded by the assuming insurer, and deposit those amounts in a separate account, in the name of the ceding insurer in any qualified United States financial institution apart from its general assets, in trust for the uses and purposes specified in clauses (i) and (ii) as may remain executory after withdrawal and for any period after the termination date.
(M) Either the reinsurance agreement or the trust agreement shall stipulate that assets deposited in the trust account shall be valued according to their current fair market value and shall consist only of cash in United States dollars, certificates of deposit issued by a United States bank and payable in United States dollars, and investments permitted by the insurance code or any combination of the above, provided investments in or issued by an entity controlling, controlled by or under common control with either the grantor or the beneficiary of the trust shall not exceed 5% of total investments. The agreement may further specify the types of investments to be deposited. If the reinsurance agreement covers life, annuities or accident and health risks, then the provisions required by this paragraph shall be included in the reinsurance agreement.
(3)
Permitted conditions.
(A) The trust agreement may provide that the trustee may resign upon delivery of a written notice of resignation, effective not less than 90 days after the beneficiary and grantor receive the notice and that the trustee may be removed by the grantor by delivery to the trustee and the beneficiary of a written notice of removal, effective not less than 90 days after the trustee and the beneficiary receive the notice, provided that no such resignation or removal shall be effective until a successor trustee has been duly appointed and approved by the beneficiary and the grantor and all assets in the trust have been duly transferred to the new trustee.
(B) The grantor may have the full and unqualified right to vote any shares of stock in the trust account and to receive from time to time payments of any dividends or interest upon any shares of stock or obligations included in the trust account. Any interest or dividends shall be either forwarded promptly upon receipt to the grantor or deposited in a separate account established in the grantor's name.
(C) The trustee may be given authority to invest, and accept substitutions of, any funds in the account, provided that no investment or substitution shall be made without prior approval of the beneficiary, unless the trust agreement specifies categories of investments acceptable to the beneficiary and authorizes the trustee to invest funds and to accept substitutions that the trustee determines are at least equal in current fair market value to the assets withdrawn and that are consistent with the restrictions in paragraph (4)(A)(ii).
(D) The trust agreement may provide that the beneficiary may at any time designate a party to which all or part of the trust assets are to be transferred. Transfer may be conditioned upon the trustee receiving, prior to or simultaneously, other specified assets.
(E) The trust agreement may provide that, upon termination of the trust account, all assets not previously withdrawn by the beneficiary shall, with written approval by the beneficiary, be delivered over to the grantor.
(4)
Additional conditions applicable to reinsurance agreements.
(A) A reinsurance agreement may contain provisions that:
(i) Require the assuming insurer to enter into a trust agreement and to establish a trust account for the benefit of the ceding insurer, and specifying what the agreement is to cover;
(ii) require the assuming insurer, prior to depositing assets with the trustee, to execute assignments or endorsements in blank, or to transfer legal title to the trustee of all shares, obligations or any other assets requiring assignments, in order that the ceding insurer, or the trustee upon the direction of the ceding insurer, may whenever necessary negotiate these assets without consent or signature from the assuming insurer or any other entity;
(iii) require that all settlements of account between the ceding insurer and the assuming insurer be made in cash or its equivalent; and
(iv) stipulate that the assuming insurer and the ceding insurer agree that the assets in the trust account, established pursuant to the provisions of the reinsurance agreement, may be withdrawn by the ceding insurer at any time, notwithstanding any other provisions in the reinsurance agreement, and shall be utilized and applied by the ceding insurer or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of such company, without diminution because of insolvency on the part of the ceding insurer or the assuming insurer, only for the following purposes:
(a) To pay or reimburse the ceding insurer for:
(1) The assuming insurer's share under the specific reinsurance agreement of premiums returned, but not yet recovered from the assuming insurer, to the owners of policies reinsured under the reinsurance agreement because of cancellations of such policies;
(2) the assuming insurer's share of surrenders and benefits or losses paid by the ceding insurer pursuant to the provisions of the policies reinsured under the reinsurance agreement; and
(3) any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the ceding insurer;
(b) to make payment to the assuming insurer of amounts held in the trust account in excess of the amount necessary to secure the credit or reduction from liability for reinsurance taken by the ceding insurer.
(B) The reinsurance agreement also may contain provisions that:
(i) Give the assuming insurer the right to seek approval from the ceding insurer, which shall not be unreasonably or arbitrarily withheld, to withdraw from the trust account all or any part of the trust assets and transfer those assets to the assuming insurer, provided:
(a) The assuming insurer shall, at the time of withdrawal, replace the withdrawn assets with other qualified assets having a current fair market value equal to the market value of the assets withdrawn so as to maintain at all times the deposit in the required amount; or
(b) after withdrawal and transfer, the current fair market value of the trust account is no less than 102% of the required amount;
(ii) provide for the return of any amount withdrawn in excess of the actual amounts required for subsection (k)(4)(A)(iv), and for interest payments at a rate not in excess of the prime rate of interest on such amounts;
(iii) permit the award by any arbitration panel or court of competent jurisdiction of:
(a) Interest at a rate different from that provided in subparagraph (ii) of this paragraph;
(b) court or arbitration costs;
(c) attorney's fees; and
(d) any other reasonable expenses.
(5)
Financial reporting.
A trust agreement may be used to reduce any liability for reinsurance ceded to an unauthorized assuming insurer in financial statements required to be filed with this department in compliance with the provisions of this section when established on or before the date of filing of the financial statement of the ceding insurer. Further, the reduction for the existence of an acceptable trust account may be up to the current fair market value of acceptable assets available to be withdrawn from the trust account at that time, but such reduction shall be no greater than the specific obligations under the reinsurance agreement that the trust account was established to secure.
(6) The failure of any trust agreement to specifically identify the beneficiary, as defined in paragraph (1), shall not be construed to affect any actions or rights that the commissioner may take or possess pursuant to the provisions of the laws of this state.
(l)
Letters of credit qualified under subsection (j)(1).
(1) The letter of credit shall be clean, irrevocable, unconditional and issued or confirmed by a qualified United States financial institution, as defined in K.S.A.
40-221a(c)(1), and amendments thereto. The letter of credit shall contain an issue date and expiration date and shall stipulate that the beneficiary need only draw a sight draft under the letter of credit and present it to obtain funds and that no other document need be presented. The letter of credit also shall indicate that it is not subject to any condition or qualifications outside of the letter of credit. In addition, the letter of credit itself shall not contain reference to any other agreements, documents or entities, except as provided in subsection (m)(8)(A). As used in this subsection, "beneficiary" means the domestic insurer for whose benefit the letter of credit has been established and any successor of the beneficiary by operation of law. If a court of law appoints a successor in interest to the named beneficiary, then the named beneficiary includes and is limited to the court appointed domiciliary receiver, including conservator, rehabilitator or liquidator.
(2) The heading of the letter of credit may include a boxed section containing the name of the applicant and other appropriate notations to provide a reference for the letter of credit. The boxed section shall be clearly marked to indicate that such information is for internal identification purposes only.
(3) The letter of credit shall contain a statement to the effect that the obligation of the qualified United States financial institution under the letter of credit is in no way contingent upon reimbursement with respect thereto.
(4) The term of the letter of credit shall be for at least one year and shall contain an "evergreen clause" that prevents the expiration of the letter of credit without due notice from the issuer. The "evergreen clause" shall provide for a period of no less than 30 days notice prior to expiration date or nonrenewal.
(5) The letter of credit shall state whether it is subject to and governed by the laws of this state or the uniform customs and practice for documentary credits of the international chamber of commerce publication 600, UCP 600, or international standby practices of the international chamber of commerce publication 590, ISP98, or any successor publication, and all drafts drawn thereunder shall be presentable at an office in the United States of a qualified United States financial institution.
(6) If the letter of credit is made subject to the uniform customs and practice for documentary credits of the international chamber of commerce publication 600, UCP 600, or international standby practices of the international chamber of commerce publication 590, ISP98, or any successor publication, then the letter of credit shall specifically address and provide for an extension of time to draw against the letter of credit in the event that one or more of the occurrences specified in article 36 of publication 600 or any other successor publication, occur.
(7) If the letter of credit is issued by a financial institution authorized to issue letters of credit, other than a qualified United States financial institution as described in subsection (m)(1), then the following additional requirements shall be met:
(A) The issuing financial institution shall formally designate the confirming qualified United States financial institution as its agent for the receipt and payment of the drafts; and
(B) the "evergreen clause" shall provide for 30 days' notice prior to the expiration date for nonrenewal.
(8)
Reinsurance agreement provisions.
(A) The reinsurance agreement in conjunction with which the letter of credit is obtained may contain provisions that:
(i) Require the assuming insurer to provide letters of credit to the ceding insurer and specify what they are to cover;
(ii) stipulate that the assuming insurer and ceding insurer agree that the letter of credit provided by the assuming insurer pursuant to the provisions of the reinsurance agreement may be drawn upon at any time, notwithstanding any other provisions in the agreement, and shall be utilized by the ceding insurer or its successors in interest only for one or more of the following reasons:
(a) To pay or reimburse the ceding insurer for:
(1) The assuming insurer's share under the specific reinsurance agreement of premiums returned, but not yet recovered from the assuming insurers, to the owners of policies reinsured under the reinsurance agreement on account of cancellations of such policies;
(2) the assuming insurer's share, under the specific reinsurance agreement, of surrenders and benefits or losses paid by the ceding insurer, but not yet recovered from the assuming insurers, under the terms and provisions of the policies reinsured under the reinsurance agreement; and
(3) any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the ceding insurer;
(b) where the letter of credit will expire without renewal or be reduced or replaced by a letter of credit for a reduced amount and where the assuming insurer's entire obligations under the reinsurance agreement remain unliquidated and undischarged 10 days prior to the termination date, to withdraw amounts equal to the assuming insurer's share of the liabilities, to the extent that the liabilities have not yet been funded by the assuming insurer and exceed the amount of any reduced or replacement letter of credit, and deposit those amounts in a separate account in the name of the ceding insurer in a qualified United States financial institution apart from its general assets, in trust for such uses and purposes specified in paragraph (8)(A)(ii)(a) as may remain after withdrawal and for any period after the termination date; and
(iii) all of the provisions of subparagraph (A) shall be applied without diminution because of insolvency on the part of the ceding insurer or assuming insurer.
(B) Nothing contained in subparagraph (A) shall preclude the ceding insurer and assuming insurer from providing for:
(i) An interest payment, at a rate not in excess of the prime rate of interest, on the amounts held pursuant to paragraph (8)(A)(ii); or
(ii) the return of any amounts drawn down on the letters of credit in excess of the actual amounts required for the above or any amounts that are subsequently determined not to be due.
(m)
Other security.
A ceding insurer may take credit for unencumbered funds withheld by the ceding insurer in the United States subject to withdrawal solely by the ceding insurer and under its exclusive control.
(n)
Reinsurance contract.
Credit will not be granted, nor an asset or reduction from liability allowed, to a ceding insurer for reinsurance effected with assuming insurers meeting the requirements of subsection (c), (d), (e), (f), (g), (h), or (j) or otherwise in compliance with K.S.A.
40-221a(a), and amendments thereto, after the adoption of this section unless the reinsurance agreement:
(1) Includes a proper insolvency clause, that stipulates that reinsurance is payable directly to the liquidator or successor without diminution regardless of the status of the ceding company;
(2) includes a provision pursuant to K.S.A.
40-221a(a), and amendments thereto, whereby the assuming insurer, if an unauthorized assuming insurer, has submitted to the jurisdiction of an alternative dispute resolution panel or court of competent jurisdiction within the United States, has agreed to comply with all requirements necessary to give the court or panel jurisdiction, has designated an agent upon whom service of process may be effected, and has agreed to abide by the final decision of the court or panel; and
(3) includes a proper reinsurance intermediary clause, if applicable, that stipulates that the credit risk for the intermediary is carried by the assuming insurer.
History: L. 2021, ch. 108, § 1; July 1.
(a) Whenever the commissioner of insurance deems it necessary but at least once every five years, the commissioner may make, or direct to be made, a financial examination of any insurance company in the process of organization, or applying for admission or doing business in this state. In addition, at the commissioner's discretion the commissioner may make, or direct to be made, a market regulation examination of any insurance company doing business in this state.
(b) In scheduling and determining the nature, scope and frequency of examinations of financial condition, the commissioner shall consider such matters as the results of financial statement analyses and ratios, changes in management or ownership, actuarial opinions, reports of independent certified public accountants and other criteria as set forth in the examiner's handbook adopted by the national association of insurance commissioners and in effect when the commissioner exercises discretion under this subsection.
(c) For the purpose of such examination, the commissioner of insurance or the persons appointed by the commissioner, for the purpose of making such examination shall have free access to the books and papers of any such company that relate to its business and to the books and papers kept by any of its agents and may examine under oath, which the commissioner or the persons appointed by the commissioner are empowered to administer, the directors, officers, agents or employees of any such company in relation to its affairs, transactions and condition.
(d) The commissioner may also examine or investigate any person, or the business of any person, in so far as such examination or investigation is, in the sole discretion of the commissioner, necessary or material to the examination of the company, but such examination or investigation shall not infringe upon or extend to any communications or information accorded privileged or confidential status under any other laws of this state.
(e) In lieu of examining the financial condition of a foreign or alien insurance company, the commissioner of insurance may accept the report of the examination made by or upon the authority of the company's state of domicile or port-of-entry state until January 1, 1994. Thereafter, such reports as they relate to financial condition may only be accepted if:
(1) The insurance department conducting the examination was at the time of the examination accredited under the national association of insurance commissioners' financial regulation standards and accreditation program; or
(2) the examination is performed under the supervision of an accredited insurance department, or with the participation of one or more examiners who are employed by such an accredited insurance department and who after a review of the examination work papers and report state under oath that the examination was performed in a manner consistent with the standards and procedures required by their insurance department.
(f) Upon determining that an examination should be conducted, the commissioner or the commissioner's designee shall appoint one or more examiners to perform the examination and instruct them as to the scope of the examination. In conducting an examination of financial condition, the examiner shall observe those guidelines and procedures set forth in the examiners' handbook adopted by the national association of insurance commissioners. The commissioner may also employ such other guidelines or procedures as the commissioner may deem appropriate.
(g) The refusal of any company, by its officers, directors, employees or agents, to submit to examination or to comply with any reasonable written request of the examiners shall be grounds for suspension or refusal of, or nonrenewal of any license or authority held by the company to engage in an insurance or other business subject to the commissioner's jurisdiction. Any such proceedings for suspension, revocation or refusal of any license or authority shall be conducted in accordance with the provisions of the Kansas administrative procedure act.
(h) When making an examination under this act, the commissioner may retain attorneys, appraisers, independent actuaries, independent certified public accountants or other professionals and specialists as examiners, the reasonable cost of which shall be borne by the company which is the subject of the examination.
(i) Nothing contained in this act shall be construed to limit the commissioner's authority to terminate or suspend any examination in order to pursue other legal or regulatory action pursuant to the insurance laws of this state.
(j) Nothing contained in this act shall be construed to limit the commissioner's authority to use and, if appropriate, to make public any final or preliminary examination report in the furtherance of any legal or regulatory action which the commissioner may, in the commissioner's sole discretion, deem appropriate.
(k) (1) No later than 30 days following completion of the examination or at such earlier time as the commissioner shall prescribe, the examiner in charge shall file with the department a verified written report of examination under oath. No later than 30 days following receipt of the verified report, the department shall transmit the report to the company examined, together with a notice which shall afford such company examined a reasonable opportunity of not more than 30 days to make a written submission or rebuttal with respect to any matters contained in the examination report.
(2) Within 30 days of the end of the period allowed for the receipt of written submissions or rebuttals, the commissioner shall fully consider and review the report, together with any written submissions or rebuttals and any relevant portions of the examiners workpapers and enter an order:
(A) Adopting the examination report as filed or with modification or corrections. If the examination report reveals that the company is operating in violation of any law, regulation or prior order of the commissioner, the commissioner may order the company to take any action the commissioner considers necessary and appropriate to cure such violations; or
(B) rejecting the examination report with directions to the examiners to reopen the examination for purposes of obtaining additional data, documentation or information, and refiling pursuant to subsection (k); or
(C) call and conduct a fact-finding hearing in accordance with K.S.A. 40-281, and amendments thereto, for purposes of obtaining additional documentation, data, information and testimony.
(3) All orders entered as a result of revelations contained in the examination report shall be accompanied by findings and conclusions resulting from the commissioner's consideration and review of the examination report, relevant examiner workpapers and any written submissions or rebuttals. Within 30 days of the issuance of the adopted report, the company shall file affidavits executed by each of its directors stating under oath that they have received a copy of the adopted report and related orders.
(4) Upon the adoption of the examination report, the commissioner shall hold the content of the examination report as private and confidential information for a period of 30 days except to the extent provided in paragraph (5). Thereafter, the commissioner may open the report for public inspection so long as no court of competent jurisdiction has stayed its publication.
(5) (A) Except as provided in paragraph (B), nothing contained in this act shall prevent or be construed as prohibiting the commissioner from disclosing the content of an examination report, preliminary examination report or results, or any matter relating thereto, at any time to:
(i) The insurance department of this or any other state or country;
(ii) law enforcement officials of this or any other state or agency of the federal government or any other country; or
(iii) officials of any agency of another country.
(B) The commissioner shall not share any information listed in paragraph (A) unless the agency or office receiving the report or matters relating thereto agrees in writing to hold it confidential and in a manner consistent with this act.
(6) In the event the commissioner determines that regulatory action is appropriate as a result of any examination, the commissioner may initiate any proceedings or actions as provided by law.
(7) All working papers, recorded information, documents and copies thereof produced by, obtained by or disclosed to the commissioner or any other person in the course of an examination made under this act including analysis by the commissioner pertaining to either the financial condition or the market regulation of a company must be given confidential treatment and are not subject to subpoena and may not be made public by the commissioner or any other person, except to the extent otherwise specifically provided in K.S.A. 45-215 et seq., and amendments thereto. Access may also be granted to the national association of insurance commissioners and its affiliates. Such parties must agree in writing prior to receiving the information to provide to it the same confidential treatment as required by this section, unless the prior written consent of the company to which it pertains has been obtained.
(8) Whenever it appears to the commissioner of insurance from such examination or other satisfactory evidence that the solvency of any such insurance company is impaired, or that it is doing business in violation of any of the laws of this state, or that its affairs are in an unsound condition so as to endanger its policyholders, the commissioner of insurance shall give the company a notice and an opportunity for a hearing in accordance with the provisions of the Kansas administrative procedure act. If the hearing confirms the report of the examination, the commissioner shall suspend the certificate of authority of such company until its solvency shall have been fully restored and the laws of the state fully complied with. The commissioner may, if there is an unreasonable delay in restoring the solvency of such company and in complying with the law, revoke the certificate of authority of such company to do business in this state. Upon revoking any such certificate the commissioner shall commence an action to dissolve such company or to enjoin the same from doing or transacting business in this state.
History: L. 1927, ch. 231, 40-222; L. 1978, ch. 164, § 1; L. 1984, ch. 162, § 1; L. 1984, ch. 313, § 73; L. 1991, ch. 124, § 2; L. 2007, ch. 26, § 1; L. 2008, ch. 35, § 1; L. 2014, ch. 101, § 2; July 1.
The commissioner may, whenever he deems it necessary, examine the affairs of any corporation organized under any law of this state, or having an office in this state, which corporation is engaged in, or advertising that it is engaged in, or receiving stock subscription for the formation of a domestic insurance company; or any corporation which is holding the capital stock of any domestic insurance company for the purpose of controlling the management thereof. Each such company or corporation, its officers, directors, employees, and agents, shall produce the corporate books and papers in its or their possession relating to its business or affairs, and any other person may be required to produce any corporate book or paper in his custody deemed to be relevant to such examination, for the inspection of the commissioner, or any person appointed by the commissioner for such examination.
History: L. 1967, ch. 250, § 1; July 1.
(a) Whenever the financial condition of any insurance company, hereinafter referred to as "company," authorized to do business in this state attains a condition such that the continued operation of the company might be hazardous to the insuring public, the commissioner, after notice and hearing in accordance with the provisions of the Kansas administrative procedure act, may order the company to take such action as may be reasonably necessary to rectify the existing condition, including, but not necessarily limited to, one or more of the following measures:
(1) Require the company to reduce the volume of new, renewal or new and renewal business being accepted to an amount and for the period of time specified by the commissioner in the manner prescribed by the commissioner's order;
(2) require the submission of such reinsurance contracts for approval and make such requirements relative to the company's reinsurance program as the commissioner deems necessary to protect the interests of Kansas policyholders;
(3) require the company to reinsure on a bulk or portfolio basis all or any part of its Kansas business with a company duly authorized to transact such business in this state;
(4) require a contribution to surplus which will increase the company's surplus for such a period of time, and by such an amount, and in such a manner, as the commissioner may deem necessary and essential;
(5) require the company to maintain a special deposit with the commissioner of insurance of this state in cash or securities of the kinds in which a domestic insurer is permitted to invest its funds under the provisions of K.S.A. 40-2a01 to 40-2a05, inclusive, 40-2a07 and 40-2a10, and amendments thereto, if other than a life insurance company, or K.S.A. 40-2b01 to 40-2b06, inclusive, and 40-2b16, and amendments thereto, if a life insurance company.
Such securities held as a special deposit shall at all times have a market value at least equal to the gross reserves that would reasonably be required to discharge the company's liabilities for the claims and claims' expenses of Kansas policyholders and claimants. The amount of the special deposit required of any life insurance company may be reduced by policy loans and deferred and uncollected premiums related to the company's Kansas business. Any special deposit required by this subsection shall be for the protection and benefit of Kansas policyholders and claimants only and shall not be withdrawn until the commissioner abrogates the requirements imposed by any order issued or agreement reached pursuant to the provisions of this section. The provisions of this subsection shall not apply to any insurance company organized under the laws of this state;
(6) require the company to maintain a general deposit with the commissioner of insurance in this state in cash or securities of the kinds authorized by K.S.A. 40-2a01 et seq., and amendments thereto, if other than a life insurance company, or K.S.A. 40-2b01, and amendments thereto, if a life insurance company unless such statutes specifically exclude such securities for deposit. Any general deposit required by this subsection shall be in an amount designated by the commissioner for the protection and benefit of those persons and entities referred to in K.S.A. 40-3641, and amendments thereto, and shall not be withdrawn until the commissioner abrogates the requirements imposed by any order issued or agreement reached pursuant to the provisions of this section. The provisions of this subsection shall only apply to insurance companies organized under the laws of this state.
(b) Whenever a guaranty fund, established pursuant to article 29 or 30 of chapter 40 of the Kansas Statutes Annotated, is activated for the protection of Kansas policyholders and claimants of an insurance company that has made a special deposit under the provisions of this section, the commissioner shall transfer the special deposit to such guaranty fund under an agreement approved by the commissioner which will provide protection to all Kansas policyholders and claimants. Any funds from such special deposit which remain after the payment of all claims and claims' expenses of Kansas policyholders and claimants shall be returned to the insurance supervisory official of the company's state of domicile. If a Kansas domestic insurance company has made a deposit under the provisions of this section, any distribution of such deposit shall be made in accordance with the provisions of K.S.A. 40-3641, and amendments thereto.
History: L. 1972, ch. 177, § 1; L. 1986, ch. 169, § 1; L. 1988, ch. 356, § 75; L. 1991, ch. 125, § 55; July 1.
As used in this act: The term "insurance company" shall mean and include all corporations, companies, associations, societies, fraternal benefit societies, reciprocal exchanges, persons or partnerships writing contracts of insurance, indemnity or suretyship in this state upon any type of risk or loss except insurance companies transacting business pursuant to the provisions of K.S.A. 40-202.
History: L. 1972, ch. 177, § 2; L. 1997, ch. 8, § 3; July 1.
For the purposes of this act a company may be deemed to be in a hazardous financial condition when the commissioner has determined, after notice and hearing as provided in K.S.A. 40-222b, that the loss experience of the company, when reviewed in conjunction with the kinds and nature of risks insured, the financial condition of the company and its ownership or the ratio of the annual premium volume in proportion to the company's policyholders surplus creates a condition that would make further assumption of risks hazardous to the insuring public.
History: L. 1972, ch. 177, § 3; July 1.
Whenever any insurance company subject to the provisions of this act fails to comply with any requirement imposed pursuant to this act, the commissioner may suspend or revoke such company's certificate of authority to transact business in this state pursuant to the provisions of K.S.A. 40-222 or the commissioner may refuse to renew such company's certificate of authority.
History: L. 1972, ch. 177, § 4; July 1.
As used in this act*:
(a) "Commissioner" means the commissioner of insurance of this state;
(b) "company" means any person engaging in or proposing or attempting to engage in any transaction or kind of insurance or surety business and any person or group of persons who may otherwise be subject to the administrative, regulatory or taxing authority of the commissioner;
(c) "department" means the department of insurance of this state;
(d) "examiner" means any individual or firm having been authorized by the commissioner to conduct an examination under this act;
(e) "insurer" shall have the meaning ascribed to the term "insurance company" by K.S.A. 40-222(c),** and amendments thereto; and
(f) "person" means any individual, aggregation of individuals, trust, association, partnership or corporation, or any affiliate thereof.
History: L. 1991, ch. 124, § 1; January 1, 1992.
(a) (1) Except as provided in K.S.A. 40-110 and 40-253, and amendments thereto, any person who makes any examination under the provisions of this act may receive, as full compensation for such person's services, on a per diem basis, an average and reasonable amount fixed by the commissioner that shall not exceed the amount recommended by the national association of insurance commissioners, for such time necessarily and actually occupied in going to and returning from the place of such examination and for such time the examiner is necessarily and actually engaged in making such examination including any day within the regular workweek when the examiner would have been so engaged had the company or society been open for business, together with such reasonably necessary and actual expenses for traveling and subsistence as the examiner shall incur because of the performance of such services.
(2) For the purposes of this act, "necessary and actual expenses" shall be limited, whether for travel within the state or travel outside the state, to those limitations expressed in K.S.A. 75-3207, and amendments thereto, that pertain to official travel outside the state. The daily charge shall be calculated by dividing the amount the examiner is authorized by the commissioner of insurance to charge per week by the number of days in the regular workweek of the company or society being examined.
(b) (1) All of such compensation, expenses, the employer's share of the federal insurance contributions act taxes, the employer's contribution to the Kansas public employees retirement system as provided in K.S.A. 74-4920, and amendments thereto, the self-insurance assessment for the workers compensation act as provided in K.S.A. 44-576, and amendments thereto, the employer's cost of the state health care benefits program under K.S.A. 75-6507, and amendments thereto, a pro rata amount determined by the commissioner to provide vacation and sick leave for the examiner, all average and reasonable outside consulting and data processing fees necessary to perform any examination, and an average and reasonable pro rata amount determined by the commissioner to fund the purchase, maintenance and enhancement of examination equipment and computer software shall be paid to the commissioner of insurance by the insurance company or society so examined, on demand of the commissioner.
(2) The amount paid for all costs pursuant to paragraph (1), outside consulting and data processing fees necessary to perform any financial examination at any one company or society, including examination of such company's or society's subsidiaries or any combination thereof, and the pro rata amount to fund the purchase of examination equipment and computer software shall not collectively total more than:
(A) $50,000 for any insurance company or society that has less than $5,000,000 in gross premiums, both direct and assumed, in the preceding calendar year; or
(B) $75,000 for any insurance company or society that has at least $5,000,000 but less than $25,000,000 in gross premiums, both direct and assumed, in the preceding calendar year;
(C) $100,000 for any insurance company or society that has at least $25,000,000 but less than $50,000,000 in gross premiums, both direct and assumed, in the preceding calendar year;
(D) $125,000 for any insurance company or society that has at least $50,000,000 but less than $100,000,000 in gross premiums, both direct and assumed, in the preceding calendar year;
(E) $175,000 for any insurance company or society that has at least $100,000,000 but less than $250,000,000 in gross premiums, both direct and assumed, in the preceding calendar year;
(F) $250,000 for any insurance company or society that has at least $250,000,000 but less than $500,000,000 in gross premiums, both direct and assumed, in the preceding calendar year; or
(G) the actual total costs paid in connection with the examination for any insurance company or society that has at least $500,000,000 in gross premiums, both direct and assumed, in the preceding calendar year.
(3) The amount paid to perform any market regulation examination at any one company or society, including examination of such company's or society's subsidiaries, or any combination thereof, and the pro rata amount to fund the purchase of examination equipment and computer software shall be reasonable and not collectively total more than $25,000.
(c) Such demand shall be accompanied by the sworn statement of the person making such examination, setting forth in separate items the number of days necessarily and actually occupied in going to and returning from the place of such examination, the number of days the examiners were necessarily and actually engaged in making such examination including those days within the regular workweek while the examination was in progress and the company or society had closed for business, and the necessary and actual expenses for traveling and subsistence, incurred in and on account of such services.
(d) A duplicate of every such sworn statement shall be kept on file in the office of the commissioner of insurance. All moneys so paid to the commissioner of insurance shall be remitted to the state treasurer in accordance with the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount in the state treasury to the credit of the insurance company examination fund. The state treasurer shall issue duplicate receipts, one to be delivered to the commissioner of insurance and the other to be filed with the director of accounts and reports.
(e) As used in this section, "average and reasonable" relates to the amounts or fees that are comparable to fees assessed by other persons who have rendered similar services in the area where the examination occurred.
History: L. 1927, ch. 231, 40-223; L. 1947, ch. 272, § 1; L. 1953, ch. 225, § 1; L. 1957, ch. 273, § 1; L. 1963, ch. 259, § 1; L. 1967, ch. 251, § 1; L. 1971, ch. 156, § 1; L. 1972, ch. 172, § 1; L. 1974, ch. 186, § 1; L. 1977, ch. 158, § 1; L. 1980, ch. 128, § 1; L. 1984, ch. 329, § 13; L. 1988, ch. 149, § 1; L. 1991, ch. 126, § 1; L. 2001, ch. 5, § 114; L. 2012, ch. 137, § 1; L. 2015, ch. 83, § 3; L. 2024, ch. 70, § 4; July 1.
A fund, designated "insurance company annual statement examination fund" in an amount not to exceed twenty-eight thousand dollars ($28,000) shall be set apart and maintained for the commissioner of insurance from insurance company tax and fee collections. Such fund shall be held by the state treasurer for the payment of expenses and salaries incurred in the auditing of securities deposited with the commissioner and examination of the annual statements required by K.S.A. 40-225 and shall be limited to the amount necessary to compensate and reimburse no more than five (5) examiners for a period of time not exceeding ninety (90) days in any one calendar year.
History: L. 1971, ch. 157, § 1; L. 1979, ch. 135, § 1; July 1.
Any person or persons who shall conduct a securities audit or annual statement examinations under the provisions of this act shall be regularly employed examiners and shall receive as full compensation for their services the amount provided by K.S.A. 40-223 together with such necessary and actual expenses for traveling and subsistence as shall be incurred in and on account of the performance of such services. For the purposes of this act, "necessary and actual expenses" shall be limited as provided in K.S.A. 75-3207 which pertain to official travel outside the state.
History: L. 1971, ch. 157, § 2; L. 1979, ch. 135, § 2; July 1.
At such monthly intervals as he deems necessary and subject to the limitations applicable to this act, the commissioner shall certify the amount of compensation and expense reimbursement due on a voucher to the director of accounts and reports for payment of such amount. Upon receipt of such voucher, properly executed, the director of accounts and reports shall issue his warrant to the state treasurer for the payment out of the revolving fund provided for by this act.
History: L. 1971, ch. 157, § 3; March 16.
In the event such fund as established by this act is, at any time, insufficient to provide the amount necessary to compensate and reimburse the examiners as provided herein, the commissioner shall certify the amount of additional funds required to the director of accounts and reports who shall promptly transfer the required amount from the state general revenue fund to the insurance company annual statement examination fund and notify the state treasurer who shall make proper entry on his records: Provided, That such additional funds shall not exceed the amount of five thousand dollars ($5,000) per fiscal year. The commissioner shall maintain in his files for a period of five (5) years from its date a duplicate of said voucher and a statement which shall set forth the reasons such fund was deficient.
History: L. 1971, ch. 157, § 4; March 16.
A revolving fund, designated as the "insurance company examiner training fund" in an amount not to exceed forty thousand dollars ($40,000) shall be set apart and maintained for the commissioner of insurance from insurance company tax and fee collections. Such fund shall be held by the state treasurer for the payment of enrollment costs of training for insurance company examiners and for the expenses and salaries incurred by the examiners while receiving the training, and shall be limited to the amount necessary to provide training to and compensate and reimburse those individuals who in the opinion of the commissioner would benefit from the training.
History: L. 1974, ch. 182, § 1; March 14.
Any person or persons who shall receive training or payment for salaries or expenses under the provisions of this act shall be regularly employed examiners and shall receive as full compensation while in training the amount provided by K.S.A. 40-223, together with such necessary and actual expenses for traveling and subsistence as shall be incurred while in training. For the purposes of this act, "necessary and actual expenses" shall be limited as provided in K.S.A. 75-3207 which relates to official travel outside the state.
History: L. 1974, ch. 182, § 2; March 14.
At such monthly intervals as he deems necessary and subject to the limitations applicable to this act, the commissioner shall certify the amount of enrollment fees, compensation and expense reimbursement due on a voucher to the director of accounts and reports for payment of such amount. Upon receipt of such voucher, properly executed, the director of accounts and reports shall issue his warrant to the state treasurer for the payment out of the revolving fund provided for by this act.
History: L. 1974, ch. 182, § 3; March 14.
K.S.A. 40-223h through 40-223j, and amendments thereto, shall be known and may be cited as the property and casualty actuarial opinion letter law.
History: L. 2008, ch. 63, § 1; July 1.
(a) Unless otherwise exempted by the commissioner, every property and casualty insurance company doing business in this state shall annually submit to the commissioner the opinion of an appointed actuary entitled "Statement of Actuarial Opinion." Such opinion shall be filed in accordance with the appropriate NAIC property and casualty annual statement instructions.
(b) (1) Every property and casualty insurance company domiciled in this state that is required to submit a statement of actuarial opinion shall annually submit an actuarial opinion summary, written by the company's appointed actuary. This actuarial opinion summary shall be filed in accordance with the appropriate NAIC property and casualty annual statement instructions and shall be considered as a document supporting the actuarial opinion required in subsection (a).
(2) A property and casualty insurance company licensed but not domiciled in this state shall provide the actuarial opinion summary to the commissioner upon request.
(c) (1) An actuarial report, including all underlying work papers as required by the appropriate NAIC property and casualty annual statement instructions, shall be prepared to support each actuarial opinion.
(2) The commissioner may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting actuarial report or work papers if:
(A) The property and casualty insurance company fails to provide a supporting actuarial report or work papers, or both, at the request of the commissioner; or
(B) the commissioner determines that the supporting actuarial report or work papers provided by the insurance company is otherwise unacceptable to the commissioner.
(d) The property and casualty insurance company's appointed actuary shall not be liable for damages to any person other than the insurance company and the commissioner for any act, error, omission, decision or conduct with respect to the actuary's opinion, except in cases of fraud or willful misconduct on the part of the appointed actuary.
(e) This section shall take effect on January 1, 2009.
History: L. 2008, ch. 63, § 2; July 1.
(a) The statement of actuarial opinion shall be provided with the annual statement in accordance with the appropriate NAIC property and casualty annual statement instructions and shall be treated as a public document.
(b) (1) Any document, material or other information, in the control or possession of the department that is furnished to the commissioner pursuant to this act or obtained by the commissioner in an investigation pursuant to this section shall be kept confidential by the commissioner. Such information shall not be made public or subject to subpoena, other than by the commissioner and then only for the purpose of enforcement actions taken by the commissioner pursuant to this act or any other provision of the insurance laws of this state.
(2) (A) This subsection shall not be construed to limit the commissioner's authority to release the documents to the actuarial board for counseling and discipline so long as the material is required for the purpose of professional disciplinary proceedings and that the actuarial board for counseling and discipline establishes procedures satisfactory to the commissioner for preserving the confidentiality of the documents.
(B) This subsection shall not be construed to limit the commissioner's authority to use the documents, materials or other information in furtherance of any regulatory or legal action brought as part of the commissioner's official duties.
(3) Neither the commissioner nor any person who received documents, materials or other information while acting under the authority of the commissioner shall be required to testify in any private civil action concerning any confidential documents, materials or information subject to paragraph (1).
(4) The commissioner may share or exchange any documents, materials or other information, including confidential and privileged documents referred to in paragraph (1), received in the performance of the commissioner's duties under this act, with:
(A) The NAIC and its affiliates and subsidiaries;
(B) the actuarial board for counseling and discipline or any other entity which regulates actuaries;
(C) other state, federal or international regulatory agencies; and
(D) other state, federal or international law enforcement authorities.
(5) (A) The sharing or exchanging of documents, materials or other information under this subsection shall be conditioned upon the recipient's authority and agreement to maintain the confidential and privileged status, if any, of the documents, materials or other information being shared or exchanged.
(B) No waiver of an existing privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the commissioner under this section or as a result of sharing such documents, materials or information as authorized by this subsection.
(6) The commissioner of insurance is hereby authorized to adopt such rules and regulations establishing protocols governing the exchange of information as may be necessary to implement and carry out the provisions of this act.
(c) For the purposes of this section:
(1) "Commissioner" means the commissioner of insurance.
(2) "NAIC" means the national association of insurance commissioners.
History: L. 2008, ch. 63, § 3; L. 2015, ch. 24, § 1; L. 2020, ch. 12, § 2; July 1.
No insurance company organized under the laws of this state shall make any disbursement of one hundred dollars or more unless the same be evidenced by a voucher signed by or on behalf of the person, firm, or corporation receiving the money and correctly describing the consideration for the payment. If the expenditure be for both services and disbursements, the voucher shall set forth the services rendered and an itemized statement of the disbursements made. If the expenditure be in connection with any matter pending before any legislative or public body, or before any department or officer of any state or government, the voucher shall correctly describe, in addition, the nature of the matter and of the interest of such company therein. When such voucher cannot be obtained, the expenditure shall be evidenced by an affidavit describing the character and object of the expenditure, and stating the reason for not obtaining such voucher.
History: L. 1927, ch. 231, 40-224; June 1.
Every insurance company or fraternal benefit society doing business in this state shall, if the statement of condition required below is compatible, participate in the insurance regulatory information system administered by the national association of insurance commissioners and shall annually, on January 1 or within 60 days thereafter, file with the commissioner of insurance a statement of its condition as of the preceding December 31. The commissioner may upon request, and for good cause shown grant a reasonable extension of time within which such statement may be filed. Such statement shall be made upon the form and be prepared in accordance with the instructions and accounting practices and procedures prescribed and adopted from time to time by the national association of insurance commissioners with such additions or amendments thereto as shall seem to the commissioner of insurance best adapted to elicit from such companies a true exhibit of their condition.
The commissioner may require any insurer, fraternal benefit society, mutual nonprofit hospital and medical service corporation, health maintenance organization or any prepaid service plan operating under article 19a of chapter 40 of the Kansas Statutes Annotated to have an annual audit by an independent certified public accountant and file an audited financial report in accordance with rules and regulations adopted to effectuate such requirement.
The commissioner of insurance shall, on or before December 1 of each year, furnish, upon request, to each company required to make such report two or more printed forms as herein prescribed. The commissioner may also at any time address any proper inquiries to any such insurance company or fraternal benefit society or its officers in relation to its condition or any other matter connected with its transactions. Each company, society or officer addressed shall promptly and truthfully reply in writing to all such inquiries, and such replies shall be verified if the commissioner of insurance requires. If the national association of insurance commissioners does not prescribe such a form as is contemplated by this section for any insurance company or fraternal benefit society doing business in this state, the commissioner of insurance shall prescribe and adopt a form to be used by such companies. The statement of any insurance company organized under the laws of a country other than the United States may, in the discretion of the commissioner of insurance, include only its assets, liabilities and transactions in the United States.
In accordance with rules and regulations adopted by the commissioner, the information contained on the statement of condition required by this section shall be provided the commissioner, or the national association of insurance commissioners, or both, by electronically readable means.
History: L. 1927, ch. 231, 40-225; L. 1957, ch. 274, § 1; L. 1968, ch. 360, § 1; L. 1986, ch. 169, § 2; L. 1988, ch. 150, § 1; L. 1993, ch. 90, § 1; L. 1994, ch. 97, § 1; L. 1997, ch. 8, § 4; July 1.
History: L. 1927, ch. 231, 40-226; Repealed, L. 1997, ch. 24, § 7; July 1.
History: L. 1927, ch. 231, 40-227; L. 1935, ch. 195, § 1; L. 1937, ch. 249, § 1; L. 1953, ch. 226, § 1; L. 1957, ch. 275, § 1; L. 1963, ch. 260, § 1; L. 1969, ch. 231, § 1; L. 1971, ch. 158, § 1; Repealed, L. 1972, ch. 173, § 20; July 1.
History: L. 1935, ch. 195, § 2; Repealed, L. 1969, ch. 231, § 2; April 15.
History: L. 1927, ch. 231, 40-228; L. 1947, ch. 273, § 1; L. 1968, ch. 374, § 2; Repealed, L. 1969, ch. 231, § 2; April 15.
All bonds or other evidences of debt having a fixed term and rate held by any insurance company or fraternal benefit society authorized to do business in this state may, if amply secured and not in default as to principal or interest, be valued as follows: If purchased at par, at the par value; if purchased above or below par, on the basis of the purchase price adjusted so as to bring the value to par at maturity and so as to yield in the meantime the effective rate of interest at which the purchase was made: Provided, That the purchase price shall in no case be taken at a higher figure than the actual market value at the time of purchase: And provided further, That the commissioner of insurance shall have full discretion in determining the method of calculating values according to the foregoing rule.
History: L. 1927, ch. 231, 40-229; June 1.
(a) (1) (A) All cash, securities or other assets, excluding real estate and mortgages, deposited with the commissioner of insurance pursuant to the provisions of the insurance code of the state of Kansas shall be deposited with any Kansas financial institution acceptable to the commissioner through which a custodial or controlled account, a joint custody receipt arrangement or any combination of these or other measures that are acceptable to the commissioner is used.
(B) All such deposits shall be held by such financial institution on behalf of the commissioner in trust for the use and benefit of such company and such company's policyholders and creditors. Such assets shall be released from such deposits only upon written approval of the commissioner.
(C) All income from deposits belong to the depositing organization and shall be paid to it as it becomes available. The commissioner, upon written approval, may direct the financial institution to permit exchange of securities or assets upon deposit of specified substituted securities or assets.
(D) An authorized signature form must be submitted to the commissioner of insurance prior to acceptance of any deposit. Each signature on the authorized signature form must be the original handwritten name of each signee. No copies, facsimiles, electronic or digital signatures will be recognized on this form.
(E) All forms for deposit, withdrawal or exchange shall be prescribed, prepared and furnished by the commissioner and no facsimile signatures shall be used or recognized.
(F) The commissioner or assistant commissioner of insurance or insurance department employee authorized by the commissioner may at any time inspect the securities on deposit in any such financial institution.
(G) Nothing in this act shall be construed to hold the state of Kansas, the commissioner, assistant commissioner or authorized employee liable either personally or officially for any default of such financial institution.
(2) All deposits made with the commissioner shall be audited by the commissioner and the state treasurer not less frequently than once each three years. The commissioner may accept an audit performed by another governmental agency acceptable to the commissioner, in lieu of this audit requirement.
(b) Assets deposited pursuant to this section shall be held by the custodian on behalf of the commissioner as in trust for the use and benefit of the depositing organization. Such assets shall remain the specific property of the organization and shall not be subject to the claim of any third party against the custodian.
(c) The custodian is authorized to redeposit such assets with a clearing corporation as defined in K.S.A.
84-8-102, and amendments thereto, if such clearing corporation is domiciled in the United States. The custodian is authorized to hold such assets through the federal reserve bank book-entry system.
(d) The commissioner shall adopt rules and regulations to establish requirements relating to deposits under this section appropriate to assure the security and safety of such deposits, including, but not limited to, the following:
(1) Capital and surplus of the custodian;
(2) title in which deposited assets are held;
(3) records to be kept by the custodian and the commissioner's access thereto;
(4) periodic reports by the custodian to the commissioner;
(5) responsibility of the custodian to indemnify the depositor for loss of deposited assets;
(6) withdrawal or exchange of deposited assets; and
(7) authority of the commissioner to terminate the deposit if the condition of the custodian should threaten the security of the deposited assets.
(e) As used in this section:
(1) "Commissioner" means the commissioner of insurance; and
(2) "financial institution" means a federal home loan bank, a savings and loan association and savings bank organized under the laws of the United States or another state, a national bank, state bank or trust company, which have main or branch offices in this state, shall at all times during which such federal home loan bank, savings and loan association, savings bank, national bank, state bank or trust company acts as a custodian be:
(A) No less than adequately capitalized as determined by the standards adopted by the regulator charged with establishing standards for, and assessing, the institution's solvency;
(B) regulated by either state or federal banking laws, the federal home loan bank act, as amended or is a member of the federal reserve system; and
(C) legally qualified to accept custody of securities.
(3) "Main office" and "branch" shall have the meanings ascribed to such terms in K.S.A.
9-1408, and amendments thereto.
History: L. 1996, ch. 25, § 1; L. 1997, ch. 64, § 1; L. 2007, ch. 45, § 1; L. 2009, ch. 83, § 22; L. 2014, ch. 15, § 1; July 1.
Revisor's Note: Later act, see 40-229a.
History: L. 1927, ch. 231, 40-230; L. 1957, ch. 278, § 2; L. 1979, ch. 135, § 3; L. 1983, ch. 49, § 79; Repealed, L. 1996, ch. 25, § 17; July 1.
The proceeds from the sale of stock during the period of organization of any insurance company now being or hereafter to be organized under the laws of this state shall be immediately invested in such securities as are permitted by law, and such securities shall be immediately deposited in accordance with K.S.A. 40-229a. An amount equal to the maximum promotion expense allowed by law may be deducted from the proceeds of such sales.
History: L. 1931, ch. 209, § 1; L. 1996, ch. 25, § 2; July 1.
(a) Except as otherwise provided in subsection (b), no insurance company shall directly or indirectly deal or trade in goods, wares, merchandise or other commodities.
(b) This section shall not prohibit an insurance company: (1) From entering into an agreement to provide administrative services to a person, firm or corporation with respect to legally constituted plans of insurance or indemnity; (2) from directly or indirectly dealing or trading in goods, wares, merchandise or other commodities which are insured by the insurance company or which may be sold under judicial process or otherwise; or (3) from negotiating and entering into contracts for alternative rates of payment with health care providers or other parties who have arranged for alternative rates of payment with health care providers, and offering the benefit of such alternative rates to insureds who select such providers.
History: L. 1927, ch. 231, 40-231; L. 1978, ch. 168, § 1; L. 1985, ch. 158, § 1; May 2.
It shall be unlawful for any insurance company, or any officer or agent thereof, or any other person or persons connected with such company, to sell the stock of any company or corporation in connection with the writing or selling of a policy of insurance or to offer any special inducement of any kind or character whatsoever in connection with the selling of such policy: Provided, That it shall be lawful for any insurance company organized under the laws of this state to sell or provide for the sale of its capital stock with the writing and selling of its policies of insurance if the amount for which such stock is sold, less the commission allowed by law for the sale of stock in insurance companies, is, when received, paid to and becomes a part of the capital and surplus of such insurance company.
History: L. 1927, ch. 231, 40-232; June 1.
It is unlawful for the directors, trustees, managers or officers of an insurance company organized under the laws of this state, directly or indirectly, to make or pay dividends on its capital stock, or pay any interest, bonus or other allowance in lieu of dividends except out of earned surplus as distinguished from contributed surplus. Earned surplus shall be calculated after reserving a sum equal to all liabilities of the company and may include all or part of surplus arising from unrealized capital gains or revaluation of assets. Any dividends or payments made contrary to the provisions of this section shall subject the company to a forfeiture of its charter.
History: L. 1927, ch. 231, 40-233; L. 1935, ch. 196, § 1; L. 1993, ch. 45, § 1; July 1.
Unless otherwise specifically provided in this code, the unearned premiums or reserves of any insurance company shall consist of a sum equal to a pro rata amount of the premiums received on all unexpired risks. The "sum of the digits" or "rule of 78" unearned premium reserve method may be used only on policies where the exposure to risk is decreasing in equal amounts during the contract period and where premium refunds on such policies would be computed using only the "sum of the digits" or "rule of 78" method if such method places a sound value on its liabilities. Any domestic title insurance company engaged exclusively in the business of insuring titles to real estate shall establish and maintain, in addition to a special reserve in adequate amount to cover its liability as to losses incurred under policies issued by it, a reserve for unearned premiums on its policies and guarantees in force and such reserve shall, at all times and for all purposes, be considered a separate and distinct trust fund and shall be deemed and shall constitute unearned portions of the original premiums and shall be charged as a reserve liability of the insurer in determining its financial condition. The unearned premium reserve shall be retained and held by such domestic title insurance company for the protection of the policyholders' interest in policies which have not expired. Except upon liquidation, dissolution or insolvency, assets equal to the amount of such reserve shall not be subject to distribution among depositors or other creditors or stockholder of such title insurance company until all claims of policyholders or holders of other title insurance contracts or agreements of such domestic title insurance company have been paid in full and all liability on the policies or other title insurance contracts or agreements, whether contingent or actual, has been discharged or lawfully reinsured. Income from the investment of the amount of such reserve shall be the unrestricted property of such title insurance company. The amount of the unearned premium reserve of every such domestic title insurance company shall be computed in accordance with the provisions of this section. Any such company, other than companies engaged exclusively in the business of insuring titles to real estate, issuing noncancelable policies shall, in addition to the reserve required under this section, accumulate an additional reserve of 3% per annum on all premiums received on such policies, and such reserves required shall be held and regarded as an absolute liability of the company.
History: L. 1927, ch. 231, 40-234; L. 1931, ch. 203, § 1; L. 1935, ch. 197, § 1; L. 1971, ch. 159, § 1; L. 1979, ch. 136, § 1; L. 1985, ch. 159, § 1; July 1.
For all individual accident and health and group accident and health insurance policies, the insurer shall maintain reserves which shall place a sound value on its liabilities under such policies and which shall not be less than the reserves according to the standards set forth in regulations issued by the commissioner and, unless otherwise specifically provided herein, less than the gross pro rata unearned premium reserve for such policies. For all individual accident and health and group accident and health insurance policies where the exposure to risk is decreasing in equal amounts during the contract period and where premium refunds on such policies would be computed using only the "sum of the digits" or "rule of 78" method, the insurer shall maintain unearned premium reserves which shall not be less than the gross unearned premium reserves computed using the "sum of the digits" or "rule of 78" unearned premium reserve method.
History: L. 1967, ch. 258, § 1; L. 1980, ch. 129, § 1; L. 1985, ch. 159, § 2; July 1.
The unearned premium reserve required to be maintained by any domestic title insurance company engaged exclusively in the business of insuring titles to real estate shall consist of:
(1) The amount of the unearned premium reserve held as of the effective date of this act; and
(2) the amount of all additions required to be made to such reserve by this act, less the withdrawal therefrom as required by this section.
On or after the effective date of this act, a domestic title insurance company engaged exclusively in the business of insuring titles to real estate shall add to its unearned premium reserve, in respect to each title insurance policy, leasehold policy, contract or reinsurance agreement issued by it, a sum equal to one dollar fifty cents ($1.50) plus twelve and one-half cents (12 1/2¢) for each one thousand dollars ($1,000) (or major portion of any fraction thereof) of the face amount of net retained liability on each such policy, contract or reinsurance agreement, under the terms of which such domestic title insurer reinsures all or a portion of any risk assumed by another title insurer qualified to do business in this state, and shall separately record the aggregate amount so set aside and reserved in respect to such policies, contracts or agreements written in each calendar year. The amounts set aside as additions to the unearned premium reserve shall be deducted from income in determining net profits of any such domestic title insurance company. The entire amount of the unearned premium reserve held, as of the effective date of this act, by any domestic title insurance company engaged exclusively in the business of insuring titles to real estate shall be presumed to have been added to the reserve of such title insurer in the calendar year during which this act becomes effective, and such entire amount shall be released from said reserve and restored to income under the formula hereinafter set forth in this section. For the purposes of determining the amounts of the unearned premium reserve that shall be withdrawn pursuant to this section, all policies, contracts or other agreements of title insurance, or reinsurance agreements of title insurance shall be considered as dated July 1 in the year of issue. The aggregate of the amounts set aside in unearned premium reserve by any domestic title insurance company engaged exclusively in the business of insuring titles to real estate in any calendar year pursuant to this section shall be released from said reserve and shall be restored to income pursuant to the following formula: One-twentieth
(1/20th) of said aggregate sum on July 1 of each of the twenty (20) years next succeeding the year of addition to the reserve. If substantially the entire liability under all policies, contracts of title insurance and reinsurance agreements of any title insurance company shall be reinsured, the value of the consideration received by a reinsuring title insurance company authorized solely to transact the business of title insurance, shall constitute in its entirety, unearned premium portions of original premiums and shall be added to its unearned premium reserve, and shall be deemed, for recovery purposes, to have been provided for liabilities assumed during the year of such reinsurance. The amount of such addition to the unearned premium reserve of such assuming title insurance company shall not be less than two-thirds of the amount of the unearned premium reserve required to be maintained by the ceding title insurance company at the time of such reinsurance.
History: L. 1971, ch. 159, § 2; July 1.
The unearned premium reserve of a title insurance company not organized under the laws of the state of Kansas transacting business in this state shall be computed as prescribed or permitted by the laws of the insurer's domicile.
History: L. 1971, ch. 159, § 3; L. 2008, ch. 71, § 1; July 1.
(a) No insurance company or fraternal benefit society doing business in this state, and no officer, director, solicitor or other agent thereof, shall make, issue or circulate, or cause to be issued or circulated, any estimate, illustration, circular or statement of any sort misrepresenting the terms of any policy issued or to be issued by it or the benefits or advantages promised thereby, or the dividends or share of the surplus to be received thereon, or shall use any name or title of any policy or class of policies misrepresenting the true nature thereof. No officer, director, solicitor or agent of any insurance company shall make any misrepresentation to any person insured in any company for the purpose of inducing or tending to induce a policyholder in any company to lapse, forfeit or surrender such policyholder's insurance.
(b) No preliminary or final policy or contract of insurance of the class authorized to be transacted in this state pursuant to paragraph (e) of K.S.A. 40-1102, and amendments thereto, and as further defined in subsection (g) of K.S.A. 40-1136, and amendments thereto, may be written unless and until the insurance company or its agent has caused to be conducted a reasonable search and examination of the title to the property involved and has caused to be made a determination of insurability of title and the risk in accordance with sound underwriting practices.
(1) For owner's policies of title insurance and loan policies of title insurance insuring purchase money mortgages, such search and examination shall be conducted by a title insurance agent or an employee of a title insurance company licensed to do business in this state or an abstracter licensed to do business in this state. The search and examination shall be based upon a search of all applicable records of the county, state and federal offices in which the real estate is located, as may pertain to the marketability of title for a minimum period of 25 years, or from the date of the previously issued title insurance policy, whichever period is less.
(2) For the purposes of this provision, "sound underwriting practices" shall be defined as underwriting practices promulgated by the underwriter which has an agency agreement with the licensed title insurance company or which comply with the seventh edition of the title standards promulgated by the Kansas bar association as copyrighted in 2005.
History: L. 1927, ch. 231, 40-235; L. 1983, ch. 153, § 1; L. 2006, ch. 91, § 1; July 1.
It shall be unlawful for any person to make, utter, circulate or transmit to another or others any derogatory statement, untrue in fact, as to any insurance company lawfully engaged in business in this state, or in the process of organization, with intent to injure any such company; or to counsel, aid, procure or induce another to originate, make, utter, circulate or transmit any such statement with like intent.
History: L. 1927, ch. 231, 40-236; June 1.
Minors may consummate contracts respecting insurance the same as adults, and any policy, certificate or other evidence of such contract shall be binding upon the minor to the same extent, as though of legal age, and any minor entering into any such insurance contract also may enter into a promissory note or installment contract for the payment of the first or subsequent premiums due under such insurance contract, the same as an adult, and any such promissory note or installment contract shall be binding upon such minor to the same extent as though he were of legal age: Provided, That all such contracts made by a minor shall have the written consent of either a parent, guardian, or conservator: Provided further, That if any insurance company or any insurance agent accepts from a minor a promissory note or installment contract for the payment of the first or subsequent premiums on a policy of life insurance, said note or contract shall be cosigned by a person over the age of eighteen (18) years, and a copy of said note or contract shall be furnished all parties thereto. A copy of said note or contract shall be furnished to the consenting parent, guardian, or conservator.
History: L. 1927, ch. 231, 40-237; L. 1965, ch. 297, § 1; L. 1971, ch. 160, § 1; L. 1972, ch. 161, § 10; July 1.
Any insurance company not organized under the laws of this state may appoint one or more general agents or managers in this state, with authority to appoint other agents of said company in this state. A certified copy of such appointment shall be filed with the commissioner of insurance. Agents for any such company in this state may be appointed by the president, vice-president, chief manager or secretary thereof, in writing, with or without the seal of the company.
History: L. 1927, ch. 231, 40-238; June 1.
An insurance agent is hereby defined to be an individual, corporation, association, partnership or other legal entity authorized in writing, by any insurance company or health maintenance organization lawfully qualified to transact the business of insurance, suretyship or indemnity in this state or authorized to operate as a health maintenance organization in this state, to negotiate or effect contracts of insurance, suretyship or indemnity on behalf of any such insurance company or health maintenance organization; or any member of a partnership or association, or any stockholder, officer or agent of a corporation, permitted by law to negotiate or effect such contracts, where such partnership, association or corporation holds a direct agency appointment from any insurance company or health maintenance organization. All such agents shall thereby become liable to all the duties, requirements, liabilities and penalties as provided in this code.
History: L. 1927, ch. 231, 40-239; L. 1988, ch. 151, § 1; L. 1996, ch. 169, § 4; July 1.
Revisor's Note: Later act, see 40-4901 et seq.
History: L. 1927, ch. 231, 40-240; L. 1963, ch. 261, § 1; L. 1967, ch. 252, § 1; L. 1971, ch. 161, § 1; L. 1978, ch. 164, § 2; L. 1982, ch. 191, § 1; L. 1988, ch. 151, § 2; L. 1989, ch. 131, § 1; L. 1990, ch. 160, § 1; L. 1993, ch. 5, § 1; L. 1996, ch. 169, § 5; L. 1999, ch. 91, § 1; L. 2000, ch. 170, § 7; Repealed, L. 2001, ch. 91, § 19; July 1.
History: L. 1976, ch. 21, § 1; L. 1982, ch. 191, § 2; Repealed, L. 1988, ch. 151, § 8; May 1, 1989.
History: L. 1976, ch. 212, § 2; L. 1979, ch. 137, § 1; L. 1981, ch. 188, § 1; L. 1982, ch. 192, § 1; L. 1986, ch. 170, § 1; Repealed, L. 1988, ch. 151, § 8; May 1, 1989.
History: L. 1976, ch. 212, §§ 3, 4; Repealed, L. 1988, ch. 151, § 8; May 1, 1989.
History: L. 1976, ch. 212, § 5; L. 1978, ch. 165, § 1; Repealed, L. 1988, ch. 151, § 8; May 1, 1989.
Revisor's Note: Later act, see 40-4901 et seq.
History: L. 1988, ch. 151, § 5; L. 1988, ch. 148, § 1; L. 1990, ch. 161, § 1; L. 1992, ch. 19, § 1; L. 1994, ch. 152, § 1; L. 1995, ch. 43, § 1; L. 1996, ch. 45, § 1; L. 1997, ch. 170, § 1; L. 1999, ch. 91, § 2; Repealed, L. 2001, ch. 91, § 19; July 1.
The commissioner is hereby authorized to adopt such rules and regulations as may be necessary to carry out the provisions of this act.
History: L. 1988, ch. 151, § 6; July 1.
Any applicant or prospective applicant for an agent's license, if an individual, shall be given an examination by the commissioner or the commissioner's designee to determine whether such applicant possesses the competence and knowledge of the kinds of insurance and transactions under the license applied for, or to be applied for, of the duties and responsibilities of such a license and of the pertinent provisions of the laws of this state. The applicant shall be tested on each class or subclassification of insurance that may be written. An examination fee prescribed in rules and regulations adopted by the commissioner shall be paid by the applicant and shall be required for each class of insurance for each attempt to pass the examination. Such examination fee shall be in addition to the certification fee required under K.S.A. 40-252, and amendments thereto. There shall be four classes of insurance for the purposes of this act:
(1) Life;
(2) accident and health;
(3) casualty and allied lines; and
(4) property and allied lines.
An insurance license may be issued as a subclassification of casualty and allied lines to any auto rental agency. An auto rental agency may offer or sell insurance only in connection with and incidental to the rental of motor vehicles, whether at the rental office, at the point of delivery of a vehicle, or by preselection of coverage in a master, corporate or group rental agreement, in any of the following general categories:
(1) Personal accident insurance covering risks of travel;
(2) motor vehicle liability insurance;
(3) personal effects insurance providing coverage to renters and other occupants of the motor vehicle;
(4) roadside assistance and emergency sickness protection programs; and
(5) any other travel or auto-related coverage an auto rental company may offer in connection with and incidental to rental of motor vehicles. No insurance may be issued by an auto rental agency unless the rental period of the rental agreement does not exceed 90 consecutive days and brochures and other written material clearly and correctly explaining insurance coverages offered by the agency are available for prospective renters and clear and complete disclosures are provided to prospective renters that such coverage may be duplicative of other insurance owned by the renter, that purchase of insurance coverage is not a condition for renting a motor vehicle and describing the process for filing a claim.
Auto rental agencies employing representatives shall conduct a training program for each representative, providing instruction on the kinds of insurance coverage offered by the agency.
No auto rental agency shall offer or solicit any insurance other than the coverages described in this section without an insurance license. No auto rental employee or auto rental agency shall advertise or otherwise hold themselves out as licensed insurers, insurance agents or insurance brokers.
The commissioner of insurance shall adopt rules and regulations with respect to the scope, subclassification, type and conduct of such examination. Examinations shall be given to applicants at least twice a month in Topeka, Kansas, and at least quarterly in other convenient locations in the state of Kansas. The commissioner shall publish or arrange for the publication of information and material which applicants can use to prepare for such examination. One or more rating organizations, advisory organizations or other associations may be designated by the commissioner to assist in, or assume responsibility for, distribution of the study manuals to applicants and other interested parties. Persons purchasing the study manual shall be charged a reasonable fee established or approved by the commissioner. In the event the publication and distribution of the study material or the development and conduct of examinations is delegated to private firms, organizations or associations and the state incurs no expense or obligation, the provisions of K.S.A. 75-3738 through 75-3744, and amendments thereto, shall not apply. If the commissioner of insurance finds that the individual applicant is trustworthy, competent and has satisfactorily completed the examination, the commissioner shall forthwith issue to the applicant a license as an insurance agent but the issuance of such license shall confer no authority to transact business in this state until the agent has been certified by a company pursuant to K.S.A. 40-4912, and amendments thereto. If such applicant fails to satisfactorily complete the examination, the examination may be retaken following a waiting period of not less than seven days from the date of the last attempt. If the applicant again fails to satisfactorily complete the examination, it may be retaken following another waiting period of not less than seven days from the date of the most recent attempt.
History: L. 1927, ch. 231, 40-241; L. 1931, ch. 204, § 1; L. 1963, ch. 261, § 2; L. 1971, ch. 162, § 1; L. 1978, ch. 164, § 3; L. 1982, ch. 193, § 1; L. 1982, ch. 194, § 1; L. 1986, ch. 171, § 1; L. 1988, ch. 151, § 3; L. 1989, ch. 131, § 2; L. 1992, ch. 19, § 2; L. 1996, ch. 45, § 2; L. 1999, ch. 91, § 3; L. 2004, ch. 159, § 1; L. 2021, ch. 23, § 1; L. 2023, ch. 41, § 3; July 1.
Revisor's Note: Later act, see 40-4901 et seq.
History: L. 1963, ch. 261, § 3; L. 1970, ch. 176, § 1; Repealed, L. 2001, ch. 91, § 19; July 1.
Revisor's Note: Later act, see 40-4901 et seq.
History: L. 1963, ch. 261, § 4; Repealed, L. 2001, ch. 91, § 19; July 1.
Revisor's Note: Later act, see 40-4901 et seq.
History: L. 1963, ch. 261, § 5; L. 1982, ch. 195, § 1; L. 1986, ch. 172, § 1; L. 1991, ch. 127, § 1; L. 1999, ch. 91, § 4; Repealed, L. 2001, ch. 91, § 19; July 1.
Revisor's Note: Later act, see 40-4901 et seq.
History: L. 1963, ch. 261, § 6; L. 1974, ch. 184, § 1; L. 1982, ch. 191, § 3; Repealed, L. 2001, ch. 91, § 19; July 1.
Revisor's Note: Later act, see 40-4901 et seq.
History: L. 1965, ch. 310, § 1; L. 1978, ch. 164, § 6; Repealed, L. 2001, ch. 91, § 19; July 1.
Revisor's Note: Later act, see 40-4901 et seq.
History: L. 1965, ch. 310, § 2; L. 1973, ch. 191, § 1; Repealed, L. 2001, ch. 91, § 19; July 1.
Revisor's Note: Later act, see 40-4901 et seq.
History: L. 1965, ch. 310, § 3; Repealed, L. 2001, ch. 91, § 19; July 1.
No insurance agent shall be required to take an examination for an agent's license for any class or subclassification of business which he was engaged in writing prior to April 25, 1971, on behalf of any insurance company or association which the insurance code of this state was made applicable by K.S.A. 40-202: Provided, That said insurance agent shall be subject to all the requirements of K.S.A. 40-241 before being licensed to sell insurance on behalf of any other company or association.
History: L. 1971, ch. 163, § 1; April 3.
Revisor's Note: Later act, see 40-4901 et seq.
History: L. 1978, ch. 164, § 4; L. 1983, ch. 154, § 1; L. 1987, ch. 172, § 14; L. 1988, ch. 151, § 4; L. 1991, ch. 128, § 1; L. 1992, ch. 19, § 3; L. 1997, ch. 170, § 2; L. 1999, ch. 91, § 5; Repealed, L. 2001, ch. 91, § 19; July 1.
Each company admitted to this state shall report annually to the commissioner all agents the company has contracted with during the prior calendar year and shall pay the certification fees set forth in K.S.A. 40-252, and amendments thereto. The commissioner may audit agent or representative certification forms and fees to ensure proper reporting and receipt of fees. Any costs associated with auditing such forms shall be borne by the company or auto rental agency audited.
History: L. 1978, ch. 164, § 5; L. 1982, ch. 196, § 1; L. 1999, ch. 91, § 6; July 1.
The commissioner may adopt rules and regulations establishing reasonable fees necessary to accommodate the cost of issuing duplicate agents' licenses, certifications of individual agent qualifications or credentials to other supervisory authorities and similar functions performed by the commissioner for the benefit of insurance agents or companies or both.
History: L. 1983, ch. 154, § 2; July 1.
Revisor's Note: Later act, see 40-4901 et seq.
History: L. 1927, ch. 231, 40-242; L. 1965, ch. 298, § 1; L. 1967, ch. 253, § 1; L. 1978, ch. 170, § 13; L. 1982, ch. 197, § 1; L. 1983, ch. 155, § 1; L. 1984, ch. 313, § 74; L. 1989, ch. 132, § 2; L. 1993, ch. 21, § 1; L. 1996, ch. 40, § 1; Repealed, L. 2001, ch. 91, § 19; July 1.
History: L. 1927, ch. 231, 40-243; Repealed, L. 1986, ch. 318, § 146; July 1.
It shall be unlawful for any person, without conforming to the provisions of this code, to represent himself or herself to be the agent of any insurance company, or, as agent, to negotiate, effect or attempt to effect any contracts of insurance, suretyship or indemnity or renewal thereof within this state.
History: L. 1927, ch. 231, 40-244; June 1.
Revisor's Note: Later act, see 40-4901 et seq.
History: L. 1927, ch. 231, 40-245; Repealed, L. 2001, ch. 91, § 19; July 1.
Revisor's Note: Later act, see 40-4901 et seq.
History: L. 1927, ch. 231, 40-246; L. 1929, ch. 197, § 1; L. 1933, ch. 69, § 1 (Special Session); L. 1937, ch. 250, § 1; L. 1959, ch. 210, § 1; L. 1961, ch. 232, § 1; L. 1967, ch. 254, § 1; L. 1978, ch. 171, § 1; L. 1980, ch. 130, § 1; L. 1984, ch. 163, § 1; L. 1996, ch. 41, § 1; L. 1997, ch. 175, § 2; L. 1999, ch. 91, § 7; Repealed, L. 2001, ch. 91, § 19; July 1.
The commissioner of insurance shall have the power to examine any agent, nonresident agent, company or assured if the commissioner has cause to believe that any provision of this act has been violated. At such hearing all pertinent records, files and policies shall be produced for examination by the commissioner. The insurance commissioner shall collect double the amount of the tax provided by law from any insurance company, agent or nonresident agent receiving premiums in violation of the manner prescribed in this act, and may suspend or revoke the license of any company, agent or nonresident agent willfully failing to comply therewith. Any agent or nonresident agent who shall write business in any company not authorized to transact business in this state or as otherwise provided by law shall be personally liable for such tax. Any assured who shall knowingly insure such assured's property contrary to the provisions of this act or with a company not authorized to do business in this state, shall be personally liable for double the amount of the tax provided by law on the premiums paid for such insurance.
Hearings under this section shall be conducted in accordance with the provisions of the Kansas administrative procedure act.
History: L. 1933, ch. 69, § 2 (Special Session); L. 1988, ch. 356, § 76; July 1, 1989.
(a) Upon receipt of a proper application, the commissioner of insurance may issue an excess lines coverage license to any licensed property and casualty agent of this state or any other state. Any agent so licensed may negotiate for insureds whose home state is this state, the types of contracts of fire insurance enumerated in K.S.A. 40-901, and amendments thereto, and the type of casualty insurance contracts enumerated in K.S.A. 40-1102, and amendments thereto, or reinsurance, to place risks or to effect insurance or reinsurance for persons or corporations other than such agent with nonadmitted insurers eligible pursuant to K.S.A. 40-246e, and amendments thereto. An agent, as defined in K.S.A. 40-4902, and amendments thereto, may place the kind of business specified in this act for which such agent is licensed pursuant to K.S.A. 40-4903 and 40-4906, and amendments thereto, with an eligible nonadmitted insurer by placing such business with a person licensed pursuant to the provisions of this act and may share in the applicable commissions on such business. Before any such license shall be issued, the applicant shall submit proper application on a form prescribed by the commissioner, which application shall be accompanied by a fee of $50. Such license shall be renewable each year on May 1, upon the payment of a $50 fee.
(b) The agent so licensed shall on or before March 1 of each year, file with the insurance department of this state, a sworn affidavit or statement to the effect that, after diligent effort, such agent has been unable to secure the amount of insurance required to protect the property, person or firm described in such agent's affidavit or statement from loss or damage in regularly admitted companies during the preceding year. Mere rate differential shall not be grounds for placing a particular risk with a nonadmitted insurer when an admitted insurer would accept such risk at a different rate. The licensed excess coverage agent shall, prior to placing insurance with an eligible nonadmitted insurer, obtain the written consent of the prospective named insured and provide such insured the following information in a form promulgated by the commissioner:
(1) A statement that the coverage will be obtained from an eligible nonadmitted insurer;
(2) a statement that the insurer is eligible pursuant to K.S.A. 40-246e, and amendments thereto;
(3) a notice that the insurer's financial condition, policy forms, rates and trade practices are not subject to the review or jurisdiction of the commissioner;
(4) a statement that the protection of the guaranty associations is not afforded to policyholders of the insurer; and
(5) a statement or notice with respect to any other information deemed necessary by the commissioner pertinent to insuring with an eligible nonadmitted insurer.
(c) In the event the insured desires that coverage be bound with an eligible nonadmitted insurer and it is not possible to obtain the written consent of the insured prior to binding the coverage, the excess lines agent may bind the coverage after advising the insured of the information set out above and shall obtain written confirmation that the insured desires that coverage be placed with an eligible nonadmitted insurer within 30 days after binding coverage.
(d) (1) When business comes to a licensed excess lines agent in which this state is the home state for placement with an eligible nonadmitted insurer from an agent not licensed as an excess lines agent, it shall be the responsibility of the licensed excess lines agent to ascertain that the insured has been provided the preceding information and has consented to being insured with an eligible nonadmitted insurer. Each excess lines agent shall keep a separate record book in such agent's office showing the transactions of fire and casualty insurance and reinsurance placed in eligible nonadmitted insurers, the amount of gross premiums charged thereon, the insurer with which the policy was placed, the date, term and number of the policy, the location and nature of the risk, the name of the insured and such other information as the commissioner may require and such record shall be available at all times for inspection by the commissioner of insurance or the commissioner's authorized representatives. The commissioner may revoke or suspend any license issued pursuant to the provisions of this act in the same manner and for the same reasons prescribed by K.S.A. 40-4909, and amendments thereto.
(2) Any policy issued under the provisions of this statute shall have stamped or endorsed in a prominent manner thereon, the following: This policy is issued by an eligible nonadmitted insurer in Kansas and, as such, the form, financial condition and rates are not subject to review by the commissioner of insurance and the insured is not protected by any guaranty fund.
(3) If business is placed with a nonadmitted company that is subsequently determined to be insolvent, the excess lines agent placing such business with such company is relieved of any responsibility to the insured as it relates to such insolvency, if the excess lines agent has satisfactorily complied with all requirements of this section pertaining to notification of the insured, has properly obtained the written consent of the insured and has used due diligence in selecting the insurer. It shall be presumed that due diligence was used in selecting the insurer if such insurer was on the list compiled pursuant to K.S.A. 40-246e, and amendments thereto, at the time coverage first became effective.
History: L. 1955, ch. 242, § 1; L. 1975, ch. 242, § 1; L. 1982, ch. 198, § 1; L. 1996, ch. 45, § 3; L. 2004, ch. 159, § 2; L. 2011, ch. 61, § 8; L. 2025, ch. 87, § 7; July 1.
(a) (1) On March 1 of each year, each licensed agent shall collect and pay to the commissioner a tax of 6% on the total gross premiums charged, less any return premiums, for the preceding calendar year for surplus lines insurance transacted by the licensee pursuant to the license for insureds whose home state is this state.
(2) On March 1 of each year, each licensed agent shall collect and pay to the commissioner a tax of 3% on the total gross premiums charged, less any returned premiums, for the preceding calendar year for surplus lines insurance transacted by the licensee for insureds whose home state is this state. The provisions of this paragraph shall commence with the taxable year beginning January 1, 2024.
(b) The tax on any portion of the premium unearned at termination of insurance, if any, having been credited by the state to the licensee shall be returned to the policyholder directly by the surplus lines licensee or through the producing broker. The surplus lines licensee is prohibited from rebating any part of the tax for any reason.
(c) The individual responsible for filing the statement shall be the agent who signs the policy or the agent of record with the company. The commissioner of insurance may assess a penalty up to double the amount of tax prescribed in subsection (a) from any licensee or other individual responsible for filing the statement as described in this subsection who fails, refuses or neglects to transmit the required affidavit or statement or fails to pay the tax imposed by this section to the commissioner within the period specified.
History: L. 1955, ch. 242, § 2; L. 1982, ch. 198, § 2; L. 1992, ch. 154, § 3; L. 2011, ch. 61, § 9; L. 2015, ch. 83, § 6; L. 2020, ch. 10, § 2; L. 2023, ch. 49, § 1; July 1.
The commissioner may, in the manner prescribed by law, revoke or suspend the license of any agent issued pursuant to either K.S.A. 40-241, and amendments thereto or K.S.A. 40-4906, and amendments thereto, of the Kansas Statutes Annotated when such agent shall engage in any transaction permitted only to licensees under the provisions of K.S.A. 40-246b, and amendments thereto, without first obtaining the license as required by K.S.A. 40-246b, and amendments thereto.
History: L. 1955, ch. 242, § 3; L. 2005, ch. 145, § 2; July 1.
(a) The commissioner shall maintain a list of eligible nonadmitted insurers for review by any interested person. Only those insurers who have filed a certified copy of their most recent annual statement with the commissioner in the form prescribed by K.S.A. 40-225, and amendments thereto, or if domiciled outside the United States, have filed their most recent annual statement with the national association of insurance commissioners may appear on the list. No company shall appear on the list whose capital or surplus as shown on the annual statement does not equal or exceed $15,000,000. Individual unincorporated insurers not listed by the national association of insurance commissioners may appear on the list if they are authorized to transact an insurance business in at least one state of the United States and possess assets that are held in trust for the benefit of American policyholders in the sum of not less than $50,000,000. Insurance exchanges that issue contracts on behalf of their members and pay the filing fee required by this section may appear on the list if their individual members have a capital or surplus equal to or in excess of $1,500,000 and the aggregate capital or surplus of all members of the exchange is at least $15,000,000.
(b) The commissioner shall remove an insurer's name from the listing only when the:
(1) Insurer requests such removal;
(2) insurer fails to file its latest annual statement prior to May 1 of each year as required by this section;
(3) commissioner is notified by the insurance supervisory authority of any state of the United States that such insurer has had its authority to transact business restricted or has been declared insolvent or placed in receivership, conservatorship, rehabilitation or any similar status wherein the business of the insurer is formally supervised by an insurance supervisory authority;
(4) commissioner is notified by the N.A.I.C. that any insurer domiciled outside the United States has been declared insolvent or placed in receivership, conservatorship, rehabilitation or any similar status in which the business of the insurer is formally supervised by an insurance supervisory authority pursuant to an order by any court of competent jurisdiction;
(5) insurer has failed to effectuate reasonably prompt, fair and equitable payment of just losses and claims in this state; or
(6) insurer encourages, promotes or rewards an agent to violate the provisions of K.S.A. 40-246b, and amendments thereto.
(c) Notwithstanding its inclusion on the list, a nonadmitted insurer shall be eligible to place insurance in accordance with K.S.A. 40-246b, and amendments thereto, if such insurer meets the eligibility requirements of 15 U.S.C. § 8204, as in effect on July 1, 2025.
(d) There shall be no liability on the part of and no cause of action of any nature shall arise against the commissioner, the commissioner's employees or the state of Kansas as a result of any insurer's name appearing or not appearing on the list required by this section if such list is constructed and maintained in good faith and without malice.
History: L. 1982, ch. 198, § 3; L. 1992, ch. 268, § 1; L. 2011, ch. 61, § 10; L. 2025, ch. 87, § 8; July 1.
History: L. 1982, ch. 198, § 4; L. 1984, ch. 164, § 1; L. 1987, ch. 158, § 1; Repealed, L. 2004, ch. 159, § 19; May 27.
(a) A surplus lines producer seeking to place non-admitted insurance for an exempt commercial purchaser is not required to file the signed statement under K.S.A. 40-246b, and amendments thereto, if the surplus lines producer has disclosed to the exempt commercial purchaser that such insurance may or may not be available from the admitted market that may provide greater protection with more regulatory oversight and the exempt commercial purchaser has subsequently requested in writing the surplus lines producer to procure or place such insurance from a nonadmitted insurer.
(b) This section shall take effect on and after January 1, 2016.
History: L. 2015, ch. 83, § 7; July 1.
(a) The commissioner of insurance may adopt such rules and regulations as are reasonable, necessary and incidental to the enforcement and administration of the provisions of K.S.A. 40-246b through 40-246e and 40-246g, and amendments thereto. Such rules and regulations shall be adopted no later than January 1, 2017.
(b) This section shall take effect on and after January 1, 2016.
History: L. 2015, ch. 83, § 8; July 1.
The following definitions shall apply to K.S.A. 40-246b through 40-246e, and amendments thereto, and K.S.A. 40-246g, and amendments thereto:
(a) "Exempt commercial purchaser" means any person purchasing commercial insurance that, at the time of placement, meets the following requirements:
(1) The person employs or retains a qualified risk manager to negotiate insurance coverage;
(2) the person has paid aggregate nationwide commercial property and casualty insurance premiums in excess of $100,000 in the immediately preceding 12 months; and
(3) the person:
(A) Possesses a net worth in excess of $20,040,000, except that this amount shall be adjusted every five years by publication in the Kansas register by the commissioner of insurance to account for the percentage change in the consumer price index;
(B) generates annual revenues in excess of $55,100,000, except that this amount shall be adjusted every five years by publication in the Kansas register by the commissioner of insurance to account for the percentage change in the consumer price index;
(C) employs more than 500 full-time or full-time-equivalent employees per insured entity or is a member of an affiliated group employing more than 1,000 employees in the aggregate;
(D) is a not-for-profit organization or public entity generating annual budgeted expenditures of at least $33,060,000, except that this amount shall be adjusted every five years by publication in the Kansas register by the commissioner of insurance to account for the percentage change in the consumer price index; or
(E) is a municipality with a population in excess of 50,000 persons.
(b) "Home state": (1) In general, except as provided in subparagraph (2), the term "home state" means, with respect to an insured:
(A) The state in which an insured maintains its principal place of business or, in the case of an individual, the individual's principal residence; or
(B) if 100% of the insured risk is located out of the state referred to in paragraph (1)(A), the state to which the greatest percentage of the insured's taxable premium for that insurance contract is allocated.
(2) If more than one insured from an affiliated group are named insureds on a single non-admitted insurance contract, the term "home state" means the home state, as determined pursuant to paragraph (1), of the member of the affiliated group that has the largest percentage of premium attributed to it under such insurance contract.
(c) "Nonadmitted insurer" means an insurer that is not authorized or admitted to transact the business of insurance under the law of the home state, but does not include a risk retention group as that term is defined in 15 U.S.C. § 3901(a)(4), as in effect on July 1, 2015.
(d) "Principal place of business" means, with respect to determining the home state of the insured, the state where the insured maintains its headquarters and where the insured's high-level officers direct, control and coordinate the business activities of the insured.
(e) "Surplus lines insurance" means insurance procured by a surplus lines licensee from a surplus lines insurer as permitted under the law of the home state. "Surplus lines insurance" shall also mean excess lines insurance as may be defined by applicable state law.
History: L. 2015, ch. 83, § 5; L. 2021, ch. 108, § 4; July 1.
(a) An insurance agent or broker who acts in negotiating or renewing or continuing a contract of insurance including any type of annuity by an insurance company lawfully doing business in this state, and who receives any money or substitute for money as a premium for such a contract from the insured, whether such agent or broker shall be entitled to an interest in same or otherwise, shall be deemed to hold such premium in trust for the company making the contract. If such agent or broker fails to pay the same over to the company, less such agent's or broker's commission and any deductions, to which by the written consent of the company such agent or broker may be entitled, such failure shall be prima facie evidence that such agent or broker has used or applied the premium for a purpose other than paying the same over to the company.
(b) (1) An agent or broker who violates the provisions of this section shall be guilty of a:
(A) Severity level 7, nonperson felony if the value of the insurance premium is $25,000 or more;
(B) severity level 9, nonperson felony if the value of the insurance premium is at least $1,000 but less than $25,000; or
(C) class A nonperson misdemeanor if the value of the insurance premium is less than $1,000.
(2) If the value of the insurance premium is less than $1,000 and such agent or broker has, within five years immediately preceding commission of the crime, been convicted of violating this section two or more times shall be guilty of a severity level 9, nonperson felony.
History: L. 1927, ch. 231, 40-247; L. 1992, ch. 288, § 10; L. 1993, ch. 291, § 226; L. 1994, ch. 291, § 73; L. 2006, ch. 194, § 28; L. 2023, ch. 41, § 4; July 1.
When any insurance company organized under the laws of this state shall desire to discontinue its business, the commissioner of insurance shall, upon application of such company, give notice of such intention in a paper published and having general circulation in the county in which such company or its general agency is located, at least once a week for six weeks, the expense of publication to be paid by the company. After such publication the commissioner of insurance shall authorize the release of the securities held under K.S.A. 40-229a, if the commissioner, upon the commissioner's own examination or the examination of some competent, disinterested person or persons appointed by the commissioner, is satisfied with the exhibition of the books and papers of the company. The president and the secretary shall affirm that all debts, judgments and liabilities of every kind are satisfied.
The commissioner of insurance may also from time to time authorize the release to such company or its assigns any portion of its securities, on being satisfied that an equal proportion of the debts and liabilities of every kind that are due or may become due has been satisfied. The amount of securities retained by the commissioner shall be not less than twice the amount of remaining liabilities.
History: L. 1927, ch. 231, 40-248; L. 1996, ch. 25, § 3; July 1.
If any insurance company organized under the laws of this state shall not commence to issue policies within two years from the granting of its charter, its corporate powers shall thereby expire and the district court of the county in which the home office of such company is located may, upon petition of the commissioner of insurance, or of any person interested, proceed to wind up its affairs.
History: L. 1927, ch. 231, 40-249; June 1.
All the provisions of this code relating to insurance companies organized under the laws of any other state of the United States, or its officers, agents or employees, shall apply to any company organized under the laws of the United States, its officers, agents or employees.
History: L. 1927, ch. 231, 40-250; June 1.
(a) The attorney general shall represent the commissioner of insurance in any action to enforce a rule and regulation or order of the commissioner.
(b) Any action of the commissioner of insurance pursuant to law shall be subject to review in accordance with the Kansas judicial review act. The action for review shall be against the commissioner of insurance, not in the commissioner's individual name but in the commissioner's representative capacity.
(c) The state of Kansas shall represent the commissioner of insurance in any action brought against the commissioner in the commissioner's individual name where such activity was in connection with the performance of the commissioner's official duties.
History: L. 1927, ch. 231, 40-251; L. 1967, ch. 255, § 1; L. 1986, ch. 318, § 28; L. 2010, ch. 17, § 67; July 1.
Not later than December 1 of each year, the commissioner shall set and cause to be published in the Kansas register the fees required pursuant to this section for the next calendar year.
Every insurance company or fraternal benefit society organized under the laws of this state or doing business in this state shall pay to the commissioner of insurance fees and taxes not to exceed the amounts specified in the following schedule:
A
Insurance companies organized under the laws of this state:
In addition to the above fees and as a condition precedent to the continuation of the certificate of authority provided in this code, all such companies shall pay a one-time fee of $2 for each newly certified agent. Such fee shall be non-recurrent and constitute the only appointment fee charged for the duration of such newly certified agent's employment with the appointing company. Such companies shall also pay a tax annually upon all premiums received on risk located in this state at the rate of 2% for tax year 2025 and 1.98% for tax year 2026, and all tax years thereafter, per annum less any taxes paid on business in this state pursuant to the provisions of K.S.A. 75-1508, and amendments thereto, and the amount of the firefighters relief tax credit determined by the commissioner of insurance. The amount of the firefighters relief tax credit for a company for the current tax year shall be determined by the commissioner of insurance by dividing: (A) The total amount of credits against the tax imposed by this section for taxes paid by all such companies on business in this state under K.S.A. 40-1701 through 40-1707, and amendments thereto, for tax year 1983, by (B) the total amount of taxes paid by all such companies on business in this state under K.S.A. 40-1703, and amendments thereto, for the tax year immediately preceding the current tax year, and by multiplying the result so obtained by (C) the amount of taxes paid by the company on business in this state under K.S.A. 40-1703, and amendments thereto, for the current tax year.
In the computation of the gross premiums all such companies shall be entitled to deduct any premiums returned on account of cancellations, including funds accepted before January 1, 1997, and declared and taxed as annuity premiums that, on or after January 1, 1997, are withdrawn before application to the purchase of annuities, all premiums received for reinsurance from any other company authorized to do business in this state, dividends returned to policyholders and premiums received in connection with the funding of a pension, deferred compensation, annuity or profit-sharing plan qualified or exempt under sections 401, 403, 404, 408, 457 or 501 of the United States internal revenue code of 1986. Funds received by life insurers for the purchase of annuity contracts and funds applied by life insurers to the purchase of annuities shall not be deemed taxable premiums or be subject to tax under this section for tax years commencing on or after January 1, 1997.
B
Fraternal benefit societies organized under the laws of this state:
C
Mutual nonprofit hospital service corporations, nonprofit
medical service corporations, nonprofit dental service
corporations, nonprofit optometric service corporations and
nonprofit pharmacy service corporations organized under
the laws of this state:
In addition to the above fees and as a condition precedent to the continuation of the certificate of authority, provided in this code, every corporation or association shall pay annually to the commissioner of insurance a tax in an amount equal to 2% for tax year 2025 and 1.98% for tax year 2026, and all tax years thereafter, per annum of the total of all premiums, subscription charges, or any other term that may be used to describe the charges made by such corporation or association to subscribers for hospital, medical or other health services or indemnity received during the preceding year. In such computations all such corporations or associations shall be entitled to deduct any premiums or subscription charges returned on account of cancellations and dividends returned to members or subscribers.
D
Insurance companies organized under the laws of any other
state, territory or country:
In addition to the above fees, all such companies shall pay a one-time fee of $5 for each newly certified agent. Such fee shall be non-recurrent and constitute the only appointment fee charged for the duration of such newly certified agent's employment with the appointing company, except as otherwise provided by law.
As a condition precedent to the continuation of the certificate of authority, provided in this code, every company organized under the laws of any other state of the United States or of any foreign country shall pay a tax upon all premiums received during the preceding year at the rate of 2% for tax year 2025 and 1.98% for tax year 2026, and all tax years thereafter, per annum.
In the computation of the gross premiums all such companies shall be entitled to deduct any premiums returned on account of cancellations, including funds accepted before January 1, 1997, and declared and taxed as annuity premiums that, on or after January 1, 1997, are withdrawn before application to the purchase of annuities, dividends returned to policyholders and all premiums received for reinsurance from any other company authorized to do business in this state and premiums received in connection with the funding of a pension, deferred compensation, annuity or profit-sharing plan qualified or exempt under sections 401, 403, 404, 408, 457 or 501 of the United States internal revenue code of 1986. Funds received by life insurers for the purchase of annuity contracts and funds applied by life insurers to the purchase of annuities shall not be deemed taxable premiums or be subject to tax under this section for tax years commencing on or after January 1, 1997.
In addition to the above fees, every such company organized under the laws of any other state of the United States shall pay a one-time fee of $5 for each newly certified agent. Such fee shall be non-recurrent and constitute the only appointment fee charged for the duration of such newly certified agent's employment with the appointing company. Such companies shall pay a tax annually upon all premiums received at the rate of 2% for tax year 2025 and 1.98% for tax year 2026, and all tax years thereafter, per annum.
In the computation of the gross premiums all such companies shall be entitled to deduct any premiums returned on account of cancellations, including funds accepted before January 1, 1997, and declared and taxed as annuity premiums that, on or after January 1, 1997, are withdrawn before application to the purchase of annuities, dividends returned to policyholders and all premiums received for reinsurance from any other company authorized to do business in this state and premiums received in connection with the funding of a pension, deferred compensation, annuity or profit-sharing plan qualified or exempt under sections 401, 403, 404, 408, 457 or 501 of the United States internal revenue code of 1986. Funds received by life insurers for the purchase of annuity contracts and funds applied by life insurers to the purchase of annuities shall not be deemed taxable premiums or be subject to tax under this section for tax years commencing on or after January 1, 1997.
In addition to the above fees, every such company or association organized under the laws of any other state of the United States shall pay a one-time fee of $5 for each newly certified agent. Such fee shall be non-recurrent and constitute the only appointment fee charged for the duration of such newly certified agent's employment with the appointing company. Such companies shall also pay a tax annually upon all premiums received at the rate of 2% for tax year 2025 and 1.98% for tax year 2026, and all tax years thereafter, per annum.
For tax years 1998 and thereafter, the annual tax shall be reduced by the "applicable percentage" of: (1) Any taxes paid on business in this state pursuant to the provisions of K.S.A. 75-1508, and amendments thereto; and (2) the amount of the firefighters relief tax credit determined by the commissioner of insurance. The amount of the firefighters relief tax credit for a company taxable under this subsection for the current tax year shall be determined by the commissioner of insurance by dividing (A) the total amount of taxes paid by all such companies on business in this state under K.S.A. 40-1701 to 40-1707, and amendments thereto, for tax year 1983 as then in effect, by (B) the total amount of taxes paid by all such companies on business in this state under K.S.A. 40-1703, and amendments thereto, for the tax year immediately preceding the current tax year, and by multiplying the result so obtained by (C) the amount of taxes paid by the company on business in this state under K.S.A. 40-1703, and amendments thereto, for the current tax year. The "applicable percentage" shall be 100%.
In the computation of the gross premiums all such companies shall be entitled to deduct any premiums returned on account of cancellations, all premiums received for reinsurance from any other company authorized to do business in this state, and dividends returned to policyholders.
E
Fraternal benefit societies organized under the laws of any other state, territory or country:
F
Mutual nonprofit hospital service corporations, nonprofit
medical service corporations, nonprofit dental service
corporations, nonprofit optometric service corporations and
nonprofit pharmacy service corporations organized under
the laws of any other state, territory or country:
In addition to the above fees and as a condition precedent to the continuation of the certificate of authority, provided in this code, every corporation or association shall pay annually to the commissioner of insurance a tax in an amount equal to 2% for tax year 2025 and 1.98% for tax year 2026, and all tax years thereafter, per annum of the total of all premiums, subscription charges, or any other term that may be used to describe the charges made by such corporation or association to subscribers in this state for hospital, medical or other health services or indemnity received during the preceding year. In such computations all such corporations or associations shall be entitled to deduct any premiums or subscription charges returned on account of cancellations and dividends returned to members or subscribers.
G
Payment of Taxes.
For the purpose of insuring the collection of the tax upon premiums, assessments and charges as set out in subsection A, C, D or F, every insurance company, corporation or association shall at the time it files its annual statement, as required by the provisions of K.S.A. 40-225, and amendments thereto, make a return, generated by or at the direction of its president and secretary or other chief officers, under penalty of K.S.A. 21-5824, and amendments thereto, to the commissioner of insurance, stating the amount of all premiums, assessments and charges received by the companies or corporations in this state, whether in cash or notes, during the year ending on the December 31 next preceding.
Commencing in 1985 and annually thereafter the estimated taxes shall be paid as follows: On or before June 15 and December 15 of such year an amount equal to 50% of the full amount of the prior year's taxes as reported by the company shall be remitted to the commissioner of insurance. As used in this paragraph, "prior year's taxes" includes: (1) Taxes assessed pursuant to this section for the prior calendar year; (2) fees and taxes assessed pursuant to K.S.A. 40-253, and amendments thereto, for the prior calendar year; and (3) taxes paid for maintenance of the department of the state fire marshal pursuant to K.S.A. 75-1508, and amendments thereto, for the prior calendar year.
Upon the receipt of such returns the commissioner of insurance shall verify the same and assess the taxes upon such companies, corporations or associations on the basis and at the rate provided herein and the balance of such taxes shall thereupon become due and payable giving credit for amounts paid pursuant to the preceding paragraph, or the commissioner shall make a refund if the taxes paid in the prior June and December are in excess of the taxes assessed.
All reports and returns required by this act and rules and regulations adopted pursuant thereto shall be preserved for three years and thereafter until the commissioner orders them to be destroyed.
H
The fee prescribed for the examination of charters and other documents shall apply to each company's initial application for admission and shall not be refundable for any reason.
History: L. 1927, ch. 231, 40-252; L. 1965, ch. 299, § 1; L. 1970, ch. 183, § 1; L. 1972, ch. 174, § 15; L. 1974, ch. 295, § 2; L. 1975, ch. 243, § 15; L. 1976, ch. 311, § 4; L. 1978, ch. 164, § 7; L. 1980, ch. 131, § 1; L. 1981, ch. 189, § 1; L. 1984, ch. 161, § 2; L. 1984, ch. 165, § 9; L. 1985, ch. 160, § 1; L. 1987, ch. 159, § 15; L. 1997, ch. 175, § 3; L. 1998, ch. 10, § 1; L. 2007, ch. 122, § 3; L. 2011, ch. 30, § 176; L. 2025, ch. 87, § 9; L. 2025, ch. 125, § 6; July 1.
A revolving fund, designated "insurance company tax and fee refund," in an amount not to exceed three thousand dollars ($3,000) shall be set apart and maintained for the insurance commissioner from insurance company tax and fee collections which shall be held by the state treasurer for the payment of all such refunds due an insurance company or companies. If the commissioner of insurance finds that the tax and/or fee paid by such company or companies is in excess of the amount legally due the state, the commissioner shall certify the amount of the overpayment on a voucher to the director of accounts and reports for refund of such tax and/or fee. Upon receipt of such voucher, properly executed, the director of accounts and reports shall issue his warrant to the state treasurer for the payment out of the revolving fund provided for in this section. In the event such fund as established by this section is, at any time, insufficient to provide the amount of tax and fee refunds due the insurance company or companies, then the commissioner shall certify the amount of additional funds required to the director of accounts and reports who shall promptly transfer the said required amount from the state general revenue fund to the insurance company tax and fee revolving fund, and notify the state treasurer, who shall make proper entry on his records. The commissioner shall maintain in his files for a period of five (5) years from its date a duplicate of said voucher and a statement which shall set forth the reasons such refunds have been made.
History: L. 1963, ch. 263, § 1; March 9.
For taxable years commencing on and after January 1, 1998, the fees, charges and taxes provided for by K.S.A. 40-252, and amendments thereto, shall be in lieu of all other license fees, premium or occupation taxes, income taxes, intangible property taxes, or other fees levied or assessed upon the basis of income, premiums, gross receipts and intangible property by this state and any municipality, county or other political subdivision of this state, and no municipality, county or other political subdivision of this state shall impose any license fee or privilege, premium, income, intangible property or gross receipts tax or fee upon any insurance company or corporation taxed under the provisions of K.S.A. 40-252, and amendments thereto and organized under the laws of this state or doing business in this state, or upon any of its agents or representatives for the privilege of doing an insurance business therein. This section shall not be construed to prohibit the levy and collection of (a) state, county or municipal taxes upon the real and tangible personal property of such company, (b) tax for the purpose of maintaining the office of the fire marshal of this state as provided in K.S.A. 75-1508, and amendments thereto, (c) the firemen's relief fund tax as provided for in K.S.A. 40-1701 through 40-1707, and amendments thereto, and (d) municipal occupation taxes levied upon any basis other than income, intangible property, premiums or gross receipts.
History: L. 1970, ch. 183, § 4; L. 1997, ch. 175, § 4; July 1.
(a) Every insurance company organized under the laws of this state and required by this act to pay a premium tax or privilege fee pursuant to K.S.A. 40-252, and amendments thereto, shall be entitled to a credit, on the premium taxes or privilege fees imposed by K.S.A. 40-252, and amendments thereto, of 25% of such taxes or fees if at least 30% of such insurance company's admitted assets is invested in Kansas securities.
(b) For the purpose of this section: (1) The term "insurance company" shall mean any insurance company, mutual nonprofit hospital corporation, nonprofit medical service corporation or any corporation, society or association to which K.S.A. 40-252, and amendments thereto, applies;
(2) The term "admitted assets" shall mean the assets treated as admitted assets in the annual statement required to be filed with the commissioner of insurance pursuant to this act and K.S.A. 40-225, and amendments thereto; and
(3) The term "Kansas securities" shall mean real estate in this state, bonds of the state of Kansas, bonds or interest bearing warrants of any county, city, town, school district or municipality or subdivision of the state of Kansas, notes or bonds secured by mortgages or other liens on real estate located in the state of Kansas, cash deposits in regularly established national or state banks in this state on the basis of the average monthly deposits throughout the calendar year, policy loans secured by the legal reserve on policies insuring residents of the state of Kansas, and any other Kansas property or securities in which, by the laws of the state of Kansas, such insurance companies may invest their funds. The provisions of this section shall not be applicable to any taxable year after tax year 1998.
History: L. 1970, ch. 183, § 5; L. 1997, ch. 175, § 5; July 1.
(a) For tax years 2001 and thereafter, each company required to pay a tax on premiums under subsections A, C, D or F of K.S.A. 40-252, and amendments thereto, shall be allowed as a credit against such tax 15% of the salaries paid to Kansas employees. Before taking into account any other credit or offset against the tax on premiums imposed under K.S.A. 40-252, and amendments thereto, the credit allowed under this section may not reduce such tax by more than 1.125% of premiums taxable thereunder for tax years 2001 and thereafter, or 1% of premiums taxable thereunder for tax years 2001 and thereafter if such credit is calculated in accordance with the provisions of subsection (c).
(b) As used in this section, unless the context otherwise requires:
(1) "Affiliate" means an insurance company which, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with another insurance company. "Affiliate" also includes any company or business entity other than an insurance company which, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with an insurance company and which performs insurance company operations for an insurance company. For purposes of this definition, control exists if any company or business entity, directly or indirectly, owns, holds with the power to vote or holds proxies representing all the voting stock or other voting securities of any other company or business entity.
(2) "Insurance company" or "company" means any entity subject to a tax on premiums under subsections A, C, D or F of K.S.A. 40-252, and amendments thereto, including the attorney-in-fact authorized by and acting for the subscribers of a reciprocal insurer or inter-insurance exchange under powers of attorney. For the purpose of this section, a reciprocal and its attorney-in-fact will be considered a single entity.
(3) "Insurance company operations" means one or more or any combination of the following functions or services performed in connection with the development, sale and administration of products giving rise to receipts subject to a tax on premiums under subsection A, C, D or F of K.S.A. 40-252, and amendments thereto: Actuarial, medical, legal, investments, accounting, auditing, underwriting, policy issuance, information, policyholder services, premium collection, claims, advertising and publications, public relations, human resources, marketing, sales office staff, training of sales and service personnel, and clerical, managerial and other support for any such functions or services.
(4) "Kansas employees" means persons who are employed in Kansas and who are common law employees of an insurance company or its affiliate. "Kansas employees" does not include independent contractors or any person to the extent such person's compensation is based on commissions.
(5) "Salaries" means gross compensation paid to Kansas employees as reported to the State of Kansas for income tax purposes for the calendar year for which a tax on premiums is imposed under K.S.A. 40-252, and amendments thereto, but only to the extent compensation is paid for insurance company operations performed in Kansas for an insurance company or its insurance company affiliates subject to the tax on premiums under subsection A, C, D or F of K.S.A. 40-252, and amendments thereto. "Salaries" does not include compensation based on commissions.
(c) For an insurance company having affiliates:
(1) Salaries paid by a noninsurance company affiliate shall be allocated among insurance company affiliates pursuant to the agreement between or among the insurance company and its affiliates.
(2) The gross amount of all premiums of an insurance company subject to tax under subsection A, C, D or F of K.S.A. 40-252, and amendments thereto and those of its insurance company affiliates subject to such tax may be aggregated. In addition, all salaries paid to Kansas employees may be aggregated. Subject to the limitation on the salary credit set forth in subsection (a) of this section, the total allowable salary credit may be determined as if all the aggregated premiums were received and all the aggregated salaries were paid by one insurance company. Once the total allowable salary credit is determined for all insurance company affiliates, the total credit may be allocated among the insurance company and its insurance company affiliates at the discretion of the insurance company on a per insurance company basis, subject to the limitation on the salary credit as set forth in subsection (a) of this section.
(d) The computation of salaries, the allowable salary credit and the allocation of the credit among insurance company affiliates shall be made on forms supplied by the commissioner of insurance.
(e) For purposes of calculating any tax due under K.S.A. 40-253, and amendments thereto, from a taxpayer not organized under the laws of this state, the credit allowed by this section shall be treated as a tax paid under K.S.A. 40-252, and amendments thereto.
History: L. 1997, ch. 175, § 7; L. 2001, ch. 205, § 1; July 1.
For tax years 1998 and thereafter, a foreign or domestic insurance company required to pay a tax on premiums under subsection A, C, D or F of K.S.A. 40-252, and amendments thereto and writing less than $15,000,000 in premiums in all states shall be allowed as a small company credit against such tax the amount computed as follows:
(a) Subtract the total dollar amount of all premiums written by the company in all states from $15,000,000;
(b) Divide the result obtained in (a) by 15,000,000;
(c) Multiply the quotient obtained in (b) by 90,000 with the resulting credit not to exceed $30,000. No credit under this section shall be allowed unless the company has paid salaries for which a salary credit is allowed under K.S.A. 40-252d.
Before taking into account any other credit or offset against the tax on premiums imposed under K.S.A. 40-252, and amendments thereto, the employment credit allowed under K.S.A. 40-252d, and amendments thereto and the small company credit allowed under this section, taken together, may not reduce such tax by more than 1% of premiums taxable under K.S.A. 40-252, and amendments thereto, for tax year 1998 or by more than 1.25% of premiums taxable under K.S.A. 40-252, and amendments thereto, for tax years 1999 and thereafter. For purposes of calculating any tax due under K.S.A. 40-253, and amendments thereto, from a taxpayer not organized under the laws of this state, the credit allowed by this section shall be treated as a tax paid under K.S.A. 40-252, and amendments thereto.
History: L. 1997, ch. 175, § 8; July 1.
(a) For tax years 2007, and thereafter, a foreign or domestic insurance company required to pay a tax on premiums under subsection (A), (C), (D) or (F) of K.S.A. 40-252, and amendments thereto, shall be allowed credits against such tax in amounts equal to the amount of such credits allowable under K.S.A. 74-50,132, 79-32,153 and 79-32,160a, and amendments thereto, when:
(1) Such credits are earned but not used by a related corporation not required to pay a tax on premiums under K.S.A. 40-252, and amendments thereto;
(2) the value of such credits is made available to the related corporation through a reduction in costs charged to the related corporation by such insurance company or the transfer of funds to the related corporation in an amount equal to the credit claimed by the insurance company; and
(3) when the entity earning the credits is engaged in a contract that is subject to the federal acquisition regulations for services related to the administration of the federal medicare program and has engaged in the investment in a qualified business facility as defined in K.S.A. 79-32,154, and amendments thereto, with respect to the acquisition or retention of a contract to administer the federal medicare program.
(b) In each tax year that the related corporation assigns to an insurance company its right to credits under this section, the related corporation must file and submit a signed waiver to the commissioner of insurance and the secretary of revenue on a form supplied by the secretary of revenue.
(c) "Related corporation" shall mean a corporation or partnership controlled by the insurance company. For the purposes of this act, "controlled by the insurance company" shall mean:
(1) In the case of a corporation, ownership, directly or indirectly, of stock possessing at least 80% of the total combined voting power of all classes of stock entitled to vote and at least 80% of all other classes of stock of the corporation; and
(2) in the case of a partnership ownership of at least 80% of the capital or profits interest in such partnership.
History: L. 2007, ch. 62, § 1; April 5.
The provisions of this act shall expire on July 1, 2012, provided that any credits earned under this act prior to such date but unused as of such date may continue to be used until exhausted.
History: L. 2007, ch. 62, § 2; April 5.
Whenever the existing or future laws of any other state or country shall require from insurance companies or fraternal benefit societies organized under the laws of this state, applying to do business in such other state or country, any deposit of securities in such state or country for the protection of policyholders therein or any payment for taxes, fines, penalties, certificates of authority, licenses, fees, or compensation for examination, including taxes or fees based on fire premiums, greater than the amount required for such purpose from insurance companies or agents of other states by the then existing laws of this state, then, and in every case, all companies and agents of any such state or country, doing business in this state shall make the same deposit, for a like purpose, with the commissioner of insurance of this state, and pay to the commissioner of insurance for taxes, fines, penalties, certificates of authority, licenses, fees, or compensation for examination, including taxes or fees based on fire premiums, an amount equal to the amount of such charges and payments imposed by the laws of such other state or country upon the companies of this state and the agents thereof. The provisions of this section shall not apply to special purpose assessments or guaranty association assessments both under the laws of this state and under the laws of any other state or country, and any tax offset or credit for any such assessment shall, for purposes of this section, be treated as a tax paid both under the laws of this state and under the laws of any other state or country.
History: L. 1927, ch. 231, 40-253; L. 1951, ch. 293, § 1; L. 1967, ch. 256, § 1; L. 1997, ch. 175, § 6; July 1.
For purposes of calculating any tax due under K.S.A. 40-253, and amendments thereto, from a taxpayer not organized under the laws of this state, the credits allowed pursuant to K.S.A. 40-2813, 74-50,132, 79-32,153, 79-32,160 and 79-32,196, and amendments thereto, shall be treated as tax paid under K.S.A. 40-252, and amendments thereto.
History: L. 1998, ch. 136, § 9; April 30.
History: L. 1927, ch. 231, 40-254; Repealed, L. 2013, ch. 97, § 15; July 1.
Revisor's Note: Later act, see 40-2801 et seq.
History: L. 1927, ch. 231, 40-255; Repealed, L. 1970, ch. 184, § 12; January 1, 1971.
That in all actions hereafter commenced, in which judgment is rendered against any insurance company as defined in K.S.A.
40-201, and including in addition thereto any fraternal benefit society and any reciprocal or interinsurance exchange on any policy or certificate of any type or kind of insurance, if it appear from the evidence that such company, society or exchange has refused without just cause or excuse to pay the full amount of such loss, the court in rendering such judgment shall allow the plaintiff a reasonable sum as an attorney's fee for services in such action, including proceeding upon appeal, to be recovered and collected as a part of the costs: Provided, however, That when a tender is made by such insurance company, society or exchange before the commencement of the action in which judgment is rendered and the amount recovered is not in excess of such tender no such costs shall be allowed.
History: L. 1931, ch. 212, § 1; L. 1957, ch. 276, § 1; L. 1967, ch. 257, § 1; L. 1972, ch. 175, § 1; July 1.
If any section, subsection, paragraph or provision of this act shall be held to be invalid by any court for any reason, it shall be conclusively presumed that this act would have been passed by the legislature without such invalid section, subsection, paragraph or provision and such finding or construction shall not in any way affect the remainder of this act.
History: L. 1927, ch. 231, § 2; June 1.
Where any person shall die and no personal representative is or has been appointed, a civil action for the recovery of death benefits based on any policy of insurance, wherein the beneficiary is not named or the beneficiary named is the estate of the decedent and where the face amount of the insurance provided in the policy is one thousand dollars or less, may be brought by the widow, or, where there is no widow, by the next of kin of such deceased. The amount recovered in any such action shall inure to the exclusive benefit of the widow and children, if any, or next of kin, to be distributed in the same manner as personal property of the deceased.
History: L. 1943, ch. 153, § 1; June 28.
The legislature declares that it is desirable for the general welfare and in particular for the welfare of insurance beneficiaries, policyholders, injured claimants and others that the business of domestic insurance companies be continued notwithstanding the event of a national emergency.
The specific purpose of this chapter is to facilitate the continued operation of domestic insurance companies in the event that a national emergency is caused by an attack on the United States or by a nuclear, atomic or other disaster which makes it impossible or impracticable for a company to conduct its business in strict accord with applicable provisions of law, its bylaws, or its charter.
History: L. 1965, ch. 312, § 1; June 30.
The board of directors of any domestic insurance company may at any time adopt emergency bylaws, subject to repeal or change by action of those having power to adopt regular bylaws for the company, which shall be operative during such a national emergency and which may, notwithstanding any different provisions of the regular bylaws, or of the applicable statutes, or of the company's charter, make any provision that may be reasonably necessary for the operation of the company during the period of such emergency.
History: L. 1965, ch. 312, § 2; June 30.
In the event that the board of directors of a domestic insurance company has not adopted emergency bylaws, the following provisions shall become effective upon the occurrence of such national emergency:
(1) Three (3) directors shall constitute a quorum for the transaction of business at all meetings of the board.
(2) Any vacancy in the board may be filled by a majority of the remaining directors, though less than a quorum, or by a sole remaining director.
(3) If there are no surviving directors, but at least three (3) vice-presidents of the company survive, the three (3) vice-presidents with the longest term of service shall be the directors and shall possess all of the powers of the previous board of directors and such powers as are granted herein or by subsequently enacted legislation. By majority vote such emergency board of directors may elect other directors. If there are not at least three (3) surviving vice-presidents, the commissioner of insurance or duly designated person exercising the powers of commissioner of insurance shall appoint three (3) persons as directors who shall possess all of the powers of the previous board of directors and such powers as are granted herein or by subsequently enacted legislation, and these persons by majority vote may elect other directors.
History: L. 1965, ch. 312, § 3; June 30.
At any time the board of directors of a domestic insurance company may, by resolution, provide that in the event of such a national emergency and in the event of the death or incapacity of the president, the secretary or the treasurer of the company such officers, or any of them, shall be succeeded in the office by the person named or described in a succession list adopted by the board of directors. Such list may be on the basis of named persons or position titles, shall establish the order of priority and may prescribe the conditions under which the powers of the office shall be exercised.
History: L. 1965, ch. 312, § 4; June 30.
At any time the board of directors of a domestic insurance company may, by resolution, provide that in the event of such a national emergency the home office or principal place of business of the company shall be at such location as is named or described in the resolution. Such resolution may provide for alternate locations and establish an order of preference.
History: L. 1965, ch. 312, § 5; June 30.
Every person who is directly or indirectly the beneficial owner of more than ten percent (10%) of any class of any equity security of a domestic stock insurance company, or who is a director or an officer of such company, shall file in the office of the commissioner of insurance on or before January 31, 1966, or within ten (10) days after he becomes such beneficial owner, director or officer, a statement, in such form as the commissioner may prescribe, of the amount of all equity securities of such company of which he is the beneficial owner, and within ten (10) days after the close of each calendar month thereafter, if there has been a change in such ownership during such month, shall file in the office of the commissioner a statement, in such form as the commissioner may prescribe, indicating his ownership at the close of the calendar month and such changes in his ownership as have occurred during such calendar month.
History: L. 1965, ch. 309, § 1; June 30.
For the purpose of preventing the unfair use of information which may have been obtained by such beneficial owner, director or officer by reason of his relationship to such company, any profit realized by him from any purchase and sale, or any sale and purchase, of any equity security of such company within any period of less than six (6) months, unless such security was acquired in good faith in connection with a debt previously contracted, shall inure to and be recoverable by the company, irrespective of any intention on the part of such beneficial owner, director or officer in entering into such transaction of holding the security purchased or of not repurchasing the security sold for a period exceeding six (6) months. Suit to recover such profit may be instituted at law or in equity in any court of competent jurisdiction by the company, or by the owner of any security of the company in the name and in behalf of the company if the company shall fail or refuse to bring such suit within sixty (60) days after request or shall fail diligently to prosecute the same thereafter; but no such suit shall be brought more than two (2) years after the date such profit was realized. This section shall not be construed to cover any transaction where such beneficial owner was not such both at the time of the purchase and sale, or the sale and purchase, of the security involved, or any transaction or transactions which the commissioner by rules and regulations may exempt as not comprehended within the purpose of this section.
History: L. 1965, ch. 309, § 2; June 30.
It shall be unlawful for any such beneficial owner, director or officer, directly or indirectly, to sell any equity security of such company if the person selling the security or his principal (i) does not own the security sold, or (ii) if owning the security, does not deliver it against such sale within twenty (20) days thereafter, or does not within five (5) days after such sale deposit it in the mails or other usual channels of transportation; but no person shall be deemed to have violated this section if he proves that notwithstanding the exercise of good faith he was unable to make such delivery or deposit within such time, or that to do so would cause undue inconvenience or expense.
History: L. 1965, ch. 309, § 3; June 30.
The provisions of K.S.A. 40-265 shall not apply to any purchase and sale, or sale and purchase, and the provisions of K.S.A. 40-266 shall not apply to any sale, of an equity security of a domestic stock insurance company not then or theretofore held by him in an investment account, by a dealer in the ordinary course of his business and incident to the establishment or maintenance by him of a primary or secondary market (otherwise than on an exchange as defined in the securities exchange act of 1934) for such security. The commissioner shall, by such rules and regulations as he deems necessary or appropriate in the public interest, define and prescribe terms and conditions with respect to securities held in an investment account and transactions made in the ordinary course of business and incident to the establishment or maintenance of a primary or secondary market to conform to the provisions of K.S.A. 40-265 and 40-266.
History: L. 1965, ch. 309, § 4; June 30.
The provisions of K.S.A. 40-264, 40-265 and 40-266 shall not apply to foreign or domestic arbitrage transactions unless made in contravention of such rules and regulations as the commissioner may adopt in order to carry out the purposes of this act.
History: L. 1965, ch. 309, § 5; June 30.
The term "equity security" when used in this act means any stock or similar security; or any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security; or any such warrant or right, or any other security which the commissioner shall deem to be of similar nature and consider necessary or appropriate, by such rules and regulations as he may prescribe in the public interest or for the protection of investors, to treat as an equity security.
History: L. 1965, ch. 309, § 6; June 30.
The provisions of K.S.A. 40-264, 40-265 and 40-266 shall not apply to equity securities of a domestic stock insurance company if (a) such securities shall be registered, or shall be required to be registered, pursuant to section 12* of the securities exchange act of 1934, as amended, or if (b) such domestic stock insurance company shall not have any class of its equity securities held of record by one hundred (100) or more persons on the last business day of the year next preceding the year in which equity securities of the company would be subject to the provisions of K.S.A. 40-264, 40-265 and 40-266 except for the provisions of this subsection (b).
History: L. 1965, ch. 309, § 7; June 30.
The commissioner shall have the power to make such rules and regulations as may be necessary for the execution of the functions vested in him by K.S.A. 40-264 to 40-270, and may for such purpose classify domestic stock insurance companies, securities, and other persons or matters within his jurisdiction. No provision of K.S.A. 40-264, 40-265 and 40-266 imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule or regulation of the commissioner, notwithstanding that such rule or regulation may, after such act or omission, be amended or rescinded or determined by judicial or other authority to be invalid for any reason.
History: L. 1965, ch. 309, § 8; June 30.
The commissioner of insurance shall have specific authority to prescribe rules and regulations regarding proxies, consents or authorizations in respect of securities issued by domestic insurance companies and such rules and regulations shall conform to those prescribed by the national association of insurance commissioners.
History: L. 1965, ch. 313, § 1; June 30.
Every group, association or other organization of insurers which engages in joint underwriting or joint reinsurance through such group, association or other organization or by standing agreement among the members thereof, shall file with the commissioner (1) a copy of its constitution, its articles of agreement or association or its articles or certificates of incorporation or other contractual provisions governing the activities of such group, association or other organization and of its bylaws, rules and regulations governing its activities; (2) a list of its members; (3) the name and address of a resident of this state upon whom notices or orders of the commissioner or other process may be served; and (4) an agreement that the commissioner may examine such underwriting group, association or other organization in accordance with 40-222 of the Kansas Statutes Annotated, unless such examination has been made by the state where the principal office of such group, association or other organization of insurers is located and that such examination is made available to the Kansas insurance department. Every such group, association or other organization shall notify the commissioner promptly of every change in its constitution, its articles or certificates of incorporation, agreement or association or other contractual provisions governing the activities of such group, association or other organization and of its bylaws, rules and regulations governing the conduct of its activities; its list of members; and the name and address of the resident of this state upon whom notices or orders of the commissioner or other process may be served.
No such group, association or organization shall engage in any unfair or unreasonable practice with respect to such activities.
History: L. 1965, ch. 311, § 1; June 30.
Whenever the affiliate companies of any joint underwriting group described in K.S.A. 40-273 issue policies in this state that obligate more than one (1) insurer, severally or jointly, the solicitation of such policies must be accomplished by a licensed resident agent for at least one (1) of the companies assuming direct liability on the risk: Provided, That such policy must be countersigned by a licensed resident agent for each company assuming direct liability as provided in K.S.A. 40-246: Provided further, Such countersignature requirement may be accomplished by means of an endorsement on which the signatures of licensed resident agents of all companies assuming direct liability on the policy are placed.
History: L. 1967, ch. 248, § 1; July 1.
No advance payment or partial payment of damages, predicated on possible tort liability, as an accommodation to an injured person, or on his behalf to others, or to the heirs at law or dependents of a deceased person of medical expenses, loss of earnings and other actual out of pocket expenses, because of an injury, death claim, property loss or potential claim against any person, firm, trust or corporation, shall be admissible into evidence as an admission against interest or admission of liability by such party or self insurer, or if paid by an insurer of such party, as the insurer's recognition of such liability with respect to such injured or deceased person, or with respect to any other claim arising from the same accident or event. Any such payments shall, however, constitute a credit and be deductible from any final settlement made or judgment rendered with respect to such injured or deceased person. In the event of a trial involving such a claim, the fact that such payments have been made shall not be brought to the attention of the jury: Provided, If after an advance payment or partial payment is made as herein provided for, and thereafter it shall be determined by final judgment of a court of competent jurisdiction that the person, firm, trust or corporation is not liable for an amount sufficient to satisfy the advance payment or partial payment, such person, firm, trust or corporation shall have no right of action for the recovery of any such a payment: Provided further, That the period fixed for the limitation for the commencement of actions shall commence on the date of the last payment or partial payment made hereunder.
History: L. 1967, ch. 267, § 1; L. 1969, ch. 232, § 1; July 1.
As used in this act: "Policy of automobile liability insurance" means a policy insuring against the liability of the insured for the death, disability or damages of another and against loss or damage to the property of another, arising from the use of an automobile that is issued to cover the following types of automobiles owned by an individual or by husband and wife, including automobiles hired under a long term contract and written on a specified car basis:
(a) A motor vehicle of the private passenger or station wagon type that is not used as a public or livery conveyance for passengers, nor rented to others;
(b) Any other four-wheel motor vehicle with a load capacity of one thousand five hundred (1,500) pounds or less which is not used in the occupation, profession or business of the named insured, other than farming: Provided, That the term "policy of automobile liability insurance" shall not include policies of automobile liability insurance (1) issued through the Kansas automobile assigned risk plan, (2) insuring more than four automobiles, nor (3) insuring the automobile hazard of garages, automobile sales agencies, repair shops, service stations or public parking places.
History: L. 1967, ch. 271, § 1; January 1, 1968.
(a) Any insurance company that denies renewal of an automobile liability insurance policy in this state shall give at least 30 days written notice to the named insured, at his last known address, or cause such notice to be given by a licensed agent of its intention not to renew such policy. No insurance company shall deny the renewal of an automobile liability insurance policy except in one or more of the following circumstances or as permitted in subsection (b):
(1) When such insurance company is required or has been permitted by the commissioner of insurance, in writing, to reduce its premium volume in order to preserve the financial integrity of such insurer;
(2) when such insurance company ceases to transact such business in this state;
(3) when such insurance company is able to show competent medical evidence that the insured has a physical or mental disablement that impairs his ability to drive in a safe and reasonable manner;
(4) when unfavorable underwriting factors, pertinent to the risk, are existent, and of a substantial nature, which could not have reasonably been ascertained by the company at the initial issuance of the policy or the last renewal thereof;
(5) when the policy has been continuously in effect for a period of five years. Such five-year period shall begin at the first policy anniversary date following the effective date of the policy, except that if such policy is renewed or continued in force after the expiration of such period or any subsequent five-year period, the provisions of this subsection shall apply in any such subsequent period; or
(6) when any of the reasons specified as reasons for cancellation in K.S.A. 40-277 are existent, except that (A) when failure to renew is based upon termination of agency contract, obligation to renew will be satisfied if the insurer has manifested its willingness to renew, and (B) obligation to renew is terminated on the effective date of any other automobile liability insurance procured by the named insured with respect to any automobile designated in both policies.
Renewal of a policy shall not constitute a waiver or estoppel with respect to grounds for cancellation which existed before the effective date of such renewal. Nothing in this section shall require an insurance company to renew an automobile liability insurance policy if such renewal would be contrary to restrictions of membership in the company which are contained in the articles of incorporation or the bylaws of such company.
(b) (1) No insurance company shall refuse to renew a policy until after June 30, 2002, based on an insured's failure to maintain membership in a bona fide association, until both the insurance company and bona fide association have complied with the requirements of this subsection. No insurance company shall refuse to renew any coverage continuously in effect before July 1, 2002, unless:
(A) The application for insurance and the insurance policy shall clearly disclose that both the payment of dues and current membership in the bona fide association are prerequisites to obtaining or renewing the insurance;
(B) the bona fide association has filed a certification with the commissioner of insurance verifying the eligibility of the insurance company to refuse to renew an insurance policy based on the membership in the bona fide association; and
(C) any money paid to the bona fide association as a membership fee:
(i) Shall not be used by the insurance company directly or indirectly to defray any costs or expenses in connection with the sale or purchase of the insurance; and
(ii) shall be set independently of any factor used by the insurance company to make any judgment or determination about the eligibility of any individual to purchase or renew such insurance. For the purposes of this provision, the individual may be a member of the bona fide organization or an employee or dependent of such a member.
(2) (A) Upon request the bona fide association shall file a statement with the commissioner of insurance verifying that the bona fide association meets the requirements of this paragraph.
(B) For the purposes of this subsection, "bona fide association" means an association which:
(i) Has been in active existence for at least five consecutive years immediately preceding the date the statement is filed;
(ii) has been formed and maintained in good faith for purposes other than obtaining or providing insurance and does not condition membership in the association on the purchase of insurance;
(iii) has articles of incorporation and bylaws or other similar governing documents;
(iv) has a relationship with one or more specific insurance companies and identifies each such insurance company; and
(v) and does not condition membership in the association or set membership fees on the eligibility of any individual to purchase or renew the insurance or on any factor that the insurance company could not lawfully consider when setting rates. For the purposes of this provision, the individual may be a member of the bona fide organization or an employee or dependent of such a member.
(3) Membership fees collected by the bona fide association shall not be deemed to be premiums of the insurance company that issued the coverage unless the bona fide association:
(A) Uses any portion of such membership fees directly or indirectly to defray any costs or expenses in connection with the sale or purchase of the insurance; or
(B) sets or adjusts membership fees for any member of the bona fide association based on any factor used by the insurance company that issues the insurance to make any judgment or determination about the eligibility of any individual to purchase or renew the insurance. For the purposes of this provision, the individual may be a member of the bona fide organization or an employee or dependent of such a member.
(4) If the membership fees are determined to constitute premiums pursuant to paragraph (3) of this subsection, the insurance company shall not refuse to renew a policy as otherwise permitted by this subsection.
History: L. 1972, ch. 176, § 1; L. 2002, ch. 58, § 1; July 1.
No insurance company shall issue a policy of automobile liability insurance in this state unless the cancellation condition of the policy or endorsement thereon includes the following limitations pertaining to cancellation by the insurance company:
After this policy has been in effect for 60 days, or if the policy is a renewal, effective immediately, the company shall not exercise its right to cancel the insurance afforded under (here insert the appropriate coverage references) solely because of age or unless
The named insured fails to discharge when due any obligations in connection with the payment of premium for this policy or any installment thereof whether payable directly or under any premium finance plan; or
the insurance was obtained through fraudulent misrepresentation; or
the insured violates any of the terms and conditions of the policy; or
the named insured or any other operator, either resident in the same household, or who customarily operates an automobile insured under the policy,
(a) has had such person's driver's license suspended or revoked during the policy period, or
(b) is or becomes subject to epilepsy or heart attacks, and such individual cannot produce a certificate from a physician testifying to such person's ability to operate a motor vehicle, or
(c) is or has been convicted during the 36 months immediately preceding the effective date of the policy or during the policy period, for:
(1) Any felony, or
(2) criminal negligence, resulting in death, homicide or assault, arising out of the operation of a motor vehicle, or
(3) operating a motor vehicle while in an intoxicated condition or while under the influence of drugs, or
(4) leaving the scene of an accident without stopping to report, or
(5) theft of a motor vehicle, or
(6) making false statements in an application for a driver's license, or
(7) a third moving violation, committed within a period of 18 months, of (i) any regulation limiting the speed of motor vehicles, (ii) any of the provisions in the motor vehicle laws of any state, the violation of which constitutes a misdemeanor or traffic infraction, or (iii) any ordinance traffic infraction, or ordinance which prohibits the same acts as a misdemeanor statute of the uniform act regulating traffic on highways, whether or not the violations were repetitious of the same offense or were different offenses.
History: L. 1967, ch. 271, § 2; L. 1984, ch. 39, § 47; January 1, 1985.
When a policy of automobile liability insurance as defined in K.S.A. 40-276 is canceled, or nonrenewed other than for nonpayment of premium by an insurance company, such insurer shall notify the named insured of his possible eligibility for such coverage through the Kansas automobile insurance plan. Such notice shall accompany or be included in the notice of cancellation, or nonrenewal, given by the insurer and shall state that such notice of availability of the Kansas automobile insurance plan is given pursuant to the provisions of this act.
History: L. 1967, ch. 271, § 3; L. 1972, ch. 176, § 2; July 1.
History: L. 1967, ch. 271, § 4, 5; L. 1972, ch. 176, § 3, 4; Repealed, L. 1981, ch. 190, § 5; July 1.
(a) The commissioner of insurance is hereby authorized to hold a fact-finding hearing on any matter relating to the business of insurance whenever the commissioner shall have reason to believe that such a proceeding would be in the public interest. The commissioner shall give to all interested parties reasonable notice of any such hearing, and such notice shall contain the time, place and purpose of the hearing. Notice of the hearing may be sent by registered mail, and any hearing held in accordance with notice thereof shall not be affected by the failure of any party to attend or remain in attendance.
(b) At the time and place fixed for such hearing, all interested parties shall have an opportunity to be heard and to present such material as the commissioner deems relevant to the matter at issue, but the observance of formal rules of pleading or evidence at any such hearing shall not be required unless requested by any party subpoenaed to appear at such hearing. The commissioner may adjourn any hearing from time to time by announcement thereof at the hearing.
(c) The commissioner, upon such hearing, may administer oaths, examine and cross-examine witnesses, receive oral and documentary evidence and shall have the power to subpoena witnesses, compel their attendance, and require the production of books, papers, records, correspondence or other documents deemed relevant to the inquiry. In case of a refusal of any person to comply with any subpoena issued hereunder or to testify with respect to any matter concerning which such person may be lawfully interrogated, the district court of Shawnee county or the county where such person resides, on application of the commissioner, may issue an order requiring such person to comply with such subpoena and to testify, and any failure to obey any such order of the court may be punished by the court as a contempt thereof. The commissioner may cause to be made a stenographic record of all the evidence and all of the proceedings had at any such hearing.
(d) A person subject to any order, as defined in K.S.A. 77-502, and amendments thereto, issued by the commissioner may request a hearing on such order. If such a request is made, the commissioner shall conduct a hearing in accordance with the provisions of the Kansas administrative procedure act.
(e) Nothing in this act shall be construed as affecting the filing of rates required by articles 9 and 11 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto.
History: L. 1967, ch. 266, § 1; L. 2022, ch. 37, § 1; April 14.
(a) Any insurance agent, as defined in K.S.A. 40-239, and amendments thereto, may extend credit to policyholders in connection with the issuance or servicing of policies procured or negotiated by such agent but any such credit so extended shall satisfy one of the following conditions, unless otherwise authorized by law:
(1) If credit is extended to policyholders for a period of not more than 30 days from the date the premium is due, and such credit is not evidenced by a written instrument, there shall be no interest charged for such credit; or
(2) if credit is extended to policyholders for a period of more than 30 days from the date the premium is due, and such credit is not evidenced by a written instrument, interest may be charged for credit extended after 30 days at a rate not exceeding 1½% per month on the unpaid balance; or
(3) if the extension of credit to a policyholder is evidenced by a written instrument setting forth the terms, and signed by the policyholder, any interest charged for such credit shall be clearly stated in the instrument but it shall not exceed the legal rate of interest authorized in K.S.A. 16-207, and amendments thereto.
(b) Any insurance agent extending credit to policyholders as provided in subsection (a)(1) or (2) of this section may request the company to cancel such insurance according to the terms of the policies for nonpayment of the policyholders' accounts, except as provided in K.S.A. 40-277, and amendments thereto, and except for policies paid by an escrow agent, or paid direct by an insured to an insurance company, or where the insured specified that payment apply to a specific policy and all premiums due on that policy have been paid, or where the unearned premium is collateral for a loan under K.S.A. 40-2601et seq., and amendments thereto.
The insurance agent shall notify the policyholder of the requested cancellation in writing at the time the request is made to the insurance company.
Such insurance agent shall have a lien on any return premium for all policies of the same policyholder to the extent of amounts owed by the policyholder.
History: L. 1968, ch. 73, § 1; L. 1980, ch. 132, § 1; L. 1984, ch. 166, § 1; July 1.
The provisions of K.S.A. 40-252, 40-928 and 40-1113 shall not apply to any interest permitted or required by this act; nor shall such interest be subject to the provisions of any rules or regulations, adopted pursuant to or to carry out the foregoing statutory provisions, and which are in conflict with the provisions of this act.
History: L. 1968, ch. 73, § 2; July 1.
From and after the effective date of this act, no life insurance company authorized to do business in this state nor any insurance agent thereof shall enter into or arrange for an agreement with a purchaser or prospective purchaser of any life insurance policy to finance the cost of any premium or extend credit in the amount of any premium for a term exceeding one year. At the expiration of any such term, such life insurance company or agent may enter into or arrange for a new agreement to finance the cost of any premiums or extend credit in the amount of any premium for an additional term of not to exceed one year.
History: L. 1976, ch. 213, § 1; July 1.
(a) No automobile liability insurance policy covering liability arising out of the ownership, maintenance, or use of any motor vehicle shall be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state, unless the policy contains or has endorsed thereon, a provision with coverage limits equal to the limits of liability coverage for bodily injury or death in such automobile liability insurance policy sold to the named insured for payment of part or all sums which the insured or the insured's legal representative shall be legally entitled to recover as damages from the uninsured owner or operator of a motor vehicle because of bodily injury, sickness or disease, including death, resulting therefrom, sustained by the insured, caused by accident and arising out of ownership, maintenance or use of such motor vehicle, or providing for such payment irrespective of legal liability of the insured or any other person or organization. No insurer shall be required to offer, provide or make available coverage conforming to this section in connection with any excess policy, umbrella policy or any other policy which does not provide primary motor vehicle insurance for liabilities arising out of the ownership, maintenance, operation or use of a specifically insured motor vehicle.
(b) Any uninsured motorist coverage shall include an underinsured motorist provision which enables the insured or the insured's legal representative to recover from the insurer the amount of damages for bodily injury or death to which the insured is legally entitled from the owner or operator of another motor vehicle with coverage limits equal to the limits of liability provided by such uninsured motorist coverage to the extent such coverage exceeds the limits of the bodily injury coverage carried by the owner or operator of the other motor vehicle.
(c) The insured named in the policy shall have the right to reject, in writing, the uninsured motorist coverage required by subsections (a) and (b) which is in excess of the limits for bodily injury or death set forth in K.S.A.
40-3107, and amendments thereto. A rejection by an insured named in the policy of the uninsured motorist coverage shall be a rejection on behalf of all parties insured by the policy. Unless the insured named in the policy requests such coverage in writing, such coverage need not be provided in any subsequent policy issued by the same insurer for motor vehicles owned by the named insured, including, but not limited to, supplemental, renewal, reinstated, transferred or substitute policies where the named insured had rejected the coverage in connection with a policy previously issued to the insured by the same insurer.
(d) Coverage under the policy shall be limited to the extent that the total limits available cannot exceed the highest limits of any single applicable policy, regardless of the number of policies involved, persons covered, claims made, vehicles or premiums shown on the policy or premiums paid or vehicles involved in an accident.
(e) Any insurer may provide for the exclusion or limitation of coverage:
(1) When the insured is occupying or struck by an uninsured automobile or trailer owned or provided for the insured's regular use;
(2) when the uninsured automobile is owned by a self-insurer or any governmental entity;
(3) when there is no evidence of physical contact with the uninsured motor vehicle and when there is no reliable competent evidence to prove the facts of the accident from a disinterested witness not making claim under the policy;
(4) to the extent that workers' compensation benefits apply;
(5) when suit is filed against the uninsured motorist without notice to the insurance carrier; and
(6) to the extent that personal injury protection benefits apply.
(f) An underinsured motorist coverage insurer shall have subrogation rights under the provisions of K.S.A.
40-287, and amendments thereto. If a tentative agreement to settle for liability limits has been reached with an underinsured tortfeasor, written notice must be given by certified mail to the underinsured motorist coverage insurer by its insured. Such written notice shall include written documentation of pecuniary losses incurred, including copies of all medical bills and written authorization or a court order to obtain reports from all employers and medical providers. Within 60 days of receipt of this written notice, the underinsured motorist coverage insurer may substitute its payment to the insured for the tentative settlement amount. The underinsured motorist coverage insurer is then subrogated to the insured's right of recovery to the extent of such payment and any settlement under the underinsured motorist coverage. If the underinsured motorist coverage insurer fails to pay the insured the amount of the tentative tort settlement within 60 days, the underinsured motorist coverage insurer has no right of subrogation for any amount paid under the underinsured motorist coverage.
History: L. 1968, ch. 273, § 1; L. 1981, ch. 191, § 1; L. 1984, ch. 167, § 1; L. 1986, ch. 173, § 1; L. 1988, ch. 152, § 1; July 1.
For the purpose of this act, the term "uninsured motor vehicle" shall, subject to the terms and conditions of such coverage, be deemed to include an insured motor vehicle where the liability insurer thereof is unable to make payment with respect to the legal liability of its insured within the limits specified herein because of insolvency.
History: L. 1968, ch. 273, § 2; July 1.
An insurer's insolvency protection shall be applicable only to accidents occurring during a policy period in which its insured's uninsured motorist coverage is in effect where the liability insurer of the tortfeasor becomes insolvent within two (2) years after such an accident: Provided, That nothing herein contained shall be construed to prevent any insurer from affording insolvency protection under terms and conditions more favorable to its insureds than is provided hereunder.
History: L. 1968, ch. 273, § 3; July 1.
The policy or endorsement affording the coverage specified in K.S.A. 40-284 may further provide that payment to any person of sums as damages under such coverage shall operate to subrogate the insurer to any cause of action in tort which such person may have against any other person or organization legally responsible for the bodily injury or death because of which such payment is made, and the insurer shall be subrogated, to the extent of such payment, to the proceeds of any settlement or judgment that may thereafter result from the exercise of any rights of recovery of such person against any person or organization legally responsible for said bodily injury or death for which payment is made by the insurer. Such insurer may enforce such rights in its own name or in the name of the person to whom payment has been made, as their interest may appear, by proper action in any court of competent jurisdiction.
History: L. 1968, ch. 273, § 4; July 1.
The standard provisions as set out in article 22 of chapter 40, of the Kansas Statutes Annotated, or amendments thereto, shall not be required in the coverage provided by this act.
History: L. 1968, ch. 273, § 5; July 1.
History: L. 1969, ch. 129, §§ 1 to 5; Repealed, L. 1979, ch. 138, § 2; July 1.
As soon as possible after the effective date of this act, the director of accounts and reports shall transfer all moneys in the Kansas riot reinsurance reimbursement fund to the state general fund. After such transfer, the Kansas riot reinsurance reimbursement fund is hereby abolished.
History: L. 1979, ch. 138, § 1; July 1.
Revisor's Note: Later act, see 40-229a.
History: L. 1970, ch. 177, § 1; Repealed, L. 1996, ch. 25, § 17; July 1.
No insurance company licensed to do business in the state of Kansas shall in the issuance, extension or renewal of any policy or contract of automobile insurance or the acceptance of any application therefor discriminate unfairly solely because of the age of the person to be insured: Provided, That nothing herein shall be construed to interfere with the application of any applicable rate classification with respect to such policy or contract of insurance pursuant to article 11 of chapter 40 of the Kansas Statutes Annotated. Any insurance company violating the provisions of this act shall be subject to the penalties authorized by K.S.A. 40-1120.
History: L. 1971, ch. 171, § 1; July 1.
An offer of insurance by any one of a group of affiliated insurors shall constitute compliance with this act on behalf of an insurance company and all of its affiliates: Provided, however, That the premium charged in the affiliate company shall be at no higher rate than the then current rate charged by the affiliate company for such classification.
History: L. 1971, ch. 171, § 2; July 1.
The term "group of affiliated insurors" as used in K.S.A. 40-296 shall mean two or more insurance companies which are under substantially the same management and/or financial control.
History: L. 1971, ch. 171, § 3; July 1.
As used in this act, the following words and phrases shall have the meanings respectively ascribed to them herein:
(a) "Automobile dealer" means a new vehicle dealer or a used vehicle dealer as defined by K.S.A. 8-126, and amendments thereto;
(b) "Automobile" means a passenger vehicle as defined by K.S.A. 8-126, and amendments thereto;
(c) "Dealer" means any automobile dealer or lending agency;
(d) "Lending agency" means any person engaged in the business of financing or lending money to any person to be used in the purchase or financing of a motor vehicle; and
(e) "Person" means any individual, partnership, corporation or other association of persons.
History: L. 1972, ch. 178, § 1; L. 2013, ch. 92, § 4; July 1.
Whenever any dealer, or any agent, officer or employee of such dealer, who also is an insurance agent, as defined by K.S.A. 40-239, shall provide only for automobile physical damage insurance in connection with the sale and financing of an automobile, such dealer, agent, officer or employee also must obtain a written acknowledgment by the purchaser of the automobile that the insurance coverage so provided for such automobile does not include automobile liability insurance sufficient to fulfill the requirements of the Kansas automobile injury reparations act. Such acknowledgment shall be made in the manner and form prescribed by the commissioner of insurance, and a copy thereof shall be furnished the purchaser. The insurance agent's license of any such dealer, agent, officer or employee who fails to obtain the acknowledgment required herein shall be subject to suspension or revocation by the commissioner pursuant to the provisions of K.S.A. 40-242.
History: L. 1972, ch. 178, § 2; L. 1974, ch. 187, § 1; July 1.
Notwithstanding any provision of any individual, group or blanket policy of accident and sickness, medical or surgical expense insurance coverage or any provision of a policy, contract, plan or agreement for medical service, issued on or after the effective date of this act, whenever such policy, contract, plan or agreement provides for reimbursement or indemnity for any service which is within the lawful scope of practice of any practitioner licensed under the healing arts act of this state, reimbursement or indemnification under such policy contract, plan or agreement shall not be denied when such services are performed by an optometrist, dentist or podiatrist acting within the lawful scope of their license.
History: L. 1973, ch. 194, § 1; July 1.
Notwithstanding any provision of any individual, group or blanket policy of accident and sickness, medical or surgical expense insurance coverage or any provision of a policy, contract, plan or agreement for medical service, issued on or after the effective date of this act, whenever such policy, contract, plan or agreement provides for reimbursement or indemnity for any service which is within the lawful scope of practice of any practitioner licensed under the Kansas healing arts act, reimbursement or indemnification under such policy contract, plan or agreement shall not be denied when such service is rendered by any such licensed practitioner within the lawful scope of his license.
History: L. 1973, ch. 195, § 1; July 1.
(a) (1) All individual and group health insurance policies providing coverage on an expense incurred basis, individual and group service or indemnity type contracts issued by a profit or nonprofit corporation and all contracts issued by health maintenance organizations organized or authorized to transact business in this state which provides coverage for a family member of the enrollee, insured or subscriber shall, as to such family members' coverage, also provide that the health insurance benefits applicable for children shall be payable with respect to a: (A) Newly born child of the enrollee, insured or subscriber from the moment of birth; (B) newly born child adopted by the enrollee, insured or subscriber from the moment of birth if a petition for adoption as provided in K.S.A. 59-2128, and amendments thereto, was filed within 31 days of the birth of the child; or (C) child adopted by the enrollee, insured or subscriber from the date the petition for adoption as provided in K.S.A. 59-2128, and amendments thereto, was filed or (D) child placed in enrollee, insured or subscriber's home by a child placement agency as defined by K.S.A. 65-503, and amendments thereto, for the purpose of adoption from the date of placement as certified by the enrollee, insured or subscriber. In no case shall the time from the date of placement to the date the petition for adoption as provided in K.S.A. 59-2128, and amendments thereto, was filed exceed 280 days.
(2) The coverage for newly born children shall consist of: (A) Coverage of injury or sickness including the necessary care and treatment of medically diagnosed congenital defects and birth abnormalities; and (B) routine and necessary immunizations for all newly born children of the insured or subscriber. For purposes of this paragraph "routine and necessary immunizations" shall consist of at least five doses of vaccine against diphtheria, pertussis, tetanus; at least four doses of vaccine against polio and Haemophilus B (Hib); and three doses of vaccine against Hepatitis B; two doses of vaccine against measles, mumps and rubella; one dose of vaccine against varicella and such other vaccines and dosages as may be prescribed by the secretary of health and environment. The required benefits shall apply to immunizations administered to each newly born child from birth to 72 months of age and shall not be subject to any deductible, copayment or coinsurance requirements.
(3) If payment of a specific premium or subscription fee is required to provide coverage for a child, the policy or contract may require that notification of birth of a newly born child or the filing of the petition for adoption or certification that a child has been placed in the home for adoption as defined by subsection (a)(1)(D) and payment of the required premium or fees must be furnished to the health maintenance organization, insurer or nonprofit service or indemnity corporation within 31 days after the date of birth or the filing of the petition for adoption or certification that a child has been placed in the home for adoption as defined by subsection (a)(1)(D) in order to have the coverage continue beyond such 31-day period.
(4) The contract issued by a health maintenance organization may provide that the benefits required pursuant to this subsection shall be covered benefits only if the services are rendered by a provider who is designated by and affiliated with the health maintenance organization.
(b) (1) All individual and group health insurance policies providing coverage on an expense incurred basis, individual and group service or indemnity type contracts issued by a profit or nonprofit corporation and all contracts issued by health maintenance organizations organized or authorized to transact business in this state which provides coverage for a family member of the enrollee, insured or subscriber, as to such family members' coverage, shall also offer an option whereby the health insurance benefits shall include delivery and obstetrical expenses at birth of the birth mother of a child adopted within 90 days of birth of such child by the enrollee, insured or subscriber subject to the same limitations contained in such policy or contract applicable to the enrollee, insured or subscriber. Such offer of an option regarding such delivery and obstetrical expense shall be made to the enrollee of a health maintenance organization and to the insured and, to the individual subscribers in the case of a group health insurance policy.
(2) Contracts issued by a health maintenance organization may provide that the benefits required pursuant to paragraph (1) of this subsection, shall be covered benefits only if the services are rendered by a provider who is designated by and affiliated with the health maintenance organization.
History: L. 1974, ch. 190, § 4; L. 1990, ch. 145, § 35; L. 1995, ch. 183, § 1; L. 1997, ch. 95, § 1; July 1.
The requirements of K.S.A. 40-2,100, 40-2,101, 40-2,102, 40-2,104, 40-2,105, 40-2,114, 40-2,160, 40-2,165 through 40-2,170, 40-2250, K.S.A. 40-2,105a, 40-2,105b, 40-2,184, 40-2,190, 40-2,194 and 40-2,210 through 40-2,216, and amendments thereto, shall apply to all insurance policies, subscriber contracts or certificates of insurance delivered, renewed or issued for delivery within or outside of this state or used within this state by or for an individual who resides or is employed in this state.
History: L. 1974, ch. 190, § 5; L. 1984, ch. 168, § 1; L. 1989, ch. 133, § 1; L. 1990, ch. 162, § 4; L. 1991, ch. 129, § 1; L. 1996, ch. 96, § 2; L. 1999, ch. 128, § 5; L. 1999, ch. 162, § 3; L. 2001, ch. 178, § 4; L. 2010, ch. 120, § 4; L. 2011, ch. 111, § 9; L. 2014, ch. 62, § 7; L. 2018, ch. 98, § 9; July 1.
Notwithstanding any provision of an individual or group policy or contract of health and accident insurance, delivered within the state whenever such policy or contract shall provide for reimbursement for any service within the lawful scope of practice of a duly licensed psychologist within the state of Kansas, the insured, or any other person covered by the policy or contract shall be allowed and entitled to reimbursement for such service irrespective of whether it was provided or performed by a duly licensed physician or a duly licensed psychologist.
History: L. 1974, ch. 189, § 1; L. 1986, ch. 299, § 7; June 1.
(a) On or after the effective date of this act, every insurer that issues any individual policy of accident and sickness insurance or group policy of accident and sickness insurance to a small employer as defined in K.S.A. 40-2209d, and amendments thereto, that provides medical, surgical or hospital expense coverage for other than specific diseases or accidents only and that provides for reimbursement or indemnity for services rendered to a person covered by such policy in a medical care facility, must provide for reimbursement or indemnity under such individual policy or under such small employer group policy, except as provided in subsection (d), that shall be limited to not less than 45 days per year for in-patient treatment of mental illness in a medical care facility licensed under the provisions of K.S.A. 65-429, and amendments thereto, and not less than 30 days per year when such person is confined for treatment of alcoholism, drug abuse or substance use disorders in a treatment facility for alcoholics licensed under the provisions of K.S.A. 65-4014, and amendments thereto, a treatment facility for drug abusers licensed under the provisions of K.S.A. 65-4605, and amendments thereto, a community mental health center or clinic licensed under the provisions of K.S.A. 39-2001 et seq., and amendments thereto, or a psychiatric hospital licensed under the provisions of K.S.A. 39-2001 et seq., and amendments thereto. Such individual policy or such small employer group policy shall also provide for reimbursement or indemnity, except as provided in subsection (d), of the costs of treatment of such person for mental illness, alcoholism, drug abuse and substance use disorders subject to the same deductibles, copayments, coinsurance, out-of-pocket expenses and treatment limitations as apply to other covered services, limited to not less than $15,000 in such person's lifetime, with no annual limits, in the facilities enumerated when in-patient treatment is not necessary for the treatment or by a physician licensed or psychologist licensed to practice under the laws of the state of Kansas.
(b) For the purposes of this section "mental illness, alcoholism, drug abuse or substance use" means disorders specified in the diagnostic and statistical manual of mental disorders, fourth edition, (DSM-IV, 1994) of the American psychiatric association.
(c) The provisions of this section shall be applicable to health maintenance organizations organized under article 32 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto.
(d) There shall be no coverage under the provisions of this section for any assessment against any person required by a diversion agreement or by order of a court to attend an alcohol and drug safety action program certified pursuant to K.S.A. 8-1008, and amendments thereto, or for evaluations and diagnostic tests ordered or requested in connection with criminal actions, divorce, child custody or child visitation proceedings.
(e) The provisions of this section shall not apply to any medicare supplement policy of insurance, as defined by the commissioner of insurance by rule and regulation.
(f) Treatment limitations include limits on the frequency of treatment, number of visits, days of coverage or other similar limits on the scope or duration of treatment.
(g) Utilization review for mental illness shall be consistent with provisions in K.S.A. 40-22a01 through 40-22a12, and amendments thereto.
History: L. 1977, ch. 161, § 1; L. 1978, ch. 166, § 1; L. 1986, ch. 299, § 8; L. 1986, ch. 174, § 1; L. 1996, ch. 170, § 1; L. 1997, ch. 190, § 15; L. 1998, ch. 174, § 1; L. 2001, ch. 178, § 5; L. 2004, ch. 128, § 2; L. 2009, ch. 136, § 7; L. 2018, ch. 71, § 12; July 1.
(a) (1) Any group health insurance policy, medical service plan, contract, hospital service corporation contract, hospital and medical service corporation contract, fraternal benefit society or health maintenance organization that provides medical, surgical or hospital expense coverage shall include coverage for diagnosis and treatment of mental illnesses and alcoholism, drug abuse or other substance use disorders. Reimbursement or indemnity shall be provided for treatment in a medical care facility licensed under the provisions of K.S.A. 65-429, and amendments thereto, treatment facilities licensed under K.S.A. 65-4605, and amendments thereto, a community mental health center or clinic licensed under the provisions of K.S.A. 39-2001 et seq., and amendments thereto, a psychiatric hospital licensed under the provisions of K.S.A. 39-2001 et seq., and amendments thereto, or by a physician or psychologist licensed to practice under the laws of the state of Kansas. Such coverage shall be subject to the same deductibles, copayments, coinsurance, out-of-pocket expenses, treatment limitations and other limitations as apply to other covered services.
(2) The coverage shall include treatment for in-patient care and out-patient care for mental illness, alcoholism, drug abuse or substance use disorders.
(b) For the purposes of this section, "mental illness, alcoholism, drug abuse or substance use" means any disorder as such terms are defined in the diagnostic and statistical manual of mental disorders, fourth edition, (DSM-IV, 1994) of the American psychiatric association.
(c) The provisions of this section shall be applicable to health maintenance organizations organized under article 32 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto.
(d) The provisions of this section shall not apply to any small employer group policy, as defined under K.S.A. 40-2209, and amendments thereto, providing medical, surgical or hospital expense coverage or to any medicare supplement policy of insurance, as defined by the commissioner of insurance by rule and regulation.
(e) The provisions of this section shall be applicable to the Kansas state employees health care benefits program and municipal funded pools.
(f) The provisions of this section shall not apply to any policy or certificate that provides coverage for any specified disease, specified accident or accident only coverage, credit, dental, disability income, hospital indemnity, long-term care insurance as defined by K.S.A. 40-2227, and amendments thereto, vision care or any other limited supplemental benefit nor to any medicare supplement policy of insurance as defined by the commissioner of insurance by rule and regulation, any coverage issued as a supplement to liability insurance, workers compensation or similar insurance, automobile medical-payment insurance or any insurance under which benefits are payable with or without regard to fault, whether written on a group, blanket or individual basis.
(g) Treatment limitations include limits on the frequency of treatment, number of visits, days of coverage or other similar limits on the scope or duration of treatment.
(h) There shall be no coverage under the provisions of this section for any assessment against any person required by a diversion agreement or by order of a court to attend an alcohol and drug safety action program certified pursuant to K.S.A. 8-1008, and amendments thereto, or for evaluations and diagnostic tests ordered or requested in connection with criminal actions, divorce, child custody or child visitation proceedings.
(i) Utilization review for mental illness shall be consistent with provisions in K.S.A. 40-22a01 through 40-22a12, and amendments thereto.
History: L. 2001, ch. 178, § 1; L. 2009, ch. 136, § 8; L. 2018, ch. 71, § 13; July 1.
On and after January 1, 2002, any group health insurance policy, nonprofit medical and hospital service corporation contract, fraternal benefit society, health maintenance organization, municipal group funded pool and state employee benefit program which provides coverage for prescription drugs, other than prescription drugs administered in a hospital or physician's office shall provide coverage for psychotherapeutic drugs used for the treatment of mental illness under terms and conditions no less favorable than coverage provided for other prescription drugs.
History: L. 2001, ch. 178, § 2; July 1.
The provisions of K.S.A. 40-2249a, and amendments thereto, shall not apply to this act.
History: L. 2001, ch. 178, § 3; July 1.
K.S.A. 40-2,105a, 40-2,105b and 40-2,105c, and amendments thereto, shall be known as the Kansas mental health parity act.
History: L. 2001, ch. 178, § 7; July 1.
For the purposes of this act: (1) "Independent insurance agent" means any licensed agent representing an insurance company on an independent contractor basis and not as an employee. This term shall include only those agents not obligated by contract to place insurance accounts with any insurance company or group of companies.
(2) "Insurance company" means any property or casualty insurance company admitted to the state of Kansas, except the term shall not include any company which requires membership in the company, as contained in the articles of incorporation or bylaws of such company, as a prerequisite to insuring that member.
(3) "Commissioner" means the commissioner of insurance.
History: L. 1977, ch. 163, § 1; L. 1982, ch. 199, § 1; July 1.
(a) Insurance companies may contract with independent insurance agents as to binding authority, policy services, adjusting services, commissions and other subjects of interest between agent and company. Such contracts which have been effective for more than one year shall not be terminated or amended by the company except by mutual agreement or unless 180 days' prior notice has been tendered to the agent, except that this shall not apply to terminations for fraud, material misrepresentation or failure to pay such agent's account less the agent's commission and any disputed items within 10 days after written demand by the company. During such notice period all contractual conditions existing prior to such notice shall continue.
(b) Any independent insurance agent whose contract with an insurance company has been terminated under the provisions of subsection (a) shall have until the policy renewal date, but not more than one year, to place the business written under such terminated contract with another insurance company.
History: L. 1977, ch. 163, § 2; L. 1982, ch. 199, § 2; L. 1985, ch. 161, § 1; July 1.
The commissioner shall promulgate such rules and regulations as are necessary to carry out the provisions of this act. Violations of this act shall be violations of the unfair trade practices act, K.S.A. 40-2407 and 40-2411. This act shall not apply if the commissioner determines nonrenewal or policy limitation is necessary to preserve insurance company solvency or protect policyholders interests.
History: L. 1977, ch. 163, § 3; July 1.
(a) No insurance company shall charge unfair discriminatory premiums, policy fees or rates for, or refuse to provide, any policy or contract of life insurance, life annuity or policy containing disability coverage for a person solely because the applicant therefor has a mental or physical handicap unless the rate differential, or refusal to provide, is based on sound actuarial principles or is related to actual or reasonably anticipated experience. No insurance company shall unfairly discriminate in the payments of dividends, other benefits payable under a policy, or in any of the terms and conditions of such policy or contract solely because the owner of the policy or contract has a mental or physical handicap unless the difference is based on sound actuarial principles or is related to actual or reasonably anticipated experience.
(b) Nothing in this section shall be construed as requiring an insurance company to provide insurance coverage against a mental or physical handicap which the applicant or policyholder has already sustained.
(c) Enforcement of the provisions of this section shall be in accordance with article 24 of chapter 40 of the Kansas Statutes Annotated, and acts amendatory thereof and supplemental thereto.
History: L. 1978, ch. 169, § 1; L. 1980, ch. 133, § 1; July 1.
(a) Every property or casualty insurance company transacting business in this state shall file with the state fire marshal, directly or through a reporting service, a monthly report of each fire loss paid which exceeds five hundred dollars ($500) and an annual report setting forth the total number of fire losses and the total amount of losses paid.
(b) The state fire marshal shall adopt rules and regulations prescribing the contents of the reports required to be filed pursuant to the provisions of subsection (a) and prescribing the time for filing such reports. The state fire marshal shall make report forms available upon request.
History: L. 1980, ch. 136, § 1; July 1.
As used in K.S.A. 40-2,111 through 40-2,113, and amendments thereto: (a) "Adverse underwriting decision" means: Any of the following actions with respect to insurance transactions involving insurance coverage which is individually underwritten:
(1) A declination of insurance coverage;
(2) a termination of insurance coverage;
(3) an offer to insure at higher than standard rates, with respect to life, health or disability insurance coverage; or
(4) the charging of a higher rate on the basis of information which differs from that which the applicant or policyholder furnished, with respect to property or casualty insurance coverage.
(b) "Declination of insurance coverage" means a denial, in whole or in part, by an insurance company or agent of requested insurance coverage.
(c) "Health care institution" means any medical care facility, adult care home, drug abuse and alcoholic treatment facility, home-health agency certified for federal reimbursement, mental health center or mental health clinic licensed by the secretary for aging and disability services, kidney disease treatment center, county, city-county or multicounty health departments and health-maintenance organization.
(d) "Health care provider" means any person licensed to practice any branch of the healing arts, licensed dentist, licensed professional nurse, licensed practical nurse, licensed advanced practice registered nurse, licensed optometrist, licensed physical therapist, licensed social worker, licensed physician assistant, licensed podiatrist or licensed psychologist.
(e) "Institutional source" means any natural person, corporation, association, partnership or governmental or other legal entity that provides information about an individual to an agent or insurance company, other than:
(1) An agent;
(2) the individual who is the subject of the information; or
(3) a natural person acting in a personal capacity rather than a business or professional capacity.
(f) "Insurance transaction" means any transaction involving insurance, but not including group insurance coverage, primarily for personal, family or household needs rather than business or professional needs.
(g) "Medical-record information" means personal information which:
(1) Relates to an individual's physical or mental condition, medical history or medical treatment; and
(2) is obtained from a health care provider or health care institution, from the individual, or from the individual's spouse, parent or legal guardian.
(h) "Termination of insurance coverage" or "termination of an insurance policy" means either a cancellation, nonrenewal or lapse of an insurance policy, in whole or in part, for any reason other than:
(1) The failure to pay a premium as required by the policy; or
(2) at the request or direction of the insured.
History: L. 1981, ch. 190, § 1; L. 1986, ch. 299, § 9; L. 2000, ch. 162, § 15; L. 2003, ch. 128, § 18; L. 2011, ch. 114, § 52; L. 2014, ch. 115, § 185; July 1.
(a) In the event of an adverse underwriting decision the insurance company, health maintenance organization or agent responsible for the decision shall either provide the applicant, policyholder or individual proposed for coverage with the specific reason or reasons for the adverse underwriting decision in writing or advise such persons that upon written request they may receive the specific reason or reasons in writing.
(b) Upon receipt of a written request within 60 business days from the date of the mailing of notice or other communication of an adverse underwriting decision to an applicant, policyholder or individual proposed for coverage, the insurance company, health maintenance organization or agent shall furnish to such person within 21 business days of the receipt of such written request:
(1) The specific reason or reasons for the adverse underwriting decision, in writing, if such information was not initially furnished in writing pursuant to subsection (a); or
(2) if specific items of medical-record information are supplied by a health care institution or health care provider it shall be disclosed either directly to the individual about whom the information relates or to a health care provider designated by the individual and licensed to provide health care with respect to the condition to which the information relates, whichever the insurance company, health maintenance organization or agent prefers; and
(3) the names and addresses of the institutional sources that supplied the specific items of information given pursuant to subsection (b)(2) if the identity of any health care provider or health care institution is disclosed either directly to the individual or to the designated health care provider, whichever the insurance company, health maintenance organization or agent prefers.
(c) The obligations imposed by this section upon an insurance company, health maintenance organization or agent may be satisfied by another insurance company, health maintenance organization or agent authorized to act on its behalf.
(d) The company, health maintenance organization or the agent, whichever is in possession of the money, shall refund to the applicant, policy holder or individual proposed for coverage, the difference between the payment and the earned premium, if any, in the event of a declination of insurance coverage, termination of insurance coverage, or any other adverse underwriting decision.
(1) If coverage is in effect, such refund may accompany the notice of the adverse underwriting decision or such refund may separately be returned in not more than 10 days from the date of such notice. The notice shall contain language indicating that any refund due will be returned in not more than 10 days from the date on such notice. The refund requirement shall not apply to life insurance if the company or health maintenance organization includes with the notice of the adverse underwriting decision an offer of coverage to an applicant for life insurance under a different policy or at an increased premium. If such a counter-offer is made by the insurer, the insured or the insured's legal representative shall have 10 business days after receipt thereof in which to notify the company or health maintenance organization of acceptance of the counter-offer, during which time coverage will be deemed to be in effect under the terms of the policy for which application has been made, but such coverage shall not extend beyond 30 calendar days following the date of issuance of the counter-offer by the insurance company or health maintenance organization. The insurance company or health maintenance organization shall promptly refund the premium upon notice of the insured's refusal to accept the counter-offer or upon expiration of such 30 calendar day period, whichever occurs first.
(2) If coverage is not in effect and payment therefor is in the possession of the company, health maintenance organization or the agent, the underwriting decision shall be made within 20 business days from receipt of the application by the agent unless the underwriting decision is dependent upon substantive information available only from an independent source. In such cases, the underwriting decision shall be made within 10 business days from receipt of the external information by the party that makes the decision. The refund may accompany the notice of an adverse underwriting decision, or such refund may separately be returned in not more than 10 days from the date of such notice. The notice shall contain language indicating that any refund due will be returned in not more than 10 days from the date on such notice.
History: L. 1981, ch. 190, § 2; L. 1989, ch. 140, § 1; L. 1990, ch. 163, § 1; L. 1994, ch. 355, § 1; L. 2013, ch. 97, § 5; July 1.
There shall be no liability on the part of and no cause of action of any nature shall arise against any insurer, its authorized representative, its agents, its employees, or any firm, person, health care provider, hospital or corporation furnishing to the insurer information as to reasons for any adverse underwriting decision, for any statement made by any of them in any written notice of any adverse underwriting decision, for the providing of information pertaining thereto, or for statements made or evidence submitted at any hearings conducted in connection therewith, if such information was provided in good faith and without malice.
History: L. 1981, ch. 190, § 3; July 1.
Notwithstanding any provision of an individual or group policy or contract of health and accident insurance, delivered within the state, whenever such policy or contract shall provide for reimbursement for any service within the lawful scope of practice of a duly licensed specialist social worker authorized to engage in private, independent practice under subsection (a) of K.S.A. 75-5353, and amendments thereto, within the state of Kansas, the insured, or any other person covered by the policy or contract shall be allowed and entitled to reimbursement for such service, unless subject coverage in those insurance plans in existence on or before March 15, 1989, is refused in writing by the policyholder prior to March 15, 1989, irrespective of whether it was provided or performed by a duly licensed physician or a duly licensed specialist social worker authorized to engage in private, independent practice under subsection (a) of K.S.A. 75-5353, and amendments thereto.
History: L. 1982, ch. 204, § 1; L. 1989, ch. 133, § 2; July 1.
(a) It is not against the public policy of this state for a person or entity to obtain insurance covering liability for punitive or exemplary damages assessed against such insured as the result of acts or omissions, intentional or otherwise, of such insured's employees, agents or servants, or of any other person or entity for whose acts such insured shall be vicariously liable, without the actual prior knowledge of such insured.
(b) The type of coverage specified in subsection (a) may be provided by insurance companies doing business in this state.
History: L. 1984, ch. 160, § 1; April 26.
As used in this act:
(a) "Contracting facility" means a health facility that has entered into a contract with a service corporation to provide services to subscribers of the service corporation.
(b) "Contracting professional provider" means a professional provider who has entered into a contract with a service corporation to provide services to subscribers of the service corporation.
(c) "Health facility" means a medical care facility as defined in K.S.A. 65-425, and amendments thereto; psychiatric hospital licensed under K.S.A. 39-2001 et seq., and amendments thereto; adult care home, but such term shall be limited to nursing facility, assisted living facility and residential health care facility as such terms are defined in K.S.A. 39-923, and amendments thereto; and kidney disease treatment center, including centers not located in a medical care facility.
(d) "Professional provider" means a provider, other than a contracting facility, of services for which benefits are provided under contracts issued by a service corporation.
(e) "Service corporation" means a nonprofit medical and hospital service corporation organized under the provisions of K.S.A. 40-19c01 et seq., and amendments thereto.
History: L. 1984, ch. 173, § 1; L. 1985, ch. 208, § 2; L. 1992, ch. 322, § 10; L. 1995, ch. 143, § 4; L. 1997, ch. 8, § 5; L. 2018, ch. 71, § 14; July 1.
Whenever a professional provider provides services or otherwise renders care to a subscriber of a service corporation under arrangements which such professional provider has established with a contracting facility, and the subscriber does not have a choice of obtaining those services from a contracting professional provider, the professional provider rendering those services shall accept the service corporation's allowable charge level as full payment and may bill the subscriber only for deductibles, coinsurance, shared payments and noncovered services as stipulated in the contract between the subscriber and the service corporation.
History: L. 1984, ch. 173, § 2; January 1, 1985.
(a) For purposes of this act a "fraudulent insurance act" means an act committed by any person who, knowingly and with intent to defraud, presents, causes to be presented or prepares with knowledge or belief that it will be presented to or by an insurer, purported insurer, broker or any agent thereof, any written, electronic, electronic impulse, facsimile, magnetic, oral, or telephonic communication or statement as part of, or in support of, an application for the issuance of, or the rating of an insurance policy for personal or commercial insurance, or a claim for payment or other benefit pursuant to an insurance policy for commercial or personal insurance that such person knows to contain materially false information concerning any fact material thereto; or conceals, for the purpose of misleading, information concerning any fact material thereto.
(b) An insurer that has knowledge or a good faith belief that a fraudulent insurance act is being or has been committed shall provide to the commissioner, on a form prescribed by the commissioner, any and all information and such additional information relating to such fraudulent insurance act as the commissioner may require.
(c) Any other person who has knowledge or a good faith belief that a fraudulent insurance act is being or has been committed may provide to the commissioner, on a form prescribed by the commissioner, any and all information and such additional information relating to such fraudulent insurance act as the commissioner may request.
(d) (1) Each insurer shall have antifraud initiatives reasonably calculated to detect fraudulent insurance acts. Antifraud initiatives may include fraud investigators, who may be insurer employees or independent contractors and an antifraud plan submitted to the commissioner not later than July 1, 2007. Each insurer that submits an antifraud plan shall notify the commissioner of any material change in the information contained in the antifraud plan within 30 days after such change occurs. Such insurer shall submit to the commissioner in writing the amended antifraud plan.
(2) Any antifraud plan, or any amendment thereof, submitted to the commissioner for informational purposes only shall be confidential and not be a public record and shall not be subject to discovery or subpoena in a civil action unless following an in camera review, the court determines that the antifraud plan is relevant and otherwise admissible under the rules of evidence set forth in article 4 of chapter 60 of the Kansas Statutes Annotated, and amendments thereto.
(e) Except as otherwise specifically provided in K.S.A. 44-5,125, and amendments thereto, and K.S.A. 21-5812(a), and amendments thereto, a fraudulent insurance act shall constitute a severity level 6, nonperson felony if the amount involved is $25,000 or more; a severity level 7, nonperson felony if the amount involved is at least $5,000 but less than $25,000; a severity level 8, nonperson felony if the amount involved is at least $1,000 but less than $5,000; and a class C nonperson misdemeanor if the amount involved is less than $1,000. Any combination of fraudulent acts as defined in subsection (a) that occur in a period of six consecutive months and that involve $25,000 or more shall have a presumptive sentence of imprisonment regardless of its location on the sentencing grid block.
(f) In addition to any other penalty, a person who violates this statute shall be ordered to make restitution to the insurer or any other person or entity for any financial loss sustained as a result of such violation. An insurer shall not be required to provide coverage or pay any claim involving a fraudulent insurance act.
(g) For the purposes of this section:
(1) "Amount involved" means the greater of: (A) The actual pecuniary harm resulting from the fraudulent insurance act; (B) the pecuniary harm that was intended to result from the fraudulent insurance act; or (C) the intended pecuniary harm that would have been impossible or unlikely to occur, such as in a government sting operation or a fraud in which the claim for payment or other benefit pursuant to an insurance policy exceeded the allowed value. The aggregate dollar amount of the fraudulent claims submitted to the insurance company shall constitute prima facie evidence of the amount of intended loss and is sufficient to establish the aggregate amount involved in the fraudulent insurance act, if not rebutted; and
(2) "pecuniary harm" means harm that is monetary or that otherwise is readily measurable in money, and does not include emotional distress, harm to reputation or other non-economic harm.
(h) This act shall apply to all insurance applications, ratings, claims and other benefits made pursuant to any insurance policy.
History: L. 1985, ch. 155, § 1; L. 1994, ch. 43, § 1; L. 2006, ch. 128, § 1; L. 2006, ch. 194, § 29; L. 2007, ch. 150, § 4; L. 2011, ch. 11, § 6; L. 2011, ch. 91, § 22; L. 2015, ch. 45, § 4; L. 2016, ch. 82, § 7; L. 2019, ch. 46, § 4; L. 2021, ch. 82, § 8; July 1.
History: L. 2011, ch. 61, § 3; L. 2016, ch. 82, § 8; Repealed, L. 2019, ch. 46, § 5; July 1.
In the absence of fraud, bad faith or malice, no person or insurer shall be subject to civil liability for libel, slander or any other relevant cause of action:
(a) For filing reports or furnishing other information required by chapter 40 of the Kansas Statutes Annotated, and amendments thereto, or required by the commissioner under the authority granted in chapter 40 of the Kansas Statutes Annotated, and amendments thereto;
(b) for any information relating to suspected fraudulent insurance acts furnished to or received from law enforcement officials, their agents and employees;
(c) for any information relating to suspected fraudulent insurance acts furnished to or received from other persons subject to the provisions of chapter 40 of the Kansas Statutes Annotated, and amendments thereto;
(d) for any such information furnished in reports to the insurance department, regulatory agencies of any other state, the national association of insurance commissioners or any organization established to detect and prevent fraudulent insurance acts, their agents, employees or designees; or
(e) for the publication of any report or bulletin related to the official activities of the insurance department by the commissioner or any employee of the insurance department. Nothing herein is intended to abrogate or modify in any way any common law or statutory privilege or immunity heretofore enjoyed by any person.
History: L. 1985, ch. 155, § 2; L. 2006, ch. 128, § 2; July 1.
No policy of property or casualty insurance, other than accident and sickness, used primarily for business or professional needs that has been in effect for 90 days or more may be canceled except for one of the following reasons:
(a) Nonpayment of premium;
(b) the policy was issued because of a material misrepresentation;
(c) any insured violated any of the material terms and conditions of the policy;
(d) unfavorable underwriting factors, specific to the insured, exist that were not present at the inception of the policy;
(e) a determination by the commissioner that continuation of coverage could place the insurer in a hazardous financial condition or in violation of the laws of this state; or
(f) a determination by the commissioner that the insurer no longer has adequate reinsurance to meet the insurer's needs.
History: L. 1986, ch. 168, § 1; July 1.
Any insurance company that denies renewal or substitution of similar coverage for the same exposures under any property or casualty insurance policy which is used primarily for business or professional needs shall give at least 60 days' written notice to the named insured at such person's last known address of the insurance company's intention not to renew such policy. The company may satisfy this obligation by causing such notice to be given by a licensed agent.
History: L. 1986, ch. 168, § 2; July 1.
Any insurance company doing business in this state shall provide to an insured a written explanation specifically detailing the reasons why such company canceled or denied renewal of an existing policy of insurance. There shall be no liability on the part of and no cause of action of any nature shall arise against any insurer, its authorized representative, its agents, its employees, or any firm, person or corporation furnishing to the insurer information as to reasons for cancellation or denial of renewal of an existing policy of insurance, for any statement made by any of them in any written notice of cancellation or denial of renewal of an existing policy of insurance, for the providing of information pertaining thereto, or for statements made or evidence submitted at any hearings conducted in connection therewith, if such information was provided in good faith and without malice.
History: L. 1986, ch. 168, § 3; July 1.
(a) From and after January 1, 1989, an insurer may cease to transact insurance in this state, or discontinue the writing or renewal of one or more kinds of property or casualty insurance specified in K.S.A. 40-901 and 40-1102, and amendments thereto, or classes of property or casualty insurance risks which were actively solicited or written:
(1) After 60 days' notice to the commissioner;
(2) upon loss of adequate reinsurance;
(3) when deemed to be in hazardous financial condition; or
(4) when deemed to be insolvent or potentially insolvent.
(b) The commissioner is authorized to extend the notice period required by paragraph (1) of subsection (a) by adoption of a rule and regulation establishing such longer period of time, not exceeding 60 additional days, as may be necessary to maintain adequate insurance markets following severe or repetitive wind, hailstorms or other unusual events that affect the insurance environment.
(c) Enforcement of the provisions of this section shall be in accordance with article 24 of chapter 40 of the Kansas Statutes Annotated, and acts amendatory thereof and supplemental thereto.
History: L. 1988, ch. 155, § 6; L. 1994, ch. 72, § 1; July 1.
Nothing in K.S.A. 40-927, 40-928, 40-929, 40-1112 and 40-1113, and amendments thereto, shall alter the basis for approval or disapproval of consent to rate or unique and unusual rate filings for individual risks nor shall any provision of such statutes require that all present approved rates be refiled.
History: L. 1988, ch. 155, § 7; May 26.
(a) If the commissioner determines after notice and opportunity for a hearing that any person has engaged or is engaging in any act or practice constituting a violation of any provision of Kansas insurance statutes or any rule and regulation or order thereunder, the commissioner may, in the exercise of discretion, order any one or more of the following:
(1) Payment of a monetary penalty of not more than $1,000 for each and every act or violation, unless the person knew or reasonably should have known that such person was in violation of the Kansas insurance statutes or any rule and regulation or order thereunder, in which case the penalty shall be not more than $2,000 for each and every act or violation;
(2) suspension or revocation of the person's license or certificate if such person knew or reasonably should have known that such person was in violation of the Kansas insurance statutes or any rule and regulation or order thereunder; or
(3) that such person cease and desist from the unlawful act or practice and take such affirmative action that, in the judgment of the commissioner, will carry out the purposes of the violated or potentially violated provision.
(b) If any person fails to file any report or other information with the commissioner as required by statute or fails to respond to any proper inquiry of the commissioner, the commissioner, after notice and opportunity for hearing, may impose a civil penalty of up to $1,000, for each violation or act, along with an additional penalty of up to $500 for each week thereafter that such report or other information is not provided to the commissioner.
(c) If the commissioner makes written findings of fact that there is a situation involving an immediate danger to the public health, safety or welfare or the public interest will be irreparably harmed by delay in issuing an order under subsection (a)(3), the commissioner may issue an emergency temporary cease and desist order. Such order, even when not an order within the meaning of K.S.A. 77-502, and amendments thereto, shall be subject to the same procedures as an emergency order issued under K.S.A. 77-536, and amendments thereto. Upon the entry of such an order, the commissioner shall promptly notify the person subject to the order that: (1) Such order has been entered; (2) the reasons therefor; and (3) that upon written request within 15 days after service of the order, the matter will be set for a hearing, which shall be conducted in accordance with the provisions of the Kansas administrative procedure act. If no hearing is requested and none is ordered by the commissioner, the order will remain in effect until it is modified or vacated by the commissioner. If a hearing is requested or ordered, the commissioner, after notice of and opportunity for hearing to the person subject to the order, shall, by written findings of fact and conclusions of law vacate, modify or make permanent the order.
(d) For purposes of this section:
(1) "Person" means any individual, corporation, association, partnership, reciprocal exchange, inter-insurer, Lloyd's insurer, fraternal benefit society and any other legal entity under the jurisdiction of the commissioner. The term "person" does not include insurance agents and brokers as such terms are defined in K.S.A. 40-4902, and amendments thereto.
(2) "Commissioner" means the commissioner of insurance of this state.
History: L. 1989, ch. 132, § 1; L. 1997, ch. 24, § 1; L. 2008, ch. 134, § 5; L. 2023, ch. 41, § 5; L. 2025, ch. 94, § 13; July 1.
Except as otherwise provided by K.S.A. 40-447, 40-3110 and 44-512a, and amendments thereto, each insurance company, fraternal benefit society and any reciprocal or interinsurance exchange licensed to transact the business of insurance in this state which fails or refuses to pay any amount due under any contract of insurance within the time prescribed herein shall pay interest on the amount due. If payment is to be made to the claimant and the same is not paid within 30 calendar days after the amount of the payment is agreed to between the claimant and the insurer, interest at the rate of 18% per annum shall be payable from the date of such agreement. If payment is to be made to any other person for providing repair or other services to the claimant and the same is not paid within 30 calendar days following the date of completion of such services and receipt of the billing statement, interest at the rate of 18% per annum shall be payable on the amount agreed to between the claimant and the insurer from the date of receipt of the billing statement.
History: L. 1989, ch. 130, § 1; July 1.
For purposes of this act, if a claimant agrees to accept other than a lump sum payment, the interest payable as provided by K.S.A. 40-2,126 shall apply separately with respect to each payment.
History: L. 1989, ch. 130, § 2; July 1.
The commissioner of insurance is hereby authorized to adopt such rules and regulations as may be necessary to carry out the provisions of this act.
History: L. 1989, ch. 130, § 3; July 1.
This act may be cited as the managing general agents act.
History: L. 1990, ch. 158, § 1; January 1, 1991.
As used in this act:
(a) "Actuary" means a person who is a member in good standing of the American academy of actuaries.
(b) "Commissioner" means the commissioner of insurance of this state.
(c) "Insurer" means any person, firm, association or corporation duly licensed in this state as an insurance company.
(d) "Managing general agent" or "MGA" means any person, firm, association or corporation who manages all or part of the insurance business of an insurer, including the management of a separate division, department or underwriting office, and acts as an agent for such insurer whether known as a managing general agent, manager or other similar term, who, with or without the authority, either separately or together with affiliates, produces, directly or indirectly, and underwrites an amount of gross written premium equal to or more than 5% of the policyholder surplus as reported in the last annual statement of the insurer in any one quarter or year together with one or more of the following:
(1) Adjusts or pays claims in excess of an amount determined by the commissioner; or
(2) negotiates reinsurance on behalf of the insurer.
(e) Notwithstanding the above, the following persons shall not be considered as MGAs for the purposes of this act:
(1) An employee of the insurer;
(2) a United States manager of the United States branch of an alien insurer;
(3) an underwriting manager which, pursuant to contract, manages all the insurance operations of the insurer, is under common control with the insurer, subject to the holding company regulatory act, and whose compensation is not based on the volume of premiums written;
(4) an attorney-in-fact of a reciprocal exchange or inter-insurance exchange as described in K.S.A. 40-1602, and amendments thereto; and
(5) an administrator registered in accordance with K.S.A. 40-3810, and amendments thereto.
(f) "Underwrite" means the authority to accept or reject risk on behalf of the insurer.
History: L. 1990, ch. 158, § 2; L. 1994, ch. 47, § 1; July 1.
(a) No person, firm, association or corporation shall act in the capacity of an MGA with respect to risks located in this state for an insurer licensed in this state unless such person is a licensed producer in this state.
(b) No person, firm, association or corporation shall act in the capacity of an MGA representing an insurer domiciled in this state with respect to risks located outside this state unless such person is licensed as a producer in this state pursuant to the provisions of the uniform insurance agents licensing act, K.S.A. 40-4901 et seq., and amendments thereto.
(c) The commissioner may require a bond in an amount acceptable to the commissioner for the protection of the insurer.
(d) For the purposes of this section, the term "producer" shall have the meaning ascribed to it in K.S.A. 40-4902, and amendments thereto.
History: L. 1990, ch. 158, § 3; L. 2004, ch. 159, § 3; L. 2005, ch. 163, § 1; July 1.
No person, firm, association or corporation acting in the capacity of an MGA shall place business with an insurer unless there is in force a written contract between the parties which sets forth the responsibilities of each party, specifies the division of responsibilities where both parties have responsibility for a particular function, and contains the following minimum provisions:
(a) The insurer may terminate the contract for cause upon written notice to the MGA. The insurer may suspend the underwriting authority of the MGA during the pendency of any dispute regarding the cause for termination.
(b) The MGA will render accounts to the insurer detailing all transactions and remit all funds due under the contract to the insurer on not less than a monthly basis.
(c) All funds collected for the account of an insurer will be held by the MGA in a fiduciary capacity in a bank which is a member of the federal reserve system. This account shall be used for all payments on behalf of the insurer. The MGA may retain no more than three months estimated claim payments and allocated loss adjustment expenses.
(d) Separate records of business written by the MGA will be maintained. The insurer shall have access and right to copy all accounts and records related to its business in a form usable by the insurer, and the commissioner shall have access to all books, bank accounts and records of the MGA in a form usable to the commissioner. Such records shall be retained until the insurer and business to which they pertain has been the subject of an examination pursuant to the provisions of K.S.A. 40-222 and amendments thereto.
(e) The contract may not be assigned in whole or part by the MGA.
(f) Appropriate underwriting guidelines including:
(1) The maximum annual premium volume;
(2) the basis of the rates to be charged;
(3) the types of risks which may be written;
(4) maximum limits of liability;
(5) applicable exclusions;
(6) territorial limitations;
(7) policy cancellation provisions; and
(8) the maximum policy period.
The insurer shall have the right to cancel or non-renew any policy of insurance subject to the applicable laws and regulations relating to the cancellation and non-renewal of insurance policies.
(g) If the contract permits the MGA to settle claims on behalf of the insurer:
(1) All claims must be reported to the company in a timely manner.
(2) A copy of the claim file will be sent to the insurer at its request or as soon as it becomes known that the claim:
(A) Has the potential to exceed an amount determined by the commissioner or exceeds the limit set by the company, whichever is less;
(B) involves a coverage dispute;
(C) may exceed the MGA's claims settlement authority;
(D) is open for more than six months; or
(E) is closed by payment of an amount set by the commissioner or an amount set by the company, whichever is less.
(3) All claim files will be the joint property of the insurer and MGA. However, upon an order of liquidation of the insurer such files shall become the sole property of the insurer or its estate, but the MGA shall have reasonable access to and the right to copy the files on a timely basis.
(4) Any settlement authority granted to the MGA may be terminated for cause upon the insurer's written notice to the MGA or upon the termination of the contract. The insurer may suspend the settlement authority during the pendency of any dispute regarding the cause for termination.
(h) Where electronic claims files are in existence, the contract shall address the timely transmission of the data.
(i) If the contract provides for a sharing of interim profits by the MGA and the MGA has the authority to determine the amount of the interim profits by establishing loss reserves or controlling claim payments or by any other manner, interim profits will not be paid to the MGA until one year after they are earned for property insurance business and five years after they are earned on casualty business and not until the profits have been verified pursuant to K.S.A. 40-2,133.
(j) The MGA shall not:
(1) Bind reinsurance or retrocessions on behalf of the insurer, except that the MGA may bind facultative reinsurance contracts pursuant to obligatory facultative agreements if the contract with the insurer contains reinsurance underwriting guidelines including, for both reinsurance assumed and ceded, a list of reinsurers with which such automatic agreements are in effect, the coverages and amounts or percentages that may be reinsured and commission schedules;
(2) commit the insurer to participate in insurance or reinsurance syndicates;
(3) appoint any agent or broker without assuring that the agent or broker is lawfully licensed to transact the type of insurance for which such agent or broker is appointed;
(4) without prior approval of the insurer, pay or commit the insurer to pay a claim over a specified amount, net of reinsurance, which shall not exceed 1% of the insurer's policyholder's surplus as of December 31 of the last completed calendar year;
(5) collect any payment from a reinsurer or commit the insurer to any claim settlement with a reinsurer without prior approval of the insurer. If prior approval is given, a report shall be promptly forwarded to the insurer;
(6) permit its subagent or broker to serve on its board of directors;
(7) jointly employ an individual who is employed with the insurer; or
(8) appoint a sub-MGA.
History: L. 1990, ch. 158, § 4; January 1, 1991.
(a) No insurer may utilize or continue to utilize the services of an MGA on and after the effective date of this act unless such utilization is in compliance with this act.
(b) The insurer shall have on file an independent financial examination in a form acceptable to the commissioner of each MGA with which it has done business.
(c) If an MGA establishes loss reserves, the insurer shall annually obtain the opinion of an actuary attesting to the adequacy of loss reserves established for losses incurred and outstanding on business produced by the MGA. Such requirement shall be in addition to any other required loss reserve certification.
(d) The insurer shall periodically, but not less frequently than semi-annually, conduct an on-site review of the underwriting and claims processing operations of the MGA.
(e) Binding authority for all reinsurance contracts or participation in insurance or reinsurance syndicates shall rest with an officer of the insurer who shall not be affiliated with the MGA.
(f) (1) Within 30 days of entering into or termination of a contract with an MGA, the insurer shall provide written notification of such appointment or termination to the commissioner. Notices of appointment of an MGA shall include:
(A) A statement of duties that the applicant is expected to perform on behalf of the insurer;
(B) the lines of insurance for which the applicant is to be authorized to act;
(C) a notification fee in an amount not to exceed $100; and
(D) any other information the commissioner may request.
(2) Not later than December 1 of each year, the commissioner shall set and cause to be published in the Kansas register the fee required pursuant to this subsection for the next calendar year.
(g) Each calendar quarter, an insurer shall review its books and records to determine if any agent or broker has become, by operation of K.S.A. 40-2,130(d), and amendments thereto, an MGA as defined in that subsection. If the insurer determines that an agent or broker has become an MGA pursuant to the above, the insurer shall promptly notify the agent or broker and the commissioner of such determination, and the insurer and agent or broker shall fully comply with the provisions of this act within 30 days.
(h) An insurer shall not appoint to its board of directors an officer, director, employee or controlling shareholder of its MGAs. This subsection shall not apply to relationships governed by the applicable provisions of article 33 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto.
History: L. 1990, ch. 158, § 5; L. 1992, ch. 154, § 4; L. 2025, ch. 87, § 10; July 1.
The acts of the MGA are considered to be the acts of the insurer on whose behalf it is acting. An MGA may be examined pursuant to K.S.A. 40-222 and 40-223, and amendments thereto, as if it were the insurer.
History: L. 1990, ch. 158, § 6; January 1, 1991.
(a) If the commissioner finds after a hearing conducted in accordance with the Kansas administrative procedure act that any person has violated any provision of this act, the commissioner may order each of the following, any combination thereof or all of the following:
(1) For each separate violation, a penalty in an amount of $5,000;
(2) revocation or suspension of the agent's or broker's license;
(3) the MGA to reimburse the insurer, the rehabilitator or liquidator of the insurer for any losses incurred by the insurer caused by a violation of this act committed by the MGA.
(b) Nothing contained in this act is intended to or shall in any manner limit or restrict the rights of policyholders, claimants and auditors.
History: L. 1990, ch. 158, § 7; L. 1994, ch. 47, § 2; July 1.
The commissioner may adopt rules and regulations deemed to be necessary for the implementation and administration of this act.
History: L. 1990, ch. 158, § 8; January 1, 1991.
(a) The costs incurred by the department of insurance in conducting any administrative hearing authorized by article 33 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, shall be assessed against insurers or rating organizations that are parties to the hearing in such proportion as the commissioner of insurance may determine upon consideration of all relevant circumstances including: (1) The nature of the hearing; (2) whether the hearing was instigated by, or for the benefit of a particular party or parties; (3) whether there is a successful party on the merits of the proceeding; (4) the relative levels of participation by the parties; and (5) with the exception of hearings held under article 33 of chapter 40 of the Kansas Statutes Annotated, only when the disapproval of rates in question is upheld, a rating organization's license is suspended or revoked or a penalty is imposed as a result of the hearing.
(b) For purposes of this section costs incurred shall mean the presiding officer fees, cost of making a record and publishing notices, and travel expenses of department of insurance officers and employees, but costs incurred shall not include presiding officer fees or cost of making a record unless the department has retained the services of the office of administrative hearings or outside experts to perform such functions.
(c) Any costs assessed hereunder shall be made by the commissioner as part of the final order or decision arising out of the proceeding. Such order or decision shall include findings and conclusions in support of the assessment of costs. This section shall not be construed as permitting the payment of travel expenses unless calculated in accordance with the applicable laws and rules and regulations of the state of Kansas. The commissioner as part of such order or decision may require all assessments for presiding officer fees and cost of making a record, if any, to be paid directly to the office of administrative hearings by the party or parties assessed for such costs.
History: L. 1990, ch. 173, § 3; L. 1990, ch. 159, § 1; L. 2004, ch. 145, § 13; July 1, 2005.
Notwithstanding the provisions of section 106 of the secondary mortgage market enhancement act of 1984, P.L. 98-440 (15 U.S.C. § 77r-1), the provisions of articles 2a and 2b of chapter 40 of the Kansas Statutes Annotated relating to the qualifications, limitations and kinds of investments that insurance companies domiciled in Kansas may purchase and hold shall apply.
History: L. 1991, ch. 122, § 1; L. 1992, ch. 118, § 3; July 1.
History: L. 1991, ch. 122, § 2; Repealed, L. 1992, ch. 118, § 4; July 1.
History: L. 1992, ch. 95, §§ 1 to 13; Repealed, L. 1999, ch. 103, § 14; April 22.
(a) Every policy, contract, plan or agreement delivered to any group in this state which provides benefits or services, or both, for hospital and medical services that is offered by an accident and health insurance company or by a health maintenance organization as defined in K.S.A. 40-3202, and amendments thereto, except when the health maintenance organization owns and operates its own pharmacies and such health maintenance organization is in operation on the effective date of this act, by a preferred provider organization or by an individual practice association or by a similar mechanism shall provide for written notice to the commissioner of insurance of the creation of a pharmacy network not less than 90 days prior to the effective date of any contract for pharmacy services. All notices shall identify a contact person or office of such plan, the address of such person or office and the geographic area to be served by such contract. The commissioner of insurance shall cause to be published in the Kansas register on a weekly basis a copy of all notices received by the commissioner in the preceding week.
(b) If such policy, contract, plan or agreement provides or contracts for the services of a pharmacy network, such policy, contract, plan or agreement shall permit participation of at least one pharmacy for each Kansas county in which that plan has participating employers or physicians. In no event shall a plan have less than one pharmacy within 30 miles of a plan physician or employer in a Kansas county designated pursuant to K.S.A. 76-375, and amendments thereto, as an underserved area and within 10 miles in any other county. The provisions of this subsection shall apply only if the plan has a written offer to participate in the pharmacy network from a registered pharmacy located in such Kansas county under the same terms and conditions of the policy, contract, plan or agreement as those offered to any other provider of pharmacy services.
(c) No such policy, contract, plan or agreement, except as permitted in this subsection, shall permit or mandate any difference in coverage for or impose any different conditions, including copayment fees, whether the prescription benefits are provided through direct contact with a pharmacy or by use of an out-of-state mail order pharmacy so long as the provider selected is a participant in the plan involved. The limitations of this subsection shall not apply to any pharmacy services owned and operated by an accident and health insurance company, its commonly owned affiliate or subsidiary, health maintenance organization, individual practice association or other similar mechanism.
(d) Any provision in an accident and health insurance policy, contract, plan or agreement offered in this state which violates the provisions of this section is void.
(e) Nothing in this section shall apply to any policy, plan, contract or agreement operating pursuant to the federal employee retirement income security act of 1974 (ERISA).
(f) The department of insurance shall enforce the provisions of this section with regard to any policy, contract, plan or agreement issued under authority of chapter 40 of the Kansas Statutes Annotated.
History: L. 1994, ch. 253, § 1; L. 1997, ch. 8, § 7; July 1.
No insurance company, health maintenance organization, nonprofit medical and hospital, dental, optometric, or pharmacy corporations, or self-funded health benefit plan whether an employee welfare benefit plan pursuant to section 607(1) of the employee retirement income security act of 1974 (ERISA) as amended or not, shall:
(a) (1) Refuse to insure, refuse to continue to insure;
(2) limit the amount, extent or kind of coverage available; or
(3) charge a different rate for the same coverage;
to any individual solely because of medicaid eligibility of the individual covered or applying for coverage or any relative of such individual.
(b) Impose requirements on any agency or official assigned the rights of any individual eligible for or covered by medicaid that are different from requirements applicable to an agent or assignee of any other individual.
(c) Exclude, limit or otherwise restrict coverage because medicaid benefits as permitted by title XIX of the social security act of 1965 are or may be available for the same accident or illness.
History: L. 1994, ch. 18, § 1; March 17.
(a) Any insurance company, including such company's agents and adjusters, that issues or renews a policy of insurance in this state covering, in whole or in part, a motor vehicle may not:
(1) Require that a person insured under such policy use a particular company or location for providing motor vehicle glass replacement, glass repair services or glass products insured in whole or in part by such policy; or
(2) engage in any act or practice of intimidation, coercion or threat for or against an insured person or infer or mislead such insured person to use a particular company or location to provide motor vehicle glass replacement, glass repair services or glass products insured in whole or in part under the terms of an insurance policy.
(b) (1) An insurance company may provide an insured with a list that includes the names of particular companies or locations providing motor vehicle glass replacement, glass repair services or glass products if some of the listed companies or locations are reasonably close and convenient to the insured. The insurance company may restrict the list to those companies or locations that meet reasonable standards of quality, service and safety.
(2) The insured may use a nonlisted company or location at the insured's sole discretion, and subject to the provisions of paragraph (3) of this subsection and subsection (c), the insurance company will fully and promptly pay for the cost of motor vehicle glass replacement, glass repair services or glass products provided, less any deductible under the terms of the policy.
(3) If the insured does not use a list as provided in paragraph (1) of subsection (b), the insurer may require the insured to obtain not more than three competitive bids to establish the cost of motor vehicle glass replacement, glass repair services or glass products provided.
(c) This section does not require an insurer to pay more for motor vehicle glass replacement, glass repair services or glass products than the lowest prevailing market price.
(d) Notwithstanding the provisions of this section, an insurance company may agree to pay the full cost of glass replacement or repair.
(e) For purposes of this section, "lowest prevailing market price" means the lowest market price in a local area.
History: L. 1994, ch. 302, § 11; July 1.
(a) Every insurer domiciled in this state shall file a report with the commissioner disclosing material acquisitions and dispositions of assets or material nonrenewals, cancellations or revisions of ceded reinsurance agreements unless such acquisitions and dispositions of assets or material nonrenewals, cancellations or revisions of ceded reinsurance agreements have been submitted to the commissioner for review, approval or information purposes pursuant to other provisions of chapter 40 of the Kansas Statutes Annotated and amendments thereto and rules and regulations of the commissioner or other requirements.
(b) The report required in subsection (a) is due within 15 days after the end of the calendar month in which any of the transactions specified in subsection (c) occur.
(c) One complete copy of the report, including any exhibits or other attachments filed as part thereof, shall be filed with:
(1) The insurance department of the insurer's state of domicile; and
(2) the national association of insurance commissioners.
(d) All reports obtained by or disclosed to the commissioner pursuant to this act, shall be given confidential treatment and shall not be subject to subpoena and shall not be made public by the commissioner, the national association of insurance commissioners or any other person, except to insurance departments of other states, without the prior written consent of the insurer to which the report pertains unless the commissioner, after giving the insurer who would be affected thereby, notice and an opportunity to be heard, determines that the interest of policyholders, shareholders or the public will be served by the publication of such report, in which event the commissioner may publish all or any part thereof as the commissioner deems appropriate.
History: L. 1994, ch. 89, § 1; July 1.
(a) No nonrenewals, cancellations or revisions of ceded reinsurance agreements need be reported pursuant to K.S.A. 40-2,156, and amendments thereto, if the nonrenewals, cancellations or revisions are not material. For purposes of this act, a material nonrenewal, cancellation or revision is one that affects:
(1) As respects property and casualty business, including accident and health business written by a property and casualty insurer:
(A) More than 50% of the insurer's total ceded written premium; or
(B) more than 50% of the insurer's total ceded indemnity and loss adjustment reserves.
(2) As respects life, annuity and accident and health business: more than 50% of the total reserve credit taken for business ceded, on an annualized basis, as indicated in the insurer's most recent annual statement.
(3) As respects either property and casualty or life, annuity, and accident and health business, either of the following events shall constitute a material revision which must be reported:
(A) An authorized reinsurer representing more than 10% of a total cession is replaced by one or more unauthorized reinsurers; or
(B) previously established collateral requirements have been reduced or waived as respects one or more unauthorized reinsurers representing collectively more than 10% of a total cession.
(b) No filing is required pursuant to subsection (a) if:
(1) As respects property and casualty business, including accident and health business written by a property and casualty insurer, the insurer's total ceded written premium represents, on an annualized basis, less than 10% of its total written premium for direct and assumed business; or
(2) as respects life, annuity and accident and health business: the total reserve credit taken for business ceded represents, on an annualized basis, less than 10% of the statutory reserve requirement prior to any cession.
(c) The following information is required to be disclosed in any report of a material nonrenewal, cancellation or revision of ceded reinsurance agreements:
(1) The effective date of the nonrenewal, cancellation or revision;
(2) the description of the transaction with an identification of the initiator thereof;
(3) the purpose of, or reason for, the transaction; and
(4) the identity of the replacement reinsurers, if applicable.
(d) Insurers are required to report all material nonrenewals, cancellations or revisions of ceded reinsurance agreements on a nonconsolidated basis unless the insurer is part of a consolidated group of insurers which utilizes a pooling arrangement or 100% reinsurance agreement that affects the solvency and integrity of the insurer's reserves and the insurer ceded substantially all of its direct and assumed business to the pool. An insurer is deemed to have ceded substantially all of its direct and assumed business to a pool if the insurer has less than $1,000,000 total direct plus assumed written premiums during a calendar year that are not subject to a pooling arrangement and the net income of the business not subject to the pooling arrangement represents less than 5% of the insurer's capital and surplus.
History: L. 1997, ch. 166, § 1; July 1.
(a) Acquisitions or dispositions of assets need not be reported pursuant to subsection (a) of K.S.A. 40-2,156, if the acquisitions or dispositions are not material. For purposes of this act, a material acquisition or disposition is one, or the aggregate of a series of related acquisitions or dispositions in a 30 day period, that is non-recurring, not in the ordinary course of business and involves more than 5% of the reporting insurer's total admitted assets as reported in its most recent statement of financial condition filed with the commissioner.
(b) (1) Asset acquisitions subject to this act include every purchase, lease, exchange, merger, consolidation, succession or other acquisition except the construction or development of real property by or for the reporting insurer or the acquisition of materials for such purpose.
(2) Asset dispositions subject to this act include every sale, lease, exchange, merger, consolidation, mortgage, hypothecation, assignment (whether for the benefit of creditors or otherwise), abandonment, destruction or other disposition.
(c) The following information is required to be disclosed in any report of a material acquisition or disposition of assets:
(1) Date of the transaction;
(2) manner of acquisition or disposition;
(3) description of the assets involved;
(4) nature and amount of the consideration given or received;
(5) purpose of, or reason for, the transaction;
(6) manner by which the amount of consideration was determined;
(7) gain or loss recognized or realized as a result of the transaction; and
(8) name or names of the person or persons from whom the assets were acquired or to whom they were disposed.
History: L. 1994, ch. 89, § 2; July 1.
History: L. 1994, ch. 89, § 3; Repealed, L. 1997, ch. 166, § 4; July 1.
Insurers are required to report all material acquisitions and dispositions of assets and all material nonrenewals, cancellations or revisions of ceded reinsurance agreements on a nonconsolidated basis unless the insurer is part of a consolidated group of insurers which utilizes a pooling arrangement or 100% reinsurance agreement that affects the solvency and integrity of the insurer's reserves and the insurer ceded substantially all of its direct and assumed business to the pool. An insurer is deemed to have ceded substantially all of its direct and assumed business to a pool if the insurer has less than $1,000,000 total direct plus assumed written premiums during a calendar year that are not subject to a pooling arrangement and the net income of the business not subject to the pooling arrangement represents less than 5% of the insurer's capital and surplus.
History: L. 1994, ch. 89, § 4; July 1.
(a) As used in this section:
(1) "Health plan" means any insurer or corporation which issues individual and group health insurance policies providing coverage on an expense-incurred basis, individual and group service or indemnity-type contracts issued by a profit or nonprofit corporation and all contracts issued by health maintenance organizations organized or authorized to transact business in this state;
(2) "attending physician" means the person licensed to practice medicine and surgery who is responsible for the care provided to the mother or newborn.
(b) Any health plan which provides coverage for maternity services, including benefits for childbirth, shall provide coverage for at least 48 hours of inpatient care following a vaginal delivery and at least 96 hours of inpatient care following delivery by caesarean section for a mother and newly born child in a medical care facility.
(c) Any decision to shorten the length of inpatient stay to less than that provided under subsection (b) shall be made by the attending physician. No health plan may terminate the service of, penalize or otherwise provide financial disincentives in response to any attending physician who orders care consistent with the provisions of this section.
(d) Notwithstanding the provisions of subsection (b), any health plan which provides coverage for postdelivery care provided to a mother and newly born child in the home, shall not be required to provide coverage of inpatient care under subsection (b), unless such inpatient care is determined to be medically necessary by the attending physician.
(e) All health plans shall provide written notice, as currently required, to all enrollees, insureds or subscribers regarding the coverage required by this section.
History: L. 1996, ch. 96, § 1; April 11.
On and after July 1, 1997:
(a) All individual and group health insurance policies providing coverage on an expense incurred basis, individual and group service or indemnity type contracts issued by a profit or nonprofit corporation and all contracts issued by health maintenance organizations organized or authorized to transact business in this state which provides coverage for a family member of the enrollee, insured or subscriber shall, as to such family members' coverage, also provide that the health insurance benefits applicable for children shall be payable with respect to a child in the custody of the commissioner of juvenile justice.
(b) The contract issued by a health maintenance organization may provide that the benefits required pursuant to this subsection shall be covered benefits only if the services are rendered by a provider who is designated by and affiliated with the health maintenance organization.
History: L. 1996, ch. 229, § 15; July 1.
(a) An insurer organized under the laws of any other state and admitted to do business in this state for the purpose of writing insurance may become a domestic insurer by complying with all of the requirements of law relative to the organization and licensing of a domestic insurer of the same type and by designating the insurer's principal place of business at a place in this state. The domestic insurer will be entitled to like certificates and licenses to transact business in this state, and shall be subject to the authority and jurisdiction of this state.
(b) A mutual holding company organized under the laws of any other state may become a domestic mutual holding company by complying with all of the requirements of law relative to the organization of a domestic mutual holding company and by designating the mutual holding company's principal place of business at a place in this state. The domestic mutual holding company shall be subject to the authority and jurisdiction of this state.
(c) A domestic insurer, upon the approval of the commissioner of insurance, may transfer the insurer's domicile to any other state in which it is admitted to transact the business of insurance, and upon such a transfer shall cease to be a domestic insurer, and shall be admitted to this state if qualified as a foreign insurer. The commissioner of insurance shall approve the proposed transfer unless the commissioner determines the transfer is not in the interest of the policyholders of this state.
(d) The certificate of authority, agents' appointments and licenses, rates and other items which the commissioner allows, in the commissioner's discretion, that are in existence at the time an insurer licensed to transact the business of insurance in this state transfers the insurer's corporate domicile to this or any other state by merger, consolidation or any other lawful method shall continue in full force and effect upon transfer if the insurer remains duly qualified to transact the business of insurance in this state. For purposes of existing authorizations and all other corporate purposes, the insurer or mutual holding company is deemed the same entity as it was prior to the transfer of its domicile. All outstanding policies of a transferring insurer shall remain in full force and effect and need not be endorsed as to the new name of the company or the company's new location unless so ordered by the commissioner. A transferring insurer shall file new policy forms with the commissioner on or before the effective date of the transfer, but may use existing policy forms with appropriate endorsements if allowed by, and under such conditions as approved by, the commissioner. However, every transferring insurer or mutual holding company shall notify the commissioner of the details of the proposed transfer and shall file promptly any resulting amendments to corporate documents filed or required to be filed with the commissioner.
(e) The commissioner may promulgate rules and regulations to carry out the purposes of this act.
(f) A foreign insurer or mutual holding company shall file restated articles of incorporation and certificate of domestication with the secretary of state in a form prescribed by the secretary of state and approved by the insurance commissioner to transfer to this state. A domestic insurer shall file with the secretary of state a certificate or order issued by the insurance commissioner approving the transfer to another state. An insurer who has transferred to this state prior to the effective date of this subsection, with the approval of the insurance commissioner pursuant to this act, shall be deemed in compliance with the provisions of this act.
History: L. 1997, ch. 25, § 1; L. 1998, ch. 23, § 1; L. 1999, ch. 22, § 1; April 1.
History: L. 1998, ch. 23, § 2; Repealed, L. 1999, ch. 22, § 2; April 1.
(a) This section shall be known and may be cited as the "diabetes coverage act."
(b) Any individual or group health insurance policy, medical service plan, contract, hospital service corporation contract, hospital and medical service corporation contract, fraternal benefit society or health maintenance organization which provides coverage for accident and health services and which is delivered, issued for delivery, amended or renewed on or after January 1, 1999, also, shall provide coverage for equipment, and supplies, limited to hypodermic needles and supplies used exclusively with diabetes management and outpatient self-management training and education, including medical nutrition therapy, for the treatment of insulin dependent diabetes, insulin-using diabetes, gestational diabetes and noninsulin using diabetes if prescribed by a health care professional legally authorized to prescribe such services and supplies under the law. Such coverage shall include coverage for insulin only if such coverage also includes coverage of prescription drugs.
(c) Diabetes outpatient self-management training and education shall be provided by a certified, registered or licensed health care professional with expertise in diabetes. The coverage for outpatient self-management training and education shall be required pursuant to this section only if ordered by a health care professional legally authorized to prescribe such services and the diabetic: (1) Is treated at a program approved by the American diabetes association; (2) is treated by a person certified by the national certification board for diabetes educators; or (3) is, as to nutritional education, treated by a licensed dietitian pursuant to a treatment plan authorized by such healthcare professional.
(d) (1) The benefits provided in this act shall be subject to the same annual deductible or co-insurance and the same requirement of medical necessity established for all other covered benefits within a given policy. In the case of a policy requiring that services be provided by or upon referral from a primary care physician, the benefits provided by this act shall be subject to such requirement.
(2) Private third party payors may not reduce or eliminate coverage due to the requirements of this act.
(3) Enforcement of the provisions of this act shall be performed by the commissioner of insurance.
(e) The provisions of this act shall not apply to any medicare supplement policy of insurance, as defined by the commissioner of insurance by rule and regulation, any policy of long-term care insurance, as defined by K.S.A. 40-2227, and amendments thereto, any specified disease or specified accident coverage or any accident only coverage as defined by the commissioner of insurance by rule and regulation, whether written on a group, blanket, or individual basis.
History: L. 1998, ch. 174, § 28; July 1.
(a) Any individual or group health insurance policy, medical service plan, contract, hospital service corporation contract, hospital and medical service corporation contract, fraternal benefit society or health maintenance organization which provides coverage for accident and health services and which is delivered, issued for delivery, amended or renewed on or after July 1, 1998, also, shall provide coverage for prostate cancer screening for men 40 years of age or over who are symptomatic or in a high-risk category and for all men 50 years of age or older. The screening shall consist, at a minimum, of a prostate-specific antigen blood test and a digital rectal examination. A policy, provision, contract, plan or agreement may apply to prostate cancer screening the same deductibles, coinsurance and other limitations as apply to other covered services.
(b) The provisions of this section shall not apply to any medicare supplement policy of insurance, as defined by the commissioner of insurance by rule and regulation, any policy of long-term care insurance, as defined by K.S.A. 40-2227, and amendments thereto, any specified disease or specified accident coverage or any accident only coverage as defined by the commissioner of insurance by rule and regulation, whether written on a group, blanket or individual basis.
History: L. 1998, ch. 174, § 30; July 1.
(a) Any individual or group health insurance policy, medical service plan, contract, hospital service corporation contract, hospital and medical service corporation contract, fraternal benefit society or health maintenance organization which provides coverage for accident and health services and which is delivered, issued for delivery, amended or renewed on or after July 1, 1999, also, shall provide coverage for the administration of general anesthesia and medical care facility charges for dental care provided to the following covered persons:
(1) A child five years of age and under; or
(2) a person who is severely disabled; or
(3) a person has a medical or behavioral condition which requires hospitalization or general anesthesia when dental care is provided.
(b) A policy, provision, contract, plan or agreement may:
(1) Apply to the covered procedures under this section the same deductibles, coinsurance, network requirements and other limitations, including but not limited to medical necessity determinations, as apply to other covered services;
(2) require prior authorization for hospitalization for the covered procedures under this section in the same manner that prior authorization is required for hospitalization for other covered diseases or conditions.
(c) The provisions of this section shall not apply to any policy or certificate providing coverage for any specified disease, specified accident or accident-only coverage, credit, dental, disability income, hospital indemnity, long-term care, as defined by K.S.A. 40-2227, and amendments thereto, medicare supplement, as defined by the commissioner of insurance by rules and regulations, vision care or other limited-benefit supplemental insurance, nor any coverage issued as a supplement to liability insurance, workers' compensation or similar insurance, automobile medical-payment insurance, or any insurance under which benefits are payable with or without regard to fault, whether written on a group, blanket or individual basis.
(d) Nothing herein shall be construed to require any individual or group health insurance policy, medical service plan, contract, hospital service corporation contract, fraternal benefit society or health maintenance organization to provide benefits for any dental procedures.
(e) The provisions of this section shall apply to the state health care benefits program and municipal self-funded pools.
(f) As used in this section "medical care facility" shall have the meaning ascribed to the term in K.S.A. 65-425, and amendments thereto.
History: L. 1999, ch. 162, § 1; July 1.
(a) Any individual or group health insurance policy, medical service plan, contract, hospital service corporation contract, hospital and medical service corporation contract, fraternal benefit society or health maintenance organization which provides coverage for accident and health services and which is delivered, issued for delivery, amended or renewed on or after July 1, 1999, and which provides medical and surgical benefits with respect to a mastectomy shall provide, in a case of a participant or beneficiary who is receiving benefits in connection with a mastectomy and who elects breast reconstruction in connection with such mastectomy, coverage for:
(1) Reconstruction of the breast on which the mastectomy has been performed;
(2) surgery and reconstruction of the other breast to produce a symmetrical appearance; and
(3) prostheses and physical complications in all stages of mastectomy, including lymphedemas.
Such coverage shall be provided in a manner determined in consultation with the attending physician and the patient. Such coverage may be subject to annual deductibles and coinsurance provisions as may be deemed appropriate and as are consistent with those established for other benefits under the plan or coverage.
(b) Each individual or group health insurance policy, medical service plan, contract, hospital service corporation contract, hospital and medical service corporation contract, fraternal benefit society or health maintenance organization which provides coverage for accident and health services which provides medical and surgical benefits with respect to a mastectomy shall provide written notice, as currently required, to all enrollees, insureds or subscribers regarding the coverage required by this section.
(c) No individual or group health insurance policy, medical service plan, contract, hospital service corporation contract, hospital and medical service corporation contract, fraternal benefit society or health maintenance organization which provides coverage for accident and health services which provides medical and surgical benefits with respect to a mastectomy shall:
(1) Deny to a patient eligibility, or continued eligibility, to enroll or to renew coverage under the terms of the plan, solely for the purpose of avoiding the requirements of this section; and
(2) penalize or otherwise reduce or limit the reimbursement of an attending provider, or provide incentives (monetary or otherwise) to an attending provider, to induce such provider to provide care to an individual participant or beneficiary in a manner inconsistent with this section.
(d) The provisions of this section shall not apply to any policy or certificate which provides coverage for any specified disease, specified accident or accident only coverage, credit, dental, disability income, hospital indemnity, long-term care insurance as defined by K.S.A. 40-2227, and amendments thereto, vision care or any other limited supplemental benefit nor to any medicare supplement policy of insurance as defined by the commissioner of insurance by rule and regulation, any coverage issued as a supplement to liability insurance, workers' compensation or similar insurance, automobile medical-payment insurance or any insurance under which benefits are payable with or without regard to fault, whether written on a group, blanket or individual basis.
History: L. 1999, ch. 162, § 2; July 1.
(a) Any individual or group health insurance policy, medical service plan, contract, hospital service corporation contract, hospital and medical service corporation contract, fraternal benefit society or health maintenance organization, municipal group-funded pool and the state employee health care benefits plan which provides coverage for hospital, medical and surgical services, other than medicare supplement or accident-only policies which are delivered, issued for delivery, amended or renewed on or after July 1, 2001, shall include coverage for services related to diagnosis, treatment and management of osteoporosis when such services are provided by a person licensed to practice medicine and surgery in this state, for individuals with a condition or medical history for which bone mass measurement is medically necessary for such individual. Such policy, provision, contract, plan or agreement may apply to such services the same deductibles, coinsurance and other limitations as apply to other covered services.
(b) The provisions of this section shall not apply to any policy or certificate which provides coverage for any specified disease, specified accident or accident only coverage, credit, dental, disability income, hospital indemnity, long-term care insurance as defined by K.S.A. 40-2227, and amendments thereto, vision care or any other limited supplemental benefit nor to any medicare supplement policy of insurance as defined by the commissioner of insurance by rule and regulation, any coverage issued as a supplement to liability insurance, workers compensation or similar insurance, automobile medical-payment insurance or any insurance under which benefits are payable with or without regard to fault, whether written on a group, blanket or individual basis.
History: L. 2001, ch. 198, § 2; July 1.
As used in K.S.A. 40-2,167 through 40-2,170, and amendments thereto, unless the context clearly indicates otherwise:
(a) "Peer-reviewed medical literature" means a published scientific study in a journal or other publication in which original manuscripts have been published only after having been critically reviewed for scientific accuracy, validity and reliability by unbiased independent experts, and that has been determined by the international committee of medical journal editors to have met the uniform requirements for manuscripts submitted to biomedical journals. Peer-reviewed medical literature does not include publications or supplements to publications that are sponsored to a significant extent by a pharmaceutical manufacturing company or health carrier.
(b) "Off-label use of drugs" means prescribing prescription drugs for treatments other than those stated in the labeling approved by the federal food and drug administration.
(c) "Standard reference compendia" means the United States pharmacopeia drug information, the American hospital formulary service drug information or the American Medical Association drug evaluation.
History: L. 1999, ch. 128, § 1; May 6.
An insurance company, nonprofit health service corporation, nonprofit medical and hospital service corporation or health maintenance organization that provides coverage for prescription drugs may not issue, deliver, execute or renew any health insurance policy or health service contract on an individual, group, blanket, franchise or association basis which excludes coverage of a prescription drug for cancer treatment on the grounds the prescription drug has not been approved by the federal food and drug administration for that covered indication if the prescription drug is recognized for treatment of the indication in one of the standard reference compendia or in substantially accepted peer-reviewed medical literature. The prescribing physician shall submit to the insurer documentation supporting the proposed off-label use or uses if requested by the insurer.
History: L. 1999, ch. 128, § 2; May 6.
The commissioner of insurance may direct an insurer or contractor regulated by this act to make payments as required by this act.
History: L. 1999, ch. 128, § 3; May 6.
This act shall not be construed to affect the prescribing and coverage of off-label use of drugs for any indication not specified in K.S.A. 40-2,168, nor does this act alter existing law regarding provisions limiting the coverage of prescription drugs that have not been approved by the federal food and drug administration; does not require coverage for any prescription drug when the federal food and drug administration has determined its use to be contraindicated; and does not require coverage for experimental drugs not otherwise approved for any indication by the federal food and drug administration.
History: L. 1999, ch. 128, § 4; May 6.
Revisor's Note: Later act, see 40-5001 through 40-5016.
History: L. 1999, ch. 103, §§ 1 to 13; Repealed, L. 2002, ch. 158, § 23; May 23.
(a) Any individual or group health insurance policy, medical service plan, contract, hospital service corporation contract, hospital and medical service corporation contract, fraternal benefit society or health maintenance organization, municipal group-funded pool and the state employee health care benefits plan which provides coverage for prescription drugs and which is delivered, issued for delivery, amended or renewed on and after July 1, 2011, shall provide coverage for a prescribed, orally administered anticancer medication used to kill or slow the growth of cancerous cells on a basis no less favorable than intravenously administered or injected cancer medications that are covered as medical benefits.
(b) Any policy, provision, contract, plan or agreement under this section may apply the same deductibles, coinsurance and other limitations as apply to other covered services.
(c) (1) From and after the effective date of this act, the provisions of this section shall apply to the state employees health care benefits program.
(2) Pursuant to the provisions of K.S.A. 40-2249a, and amendments thereto, on or before March 1, 2011, the state health care benefits commission shall submit to the president of the senate and to the speaker of the house of representatives, a report indicating the impact the provisions of this section has had on the state health care benefits program, including data on the utilization and costs of such coverage. Such report shall also include a recommendation whether such coverage should continue for the state health care benefits program or whether additional utilization and cost data is required.
History: L. 2010, ch. 120, § 3; July 1.
No contract issued or renewed after July 1, 2010, between a health insurer and a dentist who is a participating provider with respect to such health insurer's health benefit plan shall contain any provision which requires the dentist who provides any service to an insured under such health benefit plan at a fee set or prescribed by the health insurer unless such service is a covered service.
History: L. 2010, ch. 91, § 1; July 1.
For the purposes of this act:
(a) "Covered service" means a service which is reimbursable under the health benefit plan subject to any deductible, coinsurance, waiting period, frequency limitation, annual or lifetime benefit maximum or other contractual limitation contained in the health benefit plan.
(b) "Health benefit plan" shall have the meaning ascribed to it in K.S.A. 40-4602, and amendments thereto. Health benefit plan shall also include:
(1) Any subscription agreement issued by a nonprofit dental service corporation.
(2) Any policy of health insurance purchased by an individual.
(3) To the extent permitted by law, the health insurance plan for Kansas children established pursuant to K.S.A. 38-2001 et seq., and amendments thereto.
(4) To the extent permitted by law, the state medical assistance program under medicaid established pursuant to K.S.A. 39-708c, and amendments thereto.
(c) "Health insurer" shall have the meaning ascribed to it in K.S.A. 40-4602, and amendments thereto. Health insurer shall also include a nonprofit dental service corporation as such term is used in K.S.A. 40-19a01 et seq., and amendments thereto.
(d) "Insured" shall have the meaning ascribed to it in K.S.A. 40-4602, and amendments thereto. Insured shall also include a subscriber to a subscription agreement issued by a nonprofit dental service corporation as such term is used in K.S.A. 40-19a01 et seq., and amendments thereto.
(e) "Participating provider" shall have the meaning ascribed to it in K.S.A. 40-4602, and amendments thereto. Participating provider shall also include any dentist who has entered into a participation agreement with a nonprofit dental service corporation.
(f) "Provider" shall have the meaning ascribed to it in K.S.A. 40-4602, and amendments thereto. Provider shall also include any dentist licensed by the Kansas dental board.
History: L. 2010, ch. 91, § 2; July 1.
(a) Any individual or group health insurance policy, medical service plan, contract, hospital service corporation contract, hospital and medical service corporation contract, fraternal benefit society or health maintenance organization, municipal group-funded pool and the state employee health care benefits plan which is delivered, issued for delivery, amended or renewed on or after July 1, 2011, shall exclude coverage for elective abortions, unless the procedure is necessary to preserve the life of the mother. Coverage for abortions may be obtained through an optional rider for which an additional premium is paid. The premium for the optional rider shall be calculated so that it fully covers the estimated cost of covering elective abortions per enrollee as determined on an average actuarial basis.
(b) No health insurance exchange established within this state or any health insurance exchange administered by the federal government or its agencies within this state shall offer health insurance contracts, plans, or policies that provide coverage for elective abortions, nor shall any health insurance exchange operating within this state offer coverage for elective abortions through the purchase of an optional rider.
(c) For the purposes of this section:
(1) "Abortion" means the same as defined in K.S.A. 65-6701, and amendments thereto.
(2) "Elective" means an abortion for any reason other than to prevent the death of the mother upon whom the abortion is performed, except that an abortion may not be deemed one to prevent the death of the mother based on a claim or diagnosis that such mother will engage in conduct that will result in such mother's death.
History: L. 2011, ch. 111, § 8; L. 2023, ch. 88, § 2; July 1.
From and after July 1, 2011, any provisions of K.S.A. 40-2,190, and amendments thereto, or the application thereof to any person or circumstances is held invalid, the invalidity shall not affect other provisions or applications of such section which can be given effect without the invalid provisions or application, and to this end, the provisions of K.S.A. 40-2,190, and amendments thereto, are severable.
History: L. 2011, ch. 111, § 11; June 2.
(a) This section shall apply to all insurers transacting business in the state offering individual or group sickness and accident insurance. Such insurers also may offer a mandate lite health benefit plan. A group or individual carrier may also offer a mandate lite health benefit plan.
(b) A mandate lite health benefit plan means an individual or group sickness and accident insurance plan that does not contain one or more of the Kansas-mandated benefits other than K.S.A. 40-2,100 and 40-2,166, and amendments thereto.
(c) The mandate lite health benefit plan shall contain the definitions of group or individual sickness and accident insurance with respect to major medical benefits and standard provisions or rights of coverage.
(d) The mandate lite health benefit plan may be issued on a group or individual basis.
(e) The insured shall be provided with a written notice that one or more of the state-mandated benefits are not included in the mandate lite health benefit plan.
(1) The mandate lite health benefit plan shall specify the health services that are included and shall specifically list the health services that will be limited or not covered from the list of state-mandated coverage other than K.S.A. 40-2,100 and 40-2,166, and amendments thereto.
(2) The insurer is required to retain a signed copy of this notice on file as a part of the original application as evidence that the insured has acknowledged such notice.
(3) Such signed copy may be in original form, electronic file form or in any other reproducible file form as may be consistent with the insurer's method of retaining application copies.
(f) The definition of preexisting conditions may not be more restrictive than the definition of preexisting conditions normally used for the corresponding regular individual or group insurance contracts.
(g) The mandate lite health benefit plan may offer:
(1) Various optional combinations of coverage for generic, formulary and non-formulary drugs.
(2) The mandate lite health benefit plan may offer drug discount plans.
(h) A mandate lite health benefit plan may charge additional premiums for each optional benefit offered. Optional benefits may include mandated benefits that are not included in the mandate lite health benefit plan.
(i) This section shall be known and may be cited as the mandate lite health benefit plan act.
History: L. 2013, ch. 97, § 12; July 1.
(a) For the purposes of this section:
(1) "Specially designed policy'' means an insurance policy that by design may not meet all or part of the definitions of a group or individual sickness and accident insurance policy and includes temporary sickness and accident insurance on a short-term basis.
(2) "Short-term'' means an insurance policy period of six months or 12 months, based upon policy design, which offers not more than one renewal period with or without a requirement of medical re-underwriting or medical requalification.
(A) Because a short-term policy addresses the special needs for temporary coverage, a short-term policy is not subject to continuation provisions of the health insurance portability and accountability act of 1996 (public law 104-191).
(B) Because a short-term policy addresses the special needs for temporary coverage, a short-term policy shall be exempt from medical loss ratio calculations associated with individual sickness and accident insurance issued within the state unless such calculation excludes any monthly administration fee associated with the sale of such policy.
(b) Specially designed policies shall include policies designed to provide sickness and accident insurance for specific coverage of benefits or services that may be excluded as benefits or services cited under K.S.A. 40-2,192, and amendments thereto. Specially designed policies may include the following stand-alone policies and coverages:
(1) Chiropractic plans;
(2) acupuncture coverage plans;
(3) holistic medical treatment plans;
(4) podiatrist plans;
(5) pharmacy plans;
(6) psychiatric plans;
(7) allergy plans; and
(8) such other stand-alone plans or combinations of plans of accepted traditional and nontraditional medical practice as shall be allowable for exclusion from group or individual plans under K.S.A. 40-2,192, and amendments thereto.
(c) No specially designed policy shall be deemed to be included under the definition of group sickness and accident insurance, including short-term, limited-duration health insurance, issued or renewed inside or outside of this state and covering persons residing in this state.
History: L. 2013, ch. 97, § 14; July 1.
(a) (1) (A) Any large group health insurance policy, medical service plan, contract, hospital service corporation contract, hospital and medical service corporation contract, fraternal benefit society or health maintenance organization which provides coverage for accident and health services and which is delivered, issued for delivery, amended or renewed on or after January 1, 2015, shall provide coverage for the diagnosis and treatment of autism spectrum disorder in any covered individual whose age is less than 12 years.
(B) Any grandfathered individual or group health insurance policy, medical service plan, contract, hospital service corporation contract, hospital and medical service corporation contract, fraternal benefit society or health maintenance organization that provides coverage for accident and health services and that is delivered, issued for delivery, amended or renewed on or after January 1, 2016, shall provide coverage for the diagnosis and treatment of autism spectrum disorder in any covered individual whose age is less than 12 years.
(2) Such coverage shall be provided in a manner determined in consultation with the autism services provider and the patient. Services provided by autism services providers under this section shall include applied behavior analysis when required by a licensed physician, licensed psychologist or licensed specialist clinical social worker but otherwise shall be limited to the care, services and related equipment prescribed or ordered by a licensed physician, licensed psychologist or licensed specialist clinical social worker.
(3) Coverage provided under this section for applied behavior analysis shall be subject to a limitation of:
(A) 1,300 hours per calendar year for four years beginning on the later of the date of diagnosis or January 1, 2015, for any covered individual diagnosed with autism spectrum disorder between birth and five years of age; and
(B) except as provided in subparagraph (A), 520 hours per calendar year for any covered individual less than 12 years of age.
Upon prior approval by the health benefit plan, such maximum benefit limit may be exceeded if the provision of applied behavior analysis services beyond the maximum limit is medically necessary for such individual. Any payment made by an insurer on behalf of a covered individual for any care, treatment, intervention, service or item, the provision of which was for the treatment of a health condition unrelated to such covered individual's autism spectrum disorder, shall not be applied toward any maximum benefit established under this paragraph. Except for the coverage for applied behavior analysis, no coverage required under this section shall be subject to the age and hour limitations described in this paragraph.
(4) On or after January 1, 2015, through June 30, 2016, reimbursement shall be allowed only for services provided by a provider licensed, trained and qualified to provide such services or by an autism specialist or an intensive individual service provider as such terms are defined by the Kansas department for aging and disability services Kansas autism waiver. On or after July 1, 2016, reimbursement shall be allowed only for services provided by an autism service provider licensed or exempt from licensure under the applied behavior analysis licensure act, except that reimbursement shall be allowed for services provided by an autism specialist, an intensive individual service provider or any other individual qualified to provide services under the home and community based services autism waiver administered by the Kansas department for aging and disability services.
(5) Any insurer or other entity that administers claims for services provided for the treatment of autism spectrum disorder under this section shall have the right and obligation to deny any claim for services based upon medical necessity or a determination that the covered individual has reached the maximum medical improvement for the covered individual's autism spectrum disorder.
(6) Except for inpatient services, if an insured is receiving treatment for autism spectrum disorder, such insurer shall have the right to review the treatment plan not more than once in a period of six consecutive months, unless the insurer and the insured's treating physician or psychologist agree that a more frequent review is necessary. Any such agreement regarding the right to review a treatment plan more frequently shall apply only to a particular insured being treated for autism spectrum disorder and shall not apply to all individuals being treated for autism spectrum disorder by a physician or psychologist. The cost of obtaining any review or treatment plan shall be borne by the insurer.
(7) No insurer can terminate coverage, or refuse to deliver, execute, issue, amend, adjust or renew coverage to an individual solely because the individual is diagnosed with or has received treatment for autism spectrum disorder.
(b) As used in this section:
(1) "Applied behavior analysis" means the design, implementation and evaluation of environmental modifications, using behavioral stimuli and consequences, to produce socially significant improvement in human behavior, including the use of direct observation, measurement and functional analysis of the relationship between environment and behavior.
(2) "Autism spectrum disorder" means a neurobiological disorder, an illness of the nervous system, that includes:
(A) "Autistic disorder," which is:
(i) Six or more items from (a), (b) and (c) of this subparagraph, with at least two items from (a) of this subparagraph, and one item each from (b) and (c) of this subparagraph:
(a) Qualitative impairment in social interaction, as manifested by at least two of the following:
(1) Marked impairment in the use of multiple nonverbal behaviors such as eye-to-eye gaze, facial expression, body postures and gestures to regulate social interaction;
(2) failure to develop peer relationships appropriate to developmental level;
(3) a lack of spontaneous seeking to share enjoyment, interests or achievements with other people; or
(4) lack of social or emotional reciprocity;
(b) qualitative impairments in communication as manifested by at least one of the following:
(1) Delay in, or total lack of, the development of spoken language;
(2) in individuals with adequate speech, marked impairment in the ability to initiate or sustain a conversation with others;
(3) stereotyped and repetitive use of language or idiosyncratic language; or
(4) lack of varied, spontaneous make-believe play or social imitative play appropriate to developmental level;
(c) restricted repetitive and stereotyped patterns of behavior, interests and activities, as manifested by at least one of the following:
(1) Encompassing preoccupation with one or more stereotyped and restricted patterns of interest that is abnormal either in intensity or focus;
(2) apparently inflexible adherence to specific, nonfunctional routines or rituals;
(3) stereotyped and repetitive motor mannerisms; or
(4) persistent preoccupation with parts of objects;
(ii) delays or abnormal functioning in at least one of the following areas, with onset prior to age three years, including social interaction, language as used in social communication or symbolic or imaginative play; and
(iii) the disturbance is not better accounted for by Rett's disorder or childhood disintegrative disorder;
(B) "Asperger's disorder," which is:
(i) A qualitative impairment in social interaction, as manifested by at least two of the following:
(a) Marked impairment in the use of multiple nonverbal behaviors such as eye-to-eye gaze, facial expression, body postures and gestures to regulate social interaction;
(b) failure to develop peer relationships appropriate to developmental level;
(c) lack of spontaneous seeking to share enjoyment, interests or achievements with other people; or
(d) lack of social or emotional reciprocity;
(ii) restricted repetitive and stereotyped patterns of behavior, interests and activities, as manifested by at least one of the following:
(a) Encompassing preoccupation with one or more stereotyped and restricted patterns of interest that is abnormal either in intensity or focus;
(b) apparently inflexible adherence to specific, nonfunctional routines or rituals;
(c) stereotyped and repetitive motor mannerisms; or
(d) persistent preoccupation with parts of objects;
(iii) the disturbance causes clinically significant impairment in social, occupational or other important areas of functioning;
(iv) there is no clinically significant general delay in language;
(v) there is no clinically significant delay in cognitive development or in the development of age-appropriate self-help skills, adaptive behavior (other than in social interaction), and curiosity about the environment in childhood; and
(vi) criteria are not met for another specific pervasive developmental disorder or schizophrenia;
(C) "pervasive developmental disorder not otherwise specified," is a severe and pervasive impairment in the development of reciprocal social interaction associated with impairment in either verbal or nonverbal communication skills or with the presence of stereotyped behavior, interests and activities, but the criteria are not met for a specific pervasive developmental disorder, schizophrenia, schizotypal personality disorder, or avoidant personality disorder;
(D) "Rett's disorder," includes:
(i) All of the following:
(a) Apparently normal prenatal and perinatal development;
(b) apparently normal psychomotor development through the first five months after birth; and
(c) normal head circumference at birth;
(ii) onset of all of the following after the period of normal development:
(a) Deceleration of head growth between ages five and 48 months;
(b) loss of previously acquired purposeful hand skills between ages five and 30 months with the subsequent development of stereotyped hand movements;
(c) loss of social engagement early in the course of development;
(d) appearance of poorly coordinated gait or trunk movements; and
(e) severely impaired expressive and receptive language development with severe psychomotor retardation;
(E) "childhood disintegrative disorder," is:
(i) Apparently normal development for at least the first two years after birth as manifested by the presence of age-appropriate verbal and nonverbal communication, social relationships, play and adaptive behavior;
(ii) clinically significant loss of previously acquired skills in at least two of the following areas: Expressive or receptive language, social skills or adaptive behavior, bowel or bladder control or play and motor skills;
(iii) abnormalities of functioning in at least two of the following areas: Qualitative impairment in social interaction; qualitative impairments in communication; restricted, repetitive and stereotyped patterns of behavior, interests and activities, including motor stereotypies and mannerisms; and
(iv) the disturbance is not better accounted for by another specific pervasive developmental disorder or by schizophrenia.
(3) "Diagnosis of autism spectrum disorder" means any medically necessary assessment, evaluation or test performed by a licensed physician, licensed psychologist or licensed specialist clinical social worker to determine whether an individual has autism spectrum disorder.
(4) "Grandfathered health benefit plan" means the same as defined in 42 U.S.C. § 18011. The term "grandfathered health benefit plan" includes both small employer group health benefit plans that are grandfathered and individual health benefit plans that are grandfathered.
(5) "Health benefit plan" means the same as defined in K.S.A. 40-4602, and amendments thereto.
(6) "Large employer" means, in connection with a group health benefit plan with respect to a calendar year and a plan year, an employer who employed an average of at least 51 employees on business days during the preceding calendar year and who employs at least one employee on the first day of the plan year.
(7) "Small employer" means, in connection with a group health benefit plan with respect to a calendar year and a plan year, an employer who employed an average of at least two but not more than 50 employees on business days during the preceding calendar year and who employs at least one employee on the first day of the plan year.
(c) If an individual has been diagnosed as having autism spectrum disorder meeting the diagnostic criteria described in the edition of the diagnostic and statistical manual of mental disorders available at the time of diagnosis, then that individual shall not be required to undergo any additional or repeated evaluation based upon the adoption of a subsequent edition of the diagnostic and statistical manual of mental disorders adopted by rules and regulations of the behavioral sciences regulatory board in order to remain eligible for coverage under this section.
(d) Except as otherwise provided in subsection (a), no individual or group health insurance policy, medical service plan, contract, hospital service corporation contract, hospital and medical service corporation contract, fraternal benefit society or health maintenance organization that provides coverage for accident and health services and coverage with respect to autism spectrum disorder shall impose on the coverage required by this section:
(1) Any dollar limits, deductibles or coinsurance provisions that are less favorable to an insured than the dollar limits, deductibles or coinsurance provisions that apply to physical illness generally under the accident and sickness insurance policy; or
(2) any limit upon the number of visits that a covered individual may make for treatment of autism spectrum disorder.
(e) The provisions of this section shall not apply to any policy or certificate that provides coverage for any specified disease, specified accident or accident-only coverage, credit, dental, disability income, hospital indemnity, long-term care insurance as defined by K.S.A. 40-2227, and amendments thereto, vision care or any other limited supplemental benefit nor to any medicare supplement policy of insurance as defined by the commissioner of insurance by rules and regulations, any coverage issued as a supplement to liability insurance, workers' compensation or similar insurance, automobile medical-payment insurance or any insurance under which benefits are payable with or without regard to fault, whether written on a group, blanket or individual basis.
(f) This section shall not be construed as limiting benefits that are otherwise available to an individual under any individual or group health insurance policy, medical service plan, contract, hospital service corporation contract, hospital and medical service corporation contract, fraternal benefit society or health maintenance organization which provides coverage for accident and health services.
(g) The provisions of K.S.A. 40-2249a, and amendments thereto, shall not apply to the provisions of this section.
(h) The commissioner of the department of insurance shall grant a small employer with a group health benefit plan a waiver from the provisions of this section, if the small employer demonstrates to the commissioner by actual claims experience over any consecutive 12-month period that compliance with this section has increased the cost of the health insurance policy by an amount of 2.5% or greater over the period of a calendar year in premium costs to the small employer.
(i) Nothing contained in this section shall require coverage for or payment of full or partial day care or habilitation services, community support services, services at intermediate care facilities, school-based rehabilitative services or overnight, boarding and extended stay services at facilities for autism patients. Only services actually rendered on an hourly basis or fractional portion thereof by certified applied behavior analysis (ABA) providers as herein defined shall be required to be covered under this section. Nothing in this section shall require coverage or payment hereunder for services that are otherwise provided, authorized or required to be provided by public or private schools receiving any state or federal funding for such services.
History: L. 2014, ch. 62, § 1; L. 2015, ch. 83, § 1; L. 2023, ch. 3, § 1; July 1.
(a) (1) A health carrier may offer a policy of accident and sickness insurance that requires some or all health care services to be rendered by participating providers, except that emergency services must be covered regardless of whether they are delivered by a participating provider.
(2) Such policy may include a gatekeeper requirement.
(3) To the extent the policy provides coverage for services rendered by nonparticipating providers, such coverage may be subject to a deductible, copayments or coinsurance as determined by the health carrier. Notwithstanding any other provision of law to the contrary, such cost-sharing shall not be limited based on the deductible, coinsurance or copayments required for services rendered by participating providers.
(b) For purposes of this section:
(1) "Gatekeeper requirement" means a requirement in which the insured is required to obtain a referral from a primary care professional in order to access specialty care;
(2) "primary care professional" means a participating provider designated by the health carrier to supervise, coordinate or provide initial care or continuing care to an insured and who may be required by the health carrier to initiate a referral for specialty care;
(3) "participating provider" shall have the meaning ascribed to it in K.S.A.
40-4602, and amendments thereto;
(4) "emergency services" shall have the meaning ascribed to it in K.S.A.
40-4602, and amendments thereto; and
(5) "health carrier" means any insurance company, nonprofit medical and hospital corporation, municipal group funded-pool or fraternal benefit society which offers a policy of accident and sickness insurance subject to chapter 40 of the Kansas Statutes Annotated, and amendments thereto.
History: L. 2016, ch. 17, § 1; April 7.
(a) In the coverage for the next health plan coverage year commencing on January 1, 2019, the state employees health care commission shall provide for the coverage for amino acid-based elemental formula, regardless of delivery method, for the diagnosis or treatment of food protein-induced enterocolitis syndrome, eosinophilic disorders or short bowel syndrome, if prescribed by a prescriber, as defined by K.S.A. 65-1626, and amendments thereto, authorized by the pharmacy act of the state of Kansas and the applicable medical professional licensure entity in the state of Kansas.
(b) (1) Pursuant to the provisions of K.S.A. 40-2249a, and amendments thereto, on or before March 1, 2020, the state employees health care commission shall submit to the president of the senate and to the speaker of the house of representatives a report including the following information pertaining to the mandated coverage for amino acid-based elemental formula provided during the plan year commencing on January 1, 2019, and ending on December 31, 2019:
(A) The impact that the mandated coverage for amino acid-based elemental formula required by subsection (a) has had on the state health care benefits program;
(B) data on the utilization of coverage for amino acid-based elemental formula by covered individuals and the cost of providing such coverage for amino acid-based elemental formula; and
(C) a recommendation whether such mandated coverage for amino acid-based elemental formula should continue for the state health care benefits program or whether additional utilization and cost data is required.
(2) At the next legislative session following receipt of the report required in paragraph (1), the legislature may consider whether or not to require the coverage for amino acid-based elemental formula required by subsection (a) to be included in any individual or group health insurance policy, medical service plan, contract, hospital service corporation contract, hospital and medical service corporation contract, fraternal benefit society or health maintenance organization that provides coverage for accident and health services and that is delivered, issued for delivery, amended or renewed in this state on or after July 1, 2021.
History: L. 2018, ch. 76, § 4; May 17.
(a) A policy of insurance for property and casualty coverage will be considered renewed by: (1) The issuance and delivery of a policy by the current insurer or by an insurer within the same group of affiliated insurers replacing the existing policy at the end of the policy period or term with no gap in coverage; or (2) the issuance and delivery of a certificate or notice extending the term of the policy beyond its policy period or term.
(b) As used in this section, the term "group affiliated insurers" means two or more insurance companies that are under substantially the same management or financial control.
(c) When a policy of insurance is renewed by an insurer within the same group of affiliated insurers, notice of the change of the policy to the affiliated company shall be provided to the insured at the last known address and made available to the agent of record on or before 30 days before the end of the term or period of the existing policy of insurance. Such notice may be satisfied by delivery of the new policy to the insured.
History: L. 2016, ch. 33, § 1; July 1.
(a) As used in this section:
(1) "Licensee" means a person authorized to sell limited line insurance relating to the rental of self-service storage units pursuant to K.S.A. 40-4903, and amendments thereto.
(2) "Rental agreement" means any written agreement setting forth the terms and conditions governing the use of a storage unit provided by the owner of a self-service storage facility company.
(3) "Renter" or "occupant" means any person obtaining the use of a storage unit from a self-service storage company under the terms of a rental agreement.
(4) "Self-service storage company" means any person in the business of renting storage units to the public.
(5) "Storage unit" means a semi-enclosed or fully enclosed area, room or space that is primarily intended for the storage of personal property and which shall be accessible by the renter of the unit pursuant to the terms of the rental agreement.
(b) Insurance relating to the rental of self-service storage units shall only be sold by a licensee, and no such insurance shall be sold to any person in this state unless all of the following apply:
(1) The rental period of the rental agreement does not exceed two years;
(2) at every location where such insurance agreements are executed, brochures or other written materials are readily available to the prospective renter that:
(A) Summarize, clearly and correctly, the material terms of insurance coverage, including the identity of the insurer, offered to renters;
(B) disclose that this insurance may provide duplication of coverage already provided by a renter's or homeowner's insurance policy or other source of coverage;
(C) state that the purchase by the renter of this insurance is not required in order to rent a storage unit;
(D) describe the process for filing a claim in the event the renter elects to purchase coverage and in the event of a claim; and
(E) contain any additional information on the price, benefits, exclusions, conditions or other limitations of such policies as the commissioner may, by rules and regulations, prescribe;
(3) at every location where such insurance agreements are executed, a sign, approved by the commissioner, is posted that contains the following, or substantially the same information: "State law requires the operator of this facility to inform you that insurance sold by this self-storage company may provide duplication of coverage already provided by a renter's or homeowner's policy or other source of coverage. You are encouraged to contact your primary insurance carrier if you have questions about your existing coverage."; and
(4) evidence of coverage is provided to every renter who elects to purchase such insurance.
(c) No renter or occupant shall be required to obtain insurance pursuant to this section as a condition of obtaining a rental agreement for a storage unit. The renter shall be informed that the insurance offered pursuant to this section is not required as a condition for obtaining a rental agreement for a storage unit.
(d) The commissioner shall adopt rules and regulations as necessary to carry out the provisions of this section by January 1, 2018.
History: L. 2017, ch. 69, § 1; July 1.
(a) (1) Nothing in this section shall be construed to prescribe or impose corporate governance standards and internal procedures beyond those required by state corporate law. However, nothing in this section shall be construed to limit the commissioner's authority, or the rights and obligations of third parties under K.S.A. 40-222, and amendments thereto.
(2) The requirements of this section shall apply to all insurers domiciled in this state.
(b) As used in this section:
(1) "Commissioner" means the commissioner of insurance of the state of Kansas.
(2) "Corporate governance annual disclosure" or "CGAD" means a confidential report filed by the insurer or insurance group made in accordance with the requirements of this section.
(3) "Insurance group" means those insurers and affiliates included within an insurance holding company system as defined in K.S.A. 40-3302, and amendments thereto.
(4) "Insurer" means the same as defined in K.S.A. 40-3302, and amendments thereto, except that "insurer" does not include agencies, authorities or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia or a state or political subdivision of a state.
(5) "NAIC" means the national association of insurance commissioners.
(6) "ORSA summary report" means the report filed in accordance with risk management and own risk and solvency assessment act.
(c) (1) An insurer or the insurance group of which the insurer is a member shall, not later than June 1 of each calendar year, submit to the commissioner a CGAD that contains the information described in subsection (e). Notwithstanding any request from the commissioner made pursuant to subsection (c)(3), if an insurer is a member of an insurance group, the insurer shall submit the report required by this section to the commissioner of the lead state for the insurance group, in accordance with the laws of the lead state, as determined by the procedures outlined in the most recent financial analysis handbook adopted by the national association of insurance commissioners.
(2) The CGAD must include a signature of the insurer or insurance group's chief executive officer or corporate secretary attesting to the best of that individual's belief and knowledge that the insurer has implemented the corporate governance practices and that a copy of the disclosure has been provided to the insurer's board of directors or the appropriate committee of the insurer thereof.
(3) An insurer not required to submit a CGAD under this section shall do so upon the commissioner's request.
(4) For purposes of completing the CGAD, the insurer or insurance group may provide information regarding corporate governance at the ultimate controlling parent level, an intermediate holding company level or the individual legal entity level or both, depending upon how the insurer or insurance group has structured its system of corporate governance. The insurer or insurance group is encouraged to make the CGAD disclosures at the level at which the insurer's or insurance group's risk appetite is determined, or at which the earnings, capital, liquidity, operations and reputation of the insurer are overseen collectively and at which the supervision of those factors are coordinated and exercised, or the level at which legal liability for failure of general corporate governance duties would be placed. If the insurer or insurance group determines the level of reporting based on these criteria, it shall indicate which of the three criteria was used to determine the level of reporting and explain any subsequent changes in level of reporting.
(5) The review of the CGAD and any additional requests for information shall be made through the lead state as determined by the procedures within the most recent financial analysis handbook referenced in subsection (c)(1).
(6) Insurers providing information substantially similar to the information required by this section in other documents provided to the commissioner, including proxy statements filed in conjunction with other state or federal filings or other requirements provided to the commissioner, shall not be required to duplicate that information in the CGAD, but shall only be required to cross reference the document in which the information is included.
(d) The commissioner is hereby authorized to adopt any rules and regulations as are necessary to carry out the provisions of this section.
(e) (1) The insurer or insurance group shall have discretion over the responses to the CGAD inquiries, provided the CGAD shall contain the material information necessary to permit the commissioner to gain an understanding of the insurer's or group's corporate governance structure, policies and practices. The commissioner may request additional information deemed material and necessary to provide the commissioner with a clear understanding of the corporate governance policies, the reporting or information system or controls implementing those policies.
(2) The CGAD shall be prepared consistent with all department of insurance rules and regulations and documentation. Documentation supporting information shall be maintained and made available upon the commissioner's request.
(f) (1) Documents, materials or other information, including the CGAD, in the possession or control of the department of insurance that are obtained, created by or disclosed to the commissioner or any other person under this section, are recognized by this state as being proprietary and containing trade secrets. All such documents, materials or other information shall be confidential by law and privileged, and shall not be subject to the open records act, K.S.A. 45-215 et seq., and amendments thereto, shall not be subject to subpoena and shall not be subject to discovery or admissible in evidence in any private civil action. However, the commissioner is authorized to use the documents, materials or other information in the furtherance of any regulatory or legal action brought as part of the commissioner's official duties. The commissioner shall not otherwise make the documents, materials or other information public without the prior written consent of the insurer. Nothing in this section shall be construed to require the written consent of the insurer before the commissioner may share or receive confidential documents, materials or other CGAD-related information pursuant to subsection (f)(3) to assist in the performance of the commissioner's regular duties.
(2) Neither the commissioner nor any person who received documents, materials or other CGAD-related information, through examination or otherwise, while acting under the authority of the commissioner, or with whom such documents, materials or other information are shared pursuant to this section, shall be permitted or required to testify in any private civil action concerning any confidential documents, materials or information subject to subsection (f)(1).
(3) In order to assist in the performance of the commissioner's regulatory duties, the commissioner:
(A) May, upon request, share documents, materials or other CGAD-related information, including the confidential and privileged documents, materials or information subject to subsection (c)(1), including proprietary and trade secret documents and materials with other state, federal and international financial regulatory agencies, including members of any supervisory college as defined in K.S.A. 40-3308, and amendments thereto, with the NAIC and with third-party consultants pursuant to subsection (g), provided that the recipient agrees in writing to maintain the confidentiality and privileged status of the CGAD-related documents, material or other information and has verified in writing the legal authority to maintain confidentiality; and
(B) may receive documents, materials or other CGAD-related information, including otherwise confidential and privileged documents, materials or information, including proprietary and trade secret information or documents, from regulatory officials of other state, federal and international financial regulatory agencies, including members of any supervisory college as defined in the insurance holding company act and from the NAIC, and shall maintain as confidential or privileged any documents, materials or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information.
(4) The sharing of information and documents by the commissioner pursuant to this section shall not constitute a delegation of regulatory authority or rulemaking, and the commissioner is solely responsible for the administration, execution and enforcement of the provisions of this section.
(5) No waiver of any applicable privilege or claim of confidentiality in the documents, proprietary and trade secret materials or other CGAD-related information shall occur as a result of disclosure of such CGAD-related information or documents to the commissioner under this section or as a result of sharing as authorized in this section.
(g) (1) The commissioner may retain, at the insurer's expense, third-party consultants, including attorneys, actuaries, accountants and other experts not otherwise a part of the commissioner's staff as may be reasonably necessary to assist the commissioner in reviewing the CGAD and related information or the insurer's compliance with this section.
(2) Any person retained under subsection (g)(1) shall be under the direction and control of the commissioner and shall act in a purely advisory capacity.
(3) The NAIC and third-party consultants shall be subject to the same confidentiality standards and requirements as the commissioner.
(4) As part of the retention process, a third-party consultant shall verify to the commissioner, with notice to the insurer, that it is free from a conflict of interest and that it has internal procedures in place to monitor compliance with a conflict and to comply with the confidentiality standards and requirements of this section.
(5) A written agreement with NAIC consultants or third-party consultants, or a combination of the same, governing sharing and use of information provided pursuant to this section shall contain the following provisions and expressly require the written consent of the insurer prior to making the information public as provided under this section:
(A) Specific procedures and protocols for maintaining the confidentiality and security of CGAD-related information shared with the NAIC or a third-party consultant pursuant to this section;
(B) procedures and protocols for sharing by the NAIC only with other state regulators from states in which the insurance group has domiciled insurers. The agreement shall provide that the recipient agrees in writing to maintain the confidentiality and privileged status of the CGAD-related documents, materials or other information and has verified in writing the legal authority to maintain confidentiality;
(C) a provision specifying that ownership of the CGAD-related information shared with the NAIC or a third-party consultant remains with the department of insurance and the NAIC or third-party consultant's use of the information is subject to the direction of the commissioner;
(D) a provision that prohibits the NAIC or a third-party consultant from storing the information shared pursuant to this act in a permanent database after the underlying analysis is completed;
(E) a provision requiring the NAIC or third-party consultant to provide prompt notice to the commissioner and to the insurer or insurance group regarding any subpoena, request for disclosure or request for production of the insurer's CGAD-related information; and
(F) a requirement that the NAIC or a third-party consultant consent to intervention by an insurer in any judicial or administrative action in which the NAIC or a third-party consultant may be required to disclose confidential information about the insurer shared with the NAIC or a third-party consultant pursuant to this section.
(h) Any insurer failing, without just cause, to timely file the CGAD as required in this section may be required, after notice and hearing, to pay a penalty for each day's delay, to be recovered by the commissioner, in accordance with any rules and regulations adopted by the commissioner. The commissioner shall remit all moneys received to the state treasurer in accordance with the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount in the state treasury to the credit of the fees and penalties fund.
(i) If any provision of this section other than subsection (f), or the application thereof to any person or circumstance, is held invalid, such determination shall not affect the provisions or applications of this section, which can be given effect without the invalid provision or application, and to that end the provisions of this section, with the exception of subsection (f), are severable.
(j) The first filing of the CGAD shall be in 2018.
History: L. 2017, ch. 72, § 2; L. 2022, ch. 62, § 4; July 1.
(a) Except as otherwise provided in this section, at the time of any catastrophic event threatening life or property, no political subdivision shall impose restrictions or enforce local licensing or registration ordinances with respect to an insurer's claims handling operations.
(b) Any insurer establishing claims handling operations pursuant to this section shall provide notice to a city or county prior to establishing such operations.
(c) Nothing in this section shall prohibit a political subdivision from exercising its police power when necessary to preserve public health and welfare, including, but not limited to, enforcing building, zoning and fire safety codes.
(d) As used in this section:
(1) "Claims handling operations" includes, but is not limited to, the establishment of a base of operations on a temporary basis, not to exceed six months, by an insurer within the disaster area and the investigation and handling of claims by personnel authorized by any such insurer; and
(2) "insurer" means an insurance company as defined in K.S.A. 40-201, and amendments thereto.
History: L. 2018, ch. 15, § 1; July 1.
(a) K.S.A. 40-2,210 through 40-2,216, and amendments thereto, shall be known and may be cited as the Kansas telemedicine act.
(b) This section shall take effect on and after January 1, 2019.
History: L. 2018, ch. 98, § 1; July 1.
(a) For purposes of Kansas telemedicine act:
(1) "Distant site" means a site at which a healthcare provider is located while providing healthcare services by means of telemedicine.
(2) "Healthcare provider" means a physician, licensed physician assistant, licensed advanced practice registered nurse or person licensed, registered, certified or otherwise authorized to practice by the behavioral sciences regulatory board.
(3) "Originating site" means a site at which a patient is located at the time healthcare services are provided by means of telemedicine.
(4) "Physician" means a person licensed to practice medicine and surgery by the state board of healing arts.
(5) "Telemedicine," including "telehealth," means the delivery of healthcare services or consultations while the patient is at an originating site and the healthcare provider is at a distant site. Telemedicine shall be provided by means of real-time two-way interactive audio, visual, or audio-visual communications, including the application of secure video conferencing or store-and-forward technology to provide or support healthcare delivery, that facilitate the assessment, diagnosis, consultation, treatment, education and care management of a patient's healthcare. "Telemedicine" does not include communication between:
(A) Healthcare providers that consist solely of a telephone voice-only conversation, email or facsimile transmission; or
(B) a physician and a patient that consists solely of an email or facsimile transmission.
(b) This section shall take effect on and after January 1, 2019.
History: L. 2018, ch. 98, § 2; July 1.
(a) The same requirements for patient privacy and confidentiality under the health insurance portability and accountability act of 1996 and 42 C.F.R. § 2.13, as applicable, that apply to healthcare services delivered via in-person contact shall also apply to healthcare services delivered via telemedicine. Nothing in this section shall supersede the provisions of any state law relating to the confidentiality, privacy, security or privileged status of protected health information.
(b) Telemedicine may be used to establish a valid provider-patient relationship.
(c) The same standards of practice and conduct that apply to healthcare services delivered via in-person contact shall also apply to healthcare services delivered via telemedicine.
(d) (1) A person authorized by law to provide and who provides telemedicine services to a patient shall provide the patient with guidance on appropriate follow-up care.
(2) (A) Except when otherwise prohibited by any other provision of law, when the patient consents and the patient has a primary care or other treating physician, the person providing telemedicine services shall send within three business days a report to such primary care or other treating physician of the treatment and services rendered to the patient in the telemedicine encounter.
(B) A person licensed, registered, certified or otherwise authorized to practice by the behavioral sciences regulatory board shall not be required to comply with the provisions of subparagraph (A).
(e) This section shall take effect on and after January 1, 2019.
History: L. 2018, ch. 98, § 3; July 1.
(a) The provisions of this section shall apply to any individual or group health insurance policy, medical service plan, contract, hospital service corporation contract, hospital and medical service corporation contract, fraternal benefit society or health maintenance organization that provides coverage for accident and health services and that is delivered, issued for delivery, amended or renewed on or after January 1, 2019. The provisions of this section shall also apply to the Kansas medical assistance program.
(b) No individual or group health insurance policy, medical service plan, contract, hospital service corporation contract, hospital and medical service corporation contract, fraternal benefit society, health maintenance organization or the Kansas medical assistance program shall exclude an otherwise covered healthcare service from coverage solely because such service is provided through telemedicine, rather than in-person contact, or based upon the lack of a commercial office for the practice of medicine, when such service is delivered by a healthcare provider.
(c) The insured's medical record shall serve to satisfy all documentation for the reimbursement of all telemedicine healthcare services, and no additional documentation outside of the medical record shall be required.
(d) Payment or reimbursement of covered healthcare services delivered through telemedicine may be established by an insurance company, nonprofit health service corporation, nonprofit medical and hospital service corporation or health maintenance organization in the same manner as payment or reimbursement for covered services that are delivered via in-person contact are* established.
(e) Nothing in this section shall be construed to:
(1) Prohibit an individual or group health insurance policy, medical service plan, contract, hospital service corporation contract, hospital and medical service corporation contract, fraternal benefit society or health maintenance organization that provides coverage for telemedicine or the Kansas medical assistance program from providing coverage for only those services that are medically necessary, subject to the terms and conditions of the covered individual's health benefits plan;
(2) mandate coverage for a healthcare service delivered via telemedicine if such healthcare service is not already a covered healthcare service, when delivered by a healthcare provider subject to the terms and conditions of the covered individual's health benefits plan; or
(3) allow an individual or group health insurance policy, medical service plan, contract, hospital service corporation contract, hospital and medical service corporation contract, fraternal benefit society or health maintenance organization that provides coverage for telemedicine or the Kansas medical assistance program to require a covered individual to use telemedicine or in lieu of receiving an in-person healthcare service or consultation from an in-network provider.
(f) The provisions of K.S.A.
40-2248
and
40-2249a, and amendments thereto, shall not apply to this section.
(g) This section shall take effect on and after January 1, 2019.
History: L. 2018, ch. 98, § 4; July 1.
(a) The state board of healing arts, following consultation with the state board of pharmacy and the board of nursing, shall adopt rules and regulations relating to the prescribing of drugs, including controlled substances, via telemedicine. Such rules and regulations shall be adopted by December 31, 2018.
(b) The state board of healing arts shall adopt such rules and regulations as may be necessary to effectuate the provisions of Kansas telemedicine act. Such rules and regulation*, shall be adopted by December 31, 2018.
(c) The behavioral sciences regulatory board shall adopt such rules and regulations as may be necessary to effectuate the provisions of Kansas telemedicine act. Such rules and regulations shall be adopted by December 31, 2018.
History: L. 2018, ch. 98, § 5; July 1.
Nothing in the Kansas telemedicine act shall be construed to authorize the delivery of any abortion procedure via telemedicine.
History: L. 2018, ch. 98, § 6; July 1.
If any provision of the Kansas telemedicine act, or the application thereof to any person or circumstance, is held invalid or unconstitutional by court order, then the remainder of the Kansas telemedicine act and the application of such provision to other persons or circumstances shall not be affected thereby and it shall be conclusively presumed that the legislature would have enacted the remainder of the Kansas telemedicine act without such invalid or unconstitutional provision, except that the provisions of K.S.A. 40-2,215, and amendments thereto, are expressly declared to be nonseverable.
History: L. 2018, ch. 98, § 7; July 1.
As used in K.S.A. 2025 Supp. 40-2,225 through 40-2,227, and amendments thereto:
(a) "Contracting entity" means any person or entity that enters into a direct contract with a provider for the delivery of dental services in the ordinary course of business, including a third-party administrator and a dental carrier.
(b) "Covered person" means an individual who is covered under a dental benefits or health insurance plan that provides coverage for dental services.
(c) "Credit card payment" means a type of electronic funds transfer in which a dental benefit plan or such plan's contracted vendor issues a single-use series of numbers associated with the payment of dental services performed by a dentist and chargeable to a predetermined dollar amount and in which the dentist is responsible for processing the payment by a credit card terminal or internet portal. "Credit card payment" includes a virtual or online credit card payment where no physical credit card is presented to the dentist, and the single-use credit card expires upon payment processing.
(d) "Dental benefit plan" means a benefits plan that pays or provides dental expense benefits for covered dental services and is delivered or issued for delivery by or through a dental carrier on a stand-alone basis. "Dental benefit plan" includes coverage for dental benefits integrated or otherwise incorporated into the terms and coverage of a health benefits plan.
(e) "Dental carrier" means a dental insurance company, dental service corporation, dental plan organization authorized to provide dental benefits or a health benefits plan that includes coverage for dental services.
(f) "Dental services" means services for the diagnosis, prevention, treatment or cure of a dental condition, illness, injury or disease. "Dental services" does not include services delivered by a provider that are billed as medical expenses under a health benefits plan.
(g) "Dental service contractor" means any person who accepts a prepayment from or for the benefit of any other person or group of persons as consideration for providing to such person or group of persons the opportunity to receive dental services at times in the future as such services may be appropriate or required. "Dental service contractor" does not include a dentist or professional dental corporation that accepts prepayment on a fee-for-service basis for providing specific dental services to individual patients for whom such services have been prediagnosed.
(h) "Dentist" means any dentist licensed or otherwise authorized in this state to provide dental services.
(i) "Dentist agent" means a person or entity that contracts with a dentist establishing an agency relationship to process bills for services provided by the dentist under the terms and conditions of a contract between the agent and dentist, including contractual relationships that permit the agent to submit bills, request reconsideration and receive reimbursement.
(j) "Electronic funds transfer payment" means a payment by any method of electronic funds transfer other than through the automated clearing house network, as codified in 45 C.F.R. §§ 162.1601 and 162.1602.
(k) "Health insurance plan" means any: Hospital or medical insurance policy or certificate; qualified high-deductible health plan; health maintenance organization subscriber contract; contract providing benefits for dental care, whether such contract is pursuant to a medical insurance policy or certificate; stand-alone dental plan; health maintenance provider contract; or managed health care plan.
(l) "Health insurer" means any entity or person that issues a health insurance plan.
(m) "Provider" means an individual or entity that, acting within the scope of licensure or certification, provides dental services or supplies defined by the dental benefit plan. "Provider" does not include a physician organization or physician hospital organization that leases or rents the physician organization's or physician hospital organization's network to a third party.
(n) "Provider network contract" means a contract between a contracting entity and a provider that specifies the rights and responsibilities of the contracting entity and provides for the delivery and payment of dental services to an enrollee.
(o) "Third party" means a person or entity that enters into a contract with a contracting entity or with another third party to gain access to the dental services or contractual discounts of a provider network contract. "Third party" does not include any employer or other group for whom the dental carrier or contracting entity provides administrative services.
History: L. 2022, ch. 49, § 1; July 1.
(a) A contracting entity may grant a third party access to a provider network contract, or a provider's dental services or contractual discounts provided pursuant to a provider network contract, subject to the requirements of subsections (b) and (c).
(b) At the time the contract is entered into, sold, leased or renewed or a when there are material modifications to a contract relevant to granting access to a provider network contract to a third party, the dental carrier shall allow any provider that is part of the carrier's provider network to choose to not participate in third party access to the contract or to enter into a contract directly with the health insurer that acquired the provider network. Opting out of lease arrangements shall not require dentists to cancel or otherwise end a contractual relationship with the original carrier that leases a provider network.
(c) A contracting entity may grant a third party access to a provider network contract, or a provider's dental services or contractual discounts provided pursuant to a provider network contract, if:
(1) The contract specifically states that the contracting entity may enter into an agreement with third parties, allowing such third parties to obtain the contracting entity's rights and responsibilities as if the third party were the contracting entity, or if the contracting entity is a dental carrier, the provider chose to participate in third-party access at the time the provider network contract was entered into or renewed. The third-party access provision of any provider contract shall be clearly identified in the provider contract, including notice that the contract grants third-party access to the provider network and that the dentist has the right to choose not to participate in third-party access;
(2) the third party accessing the contract agrees to comply with all of the contract's terms, including such third party's obligation concerning patient steerage;
(3) the contracting entity identifies to the provider, in writing or electronic form, all third parties in existence as of the date the contract is entered into, sold, leased or renewed;
(4) the contracting entity identifies all third parties in existence in a list on its website that is updated at least once every 90 days;
(5) the contracting entity requires a third party to identify the source of the discount on all remittance advices or explanations of payment under which a discount is taken, except that this paragraph shall not apply to electronic transactions mandated by the health insurance portability and accountability act of 1996, public law 104-191;
(6) the contracting entity notifies the third party of the termination of a provider network contract not later than 30 days from the termination date with the contracting entity; and
(7) a third party's right to a provider's discounted rate ceases as of the termination date of the provider network contract. The contracting entity shall make available a copy of the provider network contract relied on in the adjudication of a claim to a provider within 30 days of a request from the provider.
(d) No provider shall be bound by or required to perform dental treatment or services under a provider network contract that has been granted to a third party in violation of K.S.A. 2025 Supp. 40-2,225 through 40-2,228, and amendments thereto.
(e) The provisions of this section shall not apply to:
(1) Access to a provider network contract that is granted to a dental carrier or an entity operating in accordance with the same brand licensee program as the contracting entity or to an entity that is an affiliate of the contracting entity. A list of the contracting entity's affiliates shall be made available to a provider on the contracting entity's website; or
(2) a provider network contract for dental services provided to beneficiaries of state-sponsored health programs, including medical assistance and the children's health insurance program.
(f) The provisions of this section shall not be waived by contract. Any contractual arrangement in conflict with the provisions of this section or that purports to waive any requirements of this section shall be null and void and unenforceable.
History: L. 2022, ch. 49, § 2; July 1.
(a) No dental benefit plan shall contain restrictions on methods of payment to a dentist from the dental benefit plan, such plan's contracted vendor or health maintenance organization in which the only acceptable payment method is a credit card payment.
(b) If initiating or changing payments to a dentist using electronic funds transfer payments, including virtual credit card payments, a dental benefit plan, such plan's contracted vendor or health maintenance organization shall:
(1) Notify the dentist if any fees are associated with a particular payment method; and
(2) advise the dentist of the available methods of payment and provide clear instructions to the dentist as to how to select an alternative payment method.
(c) A dental benefit plan, such plan's contracted vendor or health maintenance organization that initiates or changes payments to a dentist through the automated clearing house network, as codified in 45 C.F.R. §§ 162.1601 and 162.1602, shall not charge a fee solely to transmit the payment to a dentist unless the dentist has consented to such fee. A dentist's agent may charge reasonable fees when transmitting an automated clearing house network payment related to transaction management, data management, portal services and other value-added services in addition to the bank transmittal.
(d) The provisions of this section shall not be waived by contract. Any contractual arrangement in conflict with the provisions of this section or that purports to waive any requirements of this section shall be null and void and unenforceable.
History: L. 2022, ch. 49, § 3; July 1.
Any violation of K.S.A. 2025 Supp. 40-2,225 through 40-2,227, and amendments thereto, shall be subject to enforcement by the commissioner of insurance.
History: L. 2022, ch. 49, § 4; July 1.
(a) K.S.A. 2025 Supp. 40-2,231 through 40-2,240, and amendments thereto, shall be known and may be cited as the Kansas travel insurance act.
(b) The Kansas travel insurance act shall be a part of and supplemental to article 2 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto.
History: L. 2023, ch. 42, § 1; January 1, 2024.
(a) The purpose of this act is to promote the public welfare by establishing a comprehensive legal framework within which travel insurance may be sold.
(b) The requirements of this act shall apply to travel insurance that covers any resident of this state, that is sold, solicited, negotiated or offered in this state and policies and certificates that are delivered or issued for delivery in this state. This act shall not apply to cancellation fee waivers or travel assistance services except as expressly provided in this act.
(c) All other applicable provisions of the insurance laws of this state shall apply to travel insurance except that the specific provisions of this act shall supersede any general provisions of law that would otherwise be applicable to travel insurance.
History: L. 2023, ch. 42, § 2; January 1, 2024.
As used in Kansas travel insurance act:
(a) "Act" means the Kansas travel insurance act.
(b) "Aggregator site" means a website that provides access to information regarding insurance products from more than one insurer, including product and insurer information, for use in comparison shopping.
(c) "Blanket travel insurance" means a policy of travel insurance issued to any eligible group providing coverage for specific classes of persons defined in the policy with coverage provided to all members of the eligible group without a separate charge to individual members of the eligible group.
(d) "Cancellation fee waiver" means a contractual agreement between a supplier of travel services and its customer to waive some or all of the non-refundable cancellation fee provisions of the supplier's underlying travel contract with or without regard to the reason for the cancellation or form of reimbursement. "Cancellation fee waiver" is not insurance.
(e) "Commissioner" means the commissioner of insurance.
(f) "Delivery" means handing fulfillment materials to the policyholder or certificate holder or sending such fulfillment materials to the policyholder or certificate holder using United States mail or electronic means.
(g) "Eligible group" means two or more persons who are engaged in a common enterprise, or have an economic, educational or social affinity or relationship, including but not limited to, the following:
(1) (A) Any entity engaged in the business of providing travel or travel services, including but not limited to: (i) Tour operators; (ii) lodging providers; (iii) vacation property owners; (iv) hotels and resorts; (v) travel clubs; (vi) travel agencies; (vii) property managers; (viii) cultural exchange programs; and (ix) common carriers or the operator, owner or lessor of a means of transportation of passengers, including, but not limited to, airlines, cruise lines, railroads, steamship companies and public bus carriers;
(B) With regard to any particular travel or type of travel or travelers, all members or customers of the eligible group shall have a common exposure to risk attendant to such travel;
(2) colleges, schools or other institutions of learning, covering students, teachers, employees or volunteers;
(3) employers covering groups of employees, volunteers, contractors, boards of directors, dependents or guests;
(4) sports teams, camps or sponsors thereof, covering participants, members, campers, employees, officials, supervisors or volunteers;
(5) religious, charitable, recreational, educational or civic organizations or branches thereof, covering groups of members, participants or volunteers;
(6) financial institutions or financial institution vendors or parent holding companies, trustees or agents of, or designated by, one or more financial institutions or financial institution vendors, including account holders, credit card holders, debtors, guarantors or purchasers;
(7) incorporated or unincorporated associations, including labor unions, that have a common interest, constitution and bylaws, and are organized and maintained in good faith for purposes other than obtaining insurance for members or participants of such association covering its members;
(8) trusts or trustees of a fund established, created or maintained for the benefit of and covering members, employees or customers, subject to the commissioner permitting the use of a trust and the premium tax provisions described in K.S.A. 2025 Supp. 40-2,235, and amendments thereto, of one or more associations described in paragraph (7);
(9) entertainment production companies covering participants, volunteers, audience members, contestants or workers;
(10) volunteer fire departments, ambulances, rescues, police, courts or any first aid, civil defense or other such volunteer groups;
(11) preschools, daycare institutions for children or adults and senior citizen clubs;
(12) automobile or truck rental or leasing companies covering groups of individuals who may become renters, lessees or passengers defined by their travel status on the rented or leased vehicles. The common carrier, the operator, owner or lessor of a means of transportation or the automobile or truck rental or leasing company, shall be the policyholder under a policy to which this section applies; or
(13) any other group whereby the commissioner has determined that the members are engaged in a common enterprise, or have an economic, educational or social affinity or relationship and that issuance of the policy would not be contrary to the public interest.
(h) "Fulfillment materials" means documentation sent to the purchaser of a travel protection plan that confirms the purchase and provides details of the coverage and assistance of the travel protection plan.
(i) "Group travel insurance" means travel insurance issued to any eligible group.
(j) "Limited lines travel insurance producer" means a:
(1) Licensed managing general agent or third-party administrator;
(2) licensed insurance producer, including a limited lines producer; or
(3) travel administrator.
(k) "Offer and disseminate" means providing general information including a description of the coverage and price, as well as processing of the application and collecting premiums.
(l) "Primary certificate holder" means an individual person who elects and purchases travel insurance under a group policy.
(m) "Primary policyholder" means an individual person who elects and purchases individual travel insurance.
(n) "Travel administrator" means a person who directly or indirectly underwrites, collects charges, collateral or premiums from, or adjusts or settles claims on, residents of this state in connection with travel insurance. "Travel administrator" does not include the following:
(1) An individual working for a travel administrator to the extent that the person's activities are subject to the supervision and control of the travel administrator;
(2) an insurance producer selling insurance or engaged in administrative and claims-related activities within the scope of the producer's license;
(3) a travel retailer offering and disseminating travel insurance and registered under the license of a limited lines travel insurance producer in accordance with this act;
(4) an individual adjusting or settling claims in the normal course of such individual's practice or employment as an attorney-at-law and who does not collect charges or premiums in connection with insurance coverage; or
(5) a business entity that is affiliated with a licensed insurer while acting as a travel administrator for the direct and assumed insurance business of an affiliated insurer.
(o) "Travel assistance services" means non-insurance services for which the consumer is not indemnified based on a fortuitous event and where providing the service does not result in transfer or shifting of risk that would constitute the business of insurance. Travel assistance services include, but are not limited to:
(1) Security advisories;
(2) destination information;
(3) vaccination and immunization information services;
(4) travel reservation services;
(5) entertainment;
(6) activity and event planning;
(7) translation assistance;
(8) emergency messaging;
(9) international legal and medical referrals;
(10) medical case monitoring;
(11) coordination of transportation arrangements;
(12) emergency cash transfer assistance;
(13) medical prescription replacement assistance;
(14) passport and travel document replacement assistance;
(15) lost luggage assistance;
(16) concierge services; and
(17) any other service that is furnished in connection with planned travel. Travel assistance services are not insurance and are not related to insurance.
(p) (1) "Travel insurance" means insurance coverage for personal risks incidental to planned travel, including:
(A) Interruption or cancellation of a trip or event;
(B) loss of baggage or personal effects;
(C) damages to accommodations or rental vehicles;
(D) sickness, accident, disability or death occurring during travel;
(E) emergency evacuation;
(F) repatriation of remains; or
(G) any other contractual obligations to indemnify or pay a specified amount to the traveler upon determinable contingencies related to travel as approved by the commissioner.
(2) "Travel insurance" does not include major medical plans that provide comprehensive medical protection for travelers with trips lasting longer than six months, including those working or residing overseas as an expatriate or any other product that requires a specific insurance producer license.
(q) "Travel protection plans" means plans that provide one or more of the following:
(1) Travel insurance;
(2) travel assistance services; or
(3) cancellation fee waivers.
(r) "Travel retailer" means a business entity that makes, arranges or offers planned travel and may offer and disseminate travel insurance as a service to its customers on behalf of and under the direction of a limited lines travel insurance producer.
History: L. 2023, ch. 42, § 3; January 1, 2024.
(a) The commissioner may issue a limited lines travel insurance producer license to an individual or business entity that has filed with the commissioner an application for a limited lines travel insurance producer license in a form and manner prescribed by the commissioner. Such limited lines travel insurance producer shall be licensed to sell, solicit or negotiate travel insurance through a licensed insurer. No person shall act as a limited lines travel insurance producer or travel insurance retailer unless properly licensed or registered, respectively.
(b) A travel retailer may offer and disseminate travel insurance under a limited lines travel insurance producer business entity license only if the following conditions are met:
(1) The limited lines travel insurance producer or travel retailer provides to purchasers of travel insurance:
(A) A description of the material terms or the actual material terms of the insurance coverage;
(B) a description of the process for filing a claim;
(C) a description of the review or cancellation process for the travel insurance policy; and
(D) the identity and contact information of the insurer and limited lines travel insurance producer;
(2) the limited lines travel insurance producer shall:
(A) At the time of licensure, have established a register, on a form prescribed by the commissioner, of each travel retailer that offers travel insurance on the limited lines travel insurance producer's behalf. The register shall be maintained and updated by the limited lines travel insurance producer and include the name, address and contact information of the travel retailer and an officer or person who directs or controls the operations of such travel retailer and the federal tax identification number of such travel retailer;
(B) submit such register to the insurance department upon reasonable request; and
(C) certify that the travel retailer registered complies with 18 U.S.C. § 1033. The grounds for the suspension, revocation and penalties applicable to resident insurance producers under K.S.A. 40-4909, and amendments thereto, shall be applicable to limited lines travel insurance producers and travel retailers;
(3) the limited lines travel insurance producer has designated one of its employees, who is a licensed individual producer, as a designated responsible producer responsible for the compliance with the travel insurance laws and regulations applicable to the limited lines travel insurance producer and its registrants;
(4) the designated responsible producer, president, secretary, treasurer and any other officer or person who directs or controls the limited lines travel insurance producer's insurance operations complies with the fingerprinting requirements applicable to insurance producers in the resident state of the limited lines travel insurance producer;
(5) the limited lines travel insurance producer has paid all applicable licensing fees as required by state law; and
(6) the limited lines travel insurance producer requires each employee and authorized representative of the travel retailer whose duties include offering and disseminating travel insurance to receive a program of instruction or training, which is subject, at the discretion of the commissioner, to review and approval. The training material shall include, but not be limited to, adequate instructions on the types of insurance offered, ethical sales practices and required disclosures to prospective customers.
(c) Any travel retailer offering or disseminating travel insurance shall make available to each prospective purchaser such brochures or other written materials as have been approved by the travel insurer. Such materials shall include, but not be limited to, the following information:
(1) The identity and contact information of the insurer and the limited lines travel insurance producer;
(2) an explanation that the purchase of travel insurance is not required to purchase any other product or service from the travel retailer; and
(3) an explanation that an unlicensed travel retailer is permitted to provide only general information about the insurance offered by the travel retailer, including a description of the coverage and price, but is not qualified or authorized to answer technical questions about the terms and conditions of the insurance offered by the travel retailer or to evaluate the adequacy of the customer's existing insurance coverage.
(d) A travel retailer employee or authorized representative, who is not licensed as an insurance producer shall not:
(1) Evaluate or interpret the technical terms, benefits and conditions of the offered travel insurance coverage;
(2) evaluate or provide advice concerning a prospective purchaser's existing insurance coverage; or
(3) hold such travel retailer employee or authorized representative out as a licensed insurer, licensed producer or insurance expert.
(e) Notwithstanding any other provision in law, a travel retailer whose insurance-related activities and the activities of the employees and authorized representatives of such travel retailer are limited to offering and disseminating travel insurance on behalf of and under the direction of a limited lines travel insurance producer that meets the conditions stated in this act is authorized to receive related compensation, upon registration by the limited lines travel insurance producer pursuant to subsection (b)(2).
(f) As the insurer's designee, the limited lines travel insurance producer shall be responsible for the acts of the travel retailer and shall use reasonable means to ensure compliance by the travel retailer with this act.
History: L. 2023, ch. 42, § 4; January 1, 2024.
(a) A travel insurer shall pay premium tax, pursuant to K.S.A. 40-252, and amendments thereto, on travel insurance premiums paid by any of the following:
(1) An individual primary policyholder who is a resident of this state;
(2) a primary certificate-holder who is a resident of this state and who elects coverage under a group travel insurance policy; or
(3) a blanket travel insurance policyholder that is a resident of or has its principal place of business or the principal place of business of an affiliate or subsidiary in this state that has purchased blanket travel insurance for eligible blanket group members, subject to any apportionment rules that apply to the insurer across multiple taxing jurisdictions or that permit the insurer to allocate premium on an apportioned basis in a reasonable and equitable manner in those jurisdictions.
(b) A travel insurer shall:
(1) Document the state of residence or principal place of business of each policyholder or certificate holder described in subsection (a); and
(2) report as premium only the amount allocable to travel insurance and not any amounts received for travel assistance services or cancellation fee waivers.
History: L. 2023, ch. 42, § 5; January 1, 2024.
Travel protection plans may combine the features that such travel protection plan offers in this state for one price if:
(a) The travel protection plan clearly discloses to the consumer, at or prior to the time of purchase, that it includes travel insurance, travel assistance services and cancellation fee waivers as applicable and provides information and an opportunity, at or prior to the time of purchase, for the consumer to obtain additional information regarding the features and pricing of each; and
(b) the fulfillment materials:
(1) Describe and delineate the travel insurance, travel assistance services and cancellation fee waivers in the travel protection plan; and
(2) include the travel insurance disclosures and contact information for persons providing travel assistance services and cancellation fee waivers, as applicable.
History: L. 2023, ch. 42, § 6; January 1, 2024.
(a) Each person offering travel insurance to residents of this state shall be subject to the unfair trade practice law, K.S.A. 40-2401 et seq., and amendments thereto, except as otherwise provided in this section. In the event of a conflict between this act and other provisions of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, regarding the sale and marketing of travel insurance and travel protection plans, the provisions of this act shall control.
(b) Offering or selling a travel insurance policy that could never result in payment of any claims for any insured under the policy is an unfair trade practice under the unfair trade practice law, K.S.A. 40-2401 et seq., and amendments thereto.
(c) Each person that offers travel insurance policies or travel protection plans shall comply with the following:
(1) All documents provided to a consumer prior to the purchase of travel insurance, including, but not limited to, sales materials, advertising materials and marketing materials, forms, endorsements, policies, rate filings and certificates of insurance, shall be consistent with the travel insurance policy itself, including, but not limited to, forms, endorsements, policies, rate filings and certificates of insurance;
(2) for each travel insurance policy or certificate that contains pre-existing condition exclusions, information and an opportunity to learn more about such pre-existing condition exclusions shall be provided to the consumer at any time prior to the time of purchase and in the coverage's fulfillment materials;
(3) the fulfillment materials and the information described in section 4(b)(1), and amendments thereto, shall be provided to a policyholder or certificate holder as soon as practicable, following the purchase of a travel protection plan. Unless the policyholder or certificate holder has either started a covered trip or filed a claim under the travel insurance coverage, such policyholder or certificate holder may cancel a policy or certificate for a full refund of the travel protection plan price from the date of purchase of a travel protection plan until at least:
(A) 15 days following the date of delivery of the travel protection plan's fulfillment materials by postal mail; or
(B) 10 days following the date of delivery of the travel protection plan's fulfillment materials by means other than postal mail;
(4) the company shall disclose in the policy documentation and fulfillment materials whether the travel insurance is primary or secondary to other applicable coverage; and
(5) where travel insurance is marketed directly to a consumer through an insurer's website or by others through an aggregator site, it shall not be an unfair trade practice or other violation of law where an accurate summary or short description of coverage is provided on the web page, so long as the consumer has access to the full provisions of the policy through electronic means.
(d) No person offering, soliciting or negotiating travel insurance or travel protection plans on an individual or group basis may do so by using a negative option or opt out, that would require a consumer to take an affirmative action to deselect coverage, such as unchecking a box on an electronic form, when the consumer purchases a trip.
(e) It shall be an unfair trade practice to market blanket travel insurance coverage as free.
(f) Where the jurisdiction of a consumer's destination requires insurance coverage, it shall not be an unfair trade practice to require that such consumer choose between the following options as a condition of purchasing a trip or travel package:
(1) Purchasing the coverage required by the destination jurisdiction through the travel retailer or limited lines travel insurance producer supplying the trip or travel package; or
(2) agreeing to obtain and provide proof of coverage that meets the destination jurisdiction's requirements prior to departure.
History: L. 2023, ch. 42, § 7; January 1, 2024.
(a) Notwithstanding any other provision of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, no person shall act or represent itself as a travel administrator for travel insurance in this state unless such person:
(1) Is a licensed property and casualty insurance producer in this state for activities permitted under that producer license;
(2) holds a valid managing general agent license in this state; or
(3) holds a valid third-party administrator license in this state.
(b) An insurer shall be responsible for the acts of a travel administrator that administers travel insurance underwritten by the insurer and shall ensure that the travel administrator maintains all books and records relevant to the insurer be made available by the travel administrator to the commissioner, upon request.
History: L. 2023, ch. 42, § 8; January 1, 2024.
(a) Notwithstanding any other provision of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, travel insurance shall be classified and filed for purposes of rates and forms under an inland marine line of insurance. Travel insurance that provides coverage for sickness, accident, disability or death occurring during travel either exclusively, or in conjunction with related coverages of emergency evacuation or repatriation of remains, may be classified and filed under either an accident and health or an inland marine line of insurance.
(b) Travel insurance may be in the form of an individual, group or blanket policy.
(c) Eligibility and underwriting standards for travel insurance may be developed and provided based on travel protection plans designed for individual or identified marketing or distribution channels, if those standards also meet underwriting standards of the state for inland marine insurance.
History: L. 2023, ch. 42, § 9; L. 2025, ch. 99, § 16; July 1.
The commissioner may adopt rules and regulations to implement and enforce the provisions of this act.
History: L. 2023, ch. 42, § 10; January 1, 2024.
(a) K.S.A. 2025 Supp. 40-2,241 through 40-2,250, and amendments thereto, shall be known and may be cited as the Kansas real time motor vehicle insurance verification act.
(b) As used in this act:
(1) "Act" means the Kansas real time motor vehicle insurance verification act.
(2) "Commercial vehicle coverage" means any coverage provided to an insured, regardless of number of vehicles covered, under a commercial coverage form and rated from a commercial manual approved by the department.
(3) "Commissioner" means the commissioner of insurance.
(4) "Department" means the Kansas insurance department.
(5) "Insurance verification system" means the web-based system for online verification of motor vehicle liability insurance.
(6) "KDOR" means the Kansas department of revenue.
History: L. 2025, ch. 94, § 1; July 1.
(a) The commissioner shall establish a web-based system for online verification of motor vehicle insurance and require motor vehicle insurers to establish functionality for such system, as specified in this act. Implementation of the insurance verification system, including any exceptions as provided for in this act, supersedes any existing motor vehicle liability insurance verification system requirements and shall be the sole electronic system used for the purpose of verifying motor vehicle liability insurance as required by the laws of Kansas.
(b) The commissioner shall adopt such reasonable rules and regulations as are necessary to effectuate the provisions of this act.
History: L. 2025, ch. 94, § 2; July 1.
The insurance verification system shall:
(a) (1) Transmit requests to insurers for verification of motor vehicle liability insurance via web services established by the insurers in compliance with specifications and standards prescribed by the commissioner in rules and regulations; and
(2) insurance company systems shall respond to each request for verification of motor vehicle liability insurance with a prescribed response upon evaluation of the data provided in such request;
(b) include appropriate provisions to secure its data against unauthorized access in accordance with applicable data privacy protection laws;
(c) be used for verification of motor vehicle liability insurance as prescribed by the laws of Kansas and shall be accessible to authorized personnel of the department, KDOR division of vehicles, the courts, law enforcement agencies and other entities authorized by state or federal privacy laws;
(d) be interfaced, wherever appropriate, with existing state systems; and
(e) include information that shall enable authorized personnel to make inquiries of insurers of motor vehicle liability insurance by using multiple data elements for greater matching accuracy. Such information shall be limited to:
(1) Insurer national association of insurance commissioners company code number;
(2) vehicle identification number;
(3) policy number;
(4) verification date; or
(5) any other information required by the commissioner or KDOR to operate the insurance verification system.
History: L. 2025, ch. 94, § 3; July 1.
The commissioner may conduct a competitive bid and contract with a private service provider that has successfully implemented similar systems in other states to assist in establishing, implementing and maintaining the insurance verification system.
History: L. 2025, ch. 94, § 4; July 1.
The department shall provide funding for the implementation, ongoing maintenance and enhancement of the insurance verification system created by this act from the insurance department regulation service fund, established under K.S.A. 40-112, and amendments thereto.
History: L. 2025, ch. 94, § 5; July 1.
(a) Insurers shall cooperate with the commissioner and KDOR in establishing and maintaining the insurance verification system and provide motor vehicle insurance policy status information as provided in rules and regulations established by the commissioner.
(b) Insurer systems shall be permitted reasonable system downtime for maintenance and other work with advance notice to KDOR. Insurers shall not be subject to enforcement fees or other penalties under such circumstances or when systems are unavailable because of emergency, outside attack or other unexpected outages not planned by the insurer and that are reasonably outside its control as determined by KDOR.
(c) Each property and casualty insurance company that is licensed to issue motor vehicle liability insurance or is authorized to do business in Kansas shall provide verification of liability insurance for every motor vehicle insured in Kansas by such company as required by this act.
(d) This act shall not apply to vehicles insured under commercial motor vehicle coverage, except that insurers of such vehicles may participate on a voluntary basis.
(e) Insurers shall not be required to verify evidence of insurance for vehicles registered in other jurisdictions.
(f) Insurers shall be immune from civil and administrative liability for good faith efforts to comply with the terms of this act.
(g) Nothing in this section shall prohibit an insurer from using the services of a third-party vendor to facilitate the insurance verification program required by this act.
History: L. 2025, ch. 94, § 6; July 1.
The commissioner may establish, through rules and regulations, an alternative method for verifying motor vehicle liability insurance for insurers that insure 1,000 or fewer vehicles within Kansas.
History: L. 2025, ch. 94, § 7; July 1.
All information and data provided by insurance companies to the insurance verification system, and all reports, responses or other information generated for the purposes of the insurance verification system shall be confidential by law and privileged, shall not be subject to the open records act, K.S.A. 45-215, and amendments thereto, and shall not be subject to discovery or admissible as evidence in any private civil action.
History: L. 2025, ch. 94, § 8; July 1.
The insurance verification system shall be fully operational not later than July 1, 2026, following an appropriate testing period of not less than nine months. No enforcement action shall be taken based on information obtained from the insurance verification system until such system has successfully completed the testing period.
History: L. 2025, ch. 94, § 9; July 1.
Establishing compliance with the provisions of K.S.A. 40-3104, and amendments thereto, through the insurance verification system shall not be the primary cause for law enforcement to stop a vehicle.
History: L. 2025, ch. 94, § 10; July 1.
(a) The commissioner is hereby authorized to select and announce the version of insurance calculations, instructions promulgated by the NAIC or other documents required by the NAIC that shall be in effect for the next calendar year. Not later than December 1 of each year, the commissioner shall cause such announcement to be published in the Kansas register.
(b) Calculations and instructions include, but are not limited to, risk-based capital instructions, as used in K.S.A. 40-2c01, and amendments thereto, risk-based capital managed care instructions, as used in K.S.A. 40-2d01, and amendments thereto, and group capital calculation instructions, as used in K.S.A. 40-3302, and amendments thereto.
History: L. 2025, ch. 99, § 12; July 1.
Any insurance company other than life heretofore or hereafter organized under any law of this state may invest with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in bonds or other evidences of indebtedness issued, assumed or guaranteed by the United States of America, or by any agency or instrumentality thereof. Such insurance company may write call options on government obligations permitted under this section which it owns. Call options may be purchased for the sole purpose of closing out a position taken previously with respect to one or more options having been written. The purchase of a call option for any reason other than as a closing transaction and the writing of naked (uncovered) call options are hereby prohibited.
Any United States government obligation owned by an insurance company obligated under an unexpired written call option shall be valued at the lesser of the striking price or value established in accordance with the method of valuation as prescribed by the commissioner of insurance for financial reporting purposes.
"Striking price" means the price per United States government obligation, exclusive of selling costs, the company would receive should the call option be exercised by the holder.
History: L. 1972, ch. 173, § 1; L. 1989, ch. 134, § 1; July 1.
Any insurance company other than life heretofore or hereafter organized under any law of this state may invest with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in bonds or other evidences of indebtedness issued, assumed or guaranteed by the District of Columbia, or by any state, insular or territorial possession of the United States of America, or by any county, city, town, school, road, drainage or other district, located within any state, insular or territorial possession of the United States of America, or by any political or civil subdivision or governmental authority of any such state, district or insular or territorial possession, or by any agency or instrumentality of or authority related to any one or more such states, districts, or insular or territorial possessions, or political or civil subdivisions.
History: L. 1972, ch. 173, § 2; July 1.
Any insurance company other than life heretofore or hereafter organized under any law of this state may invest with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in bonds or other evidences of indebtedness issued, assumed or guaranteed by the Dominion of Canada, or by any province thereof, or by any municipality, district, agency or instrumentality thereof.
History: L. 1972, ch. 173, § 3; July 1.
Any insurance company other than life heretofore or hereafter organized under any law of this state may invest with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in bonds or other evidences of indebtedness issued, assumed or guaranteed by any foreign government, except as provided in K.S.A. 40-2a03, and amendments thereto, in an amount not to exceed 5% of its admitted assets as shown by the company's last annual report as filed with the state commissioner of insurance or a more recent quarterly financial statement as filed with the commissioner, on a form prescribed by the national association of insurance commissioners, within 45 days following the end of the calendar quarter to which the interim statement pertains. The 5% limitation shall be in addition to any investments in foreign nations required by virtue of a company doing business in a foreign nation.
History: L. 1972, ch. 173, § 4; L. 1987, ch. 160, § 1; July 1.
Any insurance company other than life heretofore or hereafter organized under any law of this state may invest by loans or otherwise, with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in bonds or other evidences of indebtedness issued, assumed or guaranteed by a business entity organized under the laws of the United States of America, or of any state, district, insular or territorial possession thereof, or of the Dominion of Canada or any province thereof which are designated "1" or "2" by the SVO or its equivalent rating by a nationally recognized statistical rating organization recognized by the SVO at the time of acquisition; or which meet the following qualifications:
(a) If fixed-interest bearing obligations, the average fixed charges shall have been covered at least 1½ times by the average net earnings available for fixed charges of the last five years, and the business entity shall have earnings in two of the last three fiscal years immediately preceding the date of acquisition. In the case of obligations of finance companies, the coverage shall be at least
1¼ times;
(b) if income, or other contingent interest obligations, the net earnings available for fixed charges of the business entity for the five fiscal years next preceding the date of acquisition of the obligations shall have averaged per year not less than 1½ times the sum of the fixed charges and the maximum contingent interest to which the business entity is subject as of the date of acquisition, and the company shall have earnings in two of the last three fiscal years immediately preceding the date of acquisition. In the case of obligations of finance companies, the coverage shall be at least 1¼ times;
(c) the business entity or a predecessor thereof must have been in existence for a period of not less than five years;
(d) investments in any obligations under this act shall not be eligible if the business entity is in default on any fixed obligations as of the date of acquisition. Statements adjusted to show the actual condition at the time of acquisition or at effect of new financing (known commercially as pro forma statements) may be used when determining investments in this act or in compliance with requirements.
(e) As used in this section:
(1) The term "fixed charges" includes actual interest incurred in each year on funded and unfunded debt. In the testing of obligations where interest is partially or entirely contingent upon earnings, fixed charges shall include contingent interest payments;
(2) the term "net earnings available for fixed charges" means income, before deducting interest on funded and unfunded debt and after deducting operating and maintenance expenses, taxes other than income taxes, depreciation and depletion. Extraordinary, nonrecurring items of income or expense shall be excluded;
(3) the term "business entity" includes a sole proprietorship, corporation, limited liability company, association, partnership, joint stock company, joint venture, mutual fund, trust, joint tenancy or similar form of business organization, whether organized for profit or not-for-profit;
(4) the term "NAIC" means the national association of insurance commissioners; and
(5) the term "SVO" means the securities valuation office of the NAIC or any successor office established by the NAIC.
History: L. 1972, ch. 173, § 5; L. 1987, ch. 160, § 2; L. 1991, ch. 130, § 1; L. 2015, ch. 7, § 1; July 1.
Any insurance company other than life heretofore or hereafter organized under any law of this state may invest with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in bonds, certificates or other evidences of indebtedness secured by any transportation or other equipment used wholly or in part within the United States of America or Dominion of Canada, that provide a right to receive determined rental, purchase or other fixed obligatory payments adequate to retire the obligations and also provide for vesting of title to such equipment free from incumbrance in a corporate trustee, or for creation of a first lien on such equipment.
History: L. 1972, ch. 173, § 6; July 1.
Any insurance company other than life heretofore or hereafter organized under any law of this state may invest by loans or otherwise, with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in preferred stocks of, or stocks guaranteed by, a corporation incorporated under the laws of the United States of America, or of any state, district, insular or territorial possession thereof, or of the Dominion of Canada, or any province thereof, in an amount not to exceed 25% of its admitted assets as shown by the company's last annual report, as filed with the state commissioner of insurance, or a more recent quarterly financial statement as filed with the commissioner, on a form prescribed by the national association of insurance commissioners, within 45 days following the end of the calendar quarter to which the interim statement pertains, and which meets the following qualifications:
(a) All bonds or other evidences of indebtedness and preferred stocks shown on the last published annual statement of the issuing corporation, if any, senior to the preferred stock acquired must be eligible as investments under K.S.A. 40-2a05 or 40-2a07, and amendments thereto, as of the date of acquisition;
(b) if cumulative preferred, not in arrears as to dividends, or if noncumulative, has paid full dividends in each of the last three years;
(c) sinking fund payments are on a current basis;
(d) if net earnings available for fixed charges for the most recently completed three fiscal year period is at least equal to 1¼ times the aggregate fixed charges, plus full contingent interest and preferred dividend requirements of the preferred stock under consideration and those on a parity therewith or having a priority thereto, for the same period; and
(e) the corporation or a predecessor thereof, must have been in existence for a period of not less than five years.
(f) As used in this section:
(1) "Fixed charges" shall include actual interest incurred in each year on funded and unfunded debt; and
(2) "net earnings" shall mean income, before deducting interest on funded and unfunded debt, and after deducting operating and maintenance expenses, depreciation and depletion, and all taxes (including income taxes). Extraordinary, nonrecurring items of income or expense shall be excluded.
History: L. 1972, ch. 173, § 7; L. 1987, ch. 160, § 3; July 1.
Any insurance company other than life heretofore or hereafter organized under any law of this state may invest by loans or otherwise, with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in the equity interests of any business entity organized and doing business under the laws of the United States of America, or of any state, district, insular or territorial possession thereof; or of the Dominion of Canada or any province thereof; or of any other country or subdivision thereof; in an amount, based upon cost, not exceeding 15% of its admitted assets as shown by the company's last annual report as filed with the state commissioner of insurance or a more recent quarterly financial statement as filed with the commissioner, on a form prescribed by the national association of insurance commissioners, within 45 days following the end of the calendar quarter to which the interim statement pertains. Such insurance company may write exchange traded, covered call options on equity interests it owns and may purchase call options for the sole purpose of closing out a position taken previously with respect to one or more options having been written. The purchase of a call option for any reason other than as a closing transaction and the writing of naked (uncovered) call options are hereby prohibited. Investments in equity interests and the writing of call options shall be further limited as provided in subsections (a) through (g) except that subsections (a) through (e) shall only apply to an amount that exceeds 7.5% of any insurance company's admitted assets.
(a) The obligations, if any, shown on the last published annual statement of such business entity must be eligible for investment under K.S.A. 40-2a05, and amendments thereto;
(b) cash dividends have been paid during each of the last three years preceding the date of acquisition;
(c) the equity interest is registered with a national securities exchange regulated under the securities exchange act of 1934, as amended, or is regularly traded on a national or regional basis;
(d) the business entity shall have earnings in three of the last five years preceding the date of acquisition;
(e) at no time shall an insurance company invest in more than 5% of the outstanding equity interests of any one such business entity, nor an amount more than 2% of the investing insurance company's admitted assets in the outstanding equity interests of any one such business entity, determined on the basis of the cost of such equity interests to the insurance company at the time of purchase;
(f) an equity interest owned by an insurance company that is obligated under an unexpired written call option shall be valued at the lesser of the striking price or current market value. For the purposes of this subsection, "striking price" means the price per equity interest, exclusive of selling costs, the company would receive should the call option be exercised by the holder;
(g) the provisions of subsections (b) and (d) shall not apply, if at the time of acquisition:
(1) The issuing business entity has net assets of $10,000,000 or more;
(2) the issuing business entity has a net worth of $1,000,000 or more; and
(3) the issuing business entity has an aggregate market value of $500,000,000 or more.
(h) As used in this section:
(1) "Business entity" includes a sole proprietorship, corporation, limited liability company, association, partnership, joint stock company, joint venture, mutual fund, trust, joint tenancy or other similar form of business organization, whether organized for profit or not-for-profit.
(2) "Equity interest" means any of the following:
(A) Common stock;
(B) trust certificate;
(C) equity investment in an investment company other than a money market mutual fund permitted under K.S.A. 40-2a22, and amendments thereto;
(D) investment in a common trust fund of a bank regulated by a federal or state agency;
(E) an ownership interest in minerals, oil or gas, the rights to which have been separated from the underlying fee interest in the real estate where the minerals, oil or gas are located;
(F) instruments which are mandatorily, or at the option of the issuer, convertible to equity;
(G) limited partnership interests;
(H) member interests in limited liability companies;
(I) warrants or other rights to acquire equity interests that are created by the person that owns or would issue the equity to be acquired; or
(J) any other security representing an ownership interest in a business entity.
History: L. 1972, ch. 173, § 8; L. 1978, ch. 172, § 1; L. 1983, ch. 156, § 1; L. 1987, ch. 160, § 4; L. 1995, ch. 22, § 1; L. 2014, ch. 43, § 1; July 1.
Any insurance company other than life heretofore or hereafter organized under any law of this state may invest with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in:
(a) Stock in any insurance company or health maintenance organization, notwithstanding subsection (e) of K.S.A. 40-2a08, and amendments thereto. Before more than 5% of the outstanding shares of stock of any insurance company or health maintenance organization is acquired, or a tender offer made therefor, prior written approval of the commissioner of insurance must be secured;
(b) stock in an incorporated insurance agency: (1) If 5% or less of the outstanding shares of stock of such agency is acquired, the provisions of K.S.A. 40-2a08, and amendments thereto, shall apply; (2) if more than 5% of the outstanding shares of such incorporated agency is acquired, or a tender offer is made therefor, the prior approval of the commissioner of insurance shall be required and the provisions of subsection (d) of K.S.A. 40-2a08, and amendments thereto, shall apply. In valuing the stock of the agency, the assets of the agency shall be valued as if held directly by an insurance company; and (3) if majority interest in an incorporated insurance agency results from the organization of an agency by the insurance company to which this act applies, such investments shall be subject to the provisions of K.S.A. 40-2a16, and amendments thereto, until it has produced earnings for three out of five consecutive years. Such stock shall not be eligible for deposit with the commissioner of insurance as part of the legal reserve of such insurance company;
(c) stock in a holding corporation: (1) If 5% or less of the outstanding shares of stock of such holding corporation is acquired, the provisions of K.S.A. 40-2a08, and amendments thereto, shall apply; (2) if at least 55% of the holding corporation's voting stock is acquired, the prior approval of the commissioner shall be required and the provisions of K.S.A. 40-2a08, and amendments thereto, shall not apply. No insurer may purchase in excess of 5% of the outstanding voting stock of a holding corporation unless such insurer acquires at least 55% of such stock, nor shall the officers and directors of an insurer collectively own or control, directly or indirectly, more than 25% of such stock. The commissioner may direct an insurer to divest of its ownership in a holding corporation acquired pursuant to this subsection if it appears to the commissioner that the continued ownership or operation of the holding corporation is not in the best interest of the policyholders, or if the insurer's ownership in the holding corporation is less than 55% of the outstanding voting stock of the holding corporation, or if the officers and directors of the insurer collectively own or control, directly or indirectly, more than 25% of such stock. A holding corporation acquired pursuant to this subsection shall not acquire any investment not permitted for insurance companies other than life pursuant to article 2a of chapter 40 of the Kansas Statutes Annotated, and amendments thereto. In valuing the stock of any holding corporation acquired under this subsection in the annual financial statement of the insurer, value shall be assigned to the holding corporation's assets as though the assets were owned directly by the insurer. A percentage of the holding corporation's assets exactly equal to the insurer's ownership interest in the holding corporation will be added to the assets of the insurer in application of the insurer's investment limitations set forth in article 2a of chapter 40 of the Kansas Statutes Annotated, and amendments thereto. Stock in a holding corporation acquired under this subsection shall not be eligible for deposit with the commissioner of insurance as part of the legal reserves of such insurer.
History: L. 1972, ch. 173, § 9; L. 1979, ch. 139, § 1; L. 1982, ch. 200, § 1; L. 1983, ch. 156, § 2; L. 1987, ch. 161, § 1; L. 1994, ch. 86, § 1; July 1.
Any insurance company other than life heretofore or hereafter organized under any law of this state may invest with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in certificates of deposit in a federally insured bank.
History: L. 1972, ch. 173, § 10; July 1.
Any insurance company other than life heretofore or hereafter organized under any law of this state may invest with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in shares or savings deposits in a federally insured savings and loan association.
History: L. 1972, ch. 173, § 11; July 1.
Any insurance company other than life heretofore or hereafter organized under any law of this state may invest with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in:
(a) Bonds, notes, obligations or other evidences of indebtedness directly or indirectly secured by mortgages or deeds of trust which are a first or second lien upon otherwise unencumbered real property and appurtenances thereto within the United States of America or any insular or territorial possession of the United States of America, or the Dominion of Canada, and upon leasehold estates in real property wherein the term of such including any options to extend is not less than 15 years beyond the maturity of the loan as made or extended. At the date of acquisition the total indebtedness secured by such lien shall not exceed 90% of the market value of the property upon which it is a lien. These limitations shall not apply to obligations described in subsections (b), (c), (d) and (e) of this section. For the purpose of this section a mortgage or deed of trust shall not be deemed to be other than a first or second lien upon property within the meaning of this section by reason of the existence of taxes or assessments against real property and appurtenances thereto that are not delinquent, instruments creating or reserving mineral, oil or timber rights, rights of way, joint driveways, sewer rights, rights in walls or by reason of building restrictions or other like restrictive covenants, or when such real estate is subject to lease in whole or in part whereby rents or profits are reserved to the owner or when there is in existence a fixed obligation or lien against the property where an escrow account or indemnification bond is or has been established or obtained sufficient to cover the maximum liability created by such obligation or lien;
(b) bonds, notes or other evidences of indebtedness representing loans and advances of credit that have been issued, guaranteed or insured by the United States government or any agency or instrumentality thereof. Any uninsured or nonguaranteed portion shall not exceed 75% of the total amount;
(c) contracts of sale, purchase money mortgages or deeds of trust secured by property obtained through foreclosure or in settlement or satisfaction of any indebtedness;
(d) bonds, notes, obligations or other evidences of indebtedness directly or indirectly secured by mortgages or deeds of trust which are a first or second lien upon otherwise unencumbered personal and real property, including a leasehold of real estate, under lease, purchase contract or lease purchase contract to any governmental body or instrumentality whose obligations qualify under K.S.A. 40-2a01, 40-2a02 or 40-2a03, and amendments thereto, or to a corporation whose obligations qualify under K.S.A. 40-2a05, and amendments thereto, if there is adequate rental, after making allowances of lessors' or sellers' obligations and liabilities, if any, under the terms of the lease or contract, to retire the loan as to payment of principal and interest and such rentals are pledged or assigned to the lender;
(e) bonds, notes or other evidences of indebtedness representing loans and advances of credit that have been issued, guaranteed or insured, in accordance with the terms and provisions of an act of the federal parliament of the Dominion of Canada approved March 18, 1954, cited as the "national housing act, 1954," as heretofore and hereafter amended;
(f) mortgages or deeds of trust upon improved real property to be occupied as a personal residence by an officer of the insurer, if the mortgage is at an interest rate that is no less than the prevailing rate of the insurer's existing portfolio of mortgage loans. Mortgages or deeds of trust entered into pursuant to this subsection shall be subject to the conditions set forth in subsection (a) of this section relating to mortgages or deeds of trust generally.
History: L. 1972, ch. 173, § 12; L. 1983, ch. 156, § 3; L. 2015, ch. 7, § 2; July 1.
Any insurance company other than life heretofore or hereafter organized under any law of this state may invest with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in real estate only if acquired or used for the following purposes and in the following manner:
(a) Such as shall be requisite for its convenient present and reasonable future accommodations in the transaction of its business. In the erection or purchase of any buildings for such purpose, additional space may be included for home office rental income;
(b) such as shall have been mortgaged to it in good faith, by way of security for loans previously contracted or for money due;
(c) such as shall have been conveyed to it in satisfaction of debts previously contracted in their legitimate business or for money due;
(d) such as shall have been purchased at sales upon judgments, decrees or mortgages obtained or made for such debts; or
(e) such as shall have been acquired for development or income purposes.
It shall not be lawful for any such company to purchase, hold or convey real estate in any other case or for any other purpose, except nothing in this section shall be deemed to prohibit any such company from purchasing the principal residence owned and inhabited by an employee or prospective employee who is being transferred by the company to a different community; and all such real estate as may be acquired as aforesaid and which shall not be necessary for the accommodation of such company in the transaction of its business, except real estate acquired for development or income purposes shall be sold and disposed of within five years after such company shall have acquired title thereto, unless the company shall procure a certificate from the commissioner of insurance that the interests of the company will suffer materially by a forced sale thereof, in which event the sale may be postponed for such period as the commissioner of insurance shall direct in the certificate. If the company so elects, real estate other than farm properties, which has been acquired under subsections (c) and (d) may be held by it for income purposes. The company's aggregate investment in real estate as herein provided shall not exceed 20% of the admitted assets of the company as shown by its last annual report as filed with the commissioner of insurance or a more recent quarterly financial statement as filed with the commissioner, on a form prescribed by the national association of insurance commissioners, within 45 days following the end of the calendar quarter to which the interim statement pertains.
History: L. 1972, ch. 173, § 13; L. 1982, ch. 201, § 1; L. 1983, ch. 156, § 4; L. 1987, ch. 160, § 5; July 1.
Any insurance company other than life heretofore or hereafter organized under any law of this state may invest with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in loans secured by collateral consisting of a pledge of bonds, securities, stock or evidences of indebtedness qualified in article 2a of chapter 40 of the Kansas Statutes Annotated, and amendments thereto. Except the amount of the loan shall not exceed 80% of the market value of the asset securing the loan. In addition, all restrictions, limitations or conditions placed on any investment authorized within article 2a of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, shall apply to the collateral pledged to the payment of loans authorized in this section.
History: L. 1972, ch. 173, § 14; L. 2014, ch. 43, § 2; July 1.
History: L. 1972, ch. 173, § 15; Repealed, L. 2000, ch. 147, § 59; January 1, 2001.
Any insurance company other than life heretofore or hereafter organized under any law of this state may invest with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in investments whether or not qualified and permitted under this act and notwithstanding any conditions or limitations prescribed therein, in an aggregate amount not more than 10% of its admitted assets as shown by the company's last annual report as filed with the commissioner of insurance or a more recent quarterly financial statement filed with the commissioner, except that investments shall not be permitted in insolvent organizations or organizations in default with respect to the payment of principal or interest.
History: L. 1972, ch. 173, § 16; L. 1983, ch. 156, § 5; L. 2015, ch. 7, § 3; July 1.
Any insurance company other than life organized under any law of this state may invest with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in bonds or other evidences of indebtedness issued, assumed, or guaranteed by the international bank for reconstruction and development, the inter-American development bank or by the African development bank.
History: L. 1972, ch. 173, § 17; L. 1986, ch. 175, § 1; April 24.
Any insurance company other than life heretofore or hereafter organized under any law of this state may invest with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in shares of beneficial interest in or obligations issued by a real estate investment trust qualified under sections 856 through 858 of the federal internal revenue code which meet the following qualifications:
(a) The obligations shown on the last published annual statement of such trust must meet the qualifications specified for corporate obligations in subsections (a) through (d) of K.S.A. 40-2a05.
(b) Cash dividends have been paid during each of the last three (3) years preceding the date of acquisition.
(c) The shares are registered on a national securities exchange regulated under the securities exchange act of 1934, as amended, or regularly traded on a national or regional basis.
(d) The trust shall have earnings in three (3) of the last five (5) years preceding date of acquisition.
(e) No insurance company shall own more than five percent (5%) of the total number of shares of any one such trust, nor invest more than two percent (2%) of its admitted assets in shares of any one such trust.
Shares in each such trust which has over one-half (½) of its assets invested in ownership of real estate or which has such ownership as its stated investment objective shall be considered a real estate investment for purposes of conforming with the limitation on real estate ownership imposed in K.S.A. 40-2a13.
History: L. 1972, ch. 173, § 18; July 1.
All investments owned by any insurance company other than life at the time this act becomes effective and purchased pursuant to and in accordance with prior investment laws of this state shall be deemed in compliance with this act.
History: L. 1972, ch. 173, § 19; July 1.
(a) Any insurance company other than life organized under any law of this state, with the direction or approval of a majority of its board of directors or authorized committee thereof, may:
(1) Adopt a nominee name unique to such insurance company in which such insurance company's securities may be registered;
(2) designate a state or national bank, a trust company or a federal home loan bank having trust powers to obtain a nominee name for such insurance company in which such insurance company's securities may be registered; or
(3) designate a state or national bank or a trust company having trust powers as trustee to make any investment authorized by this act in the name of such trustee or such trustee's nominee.
(b) Under the provisions of paragraphs (2) and (3) of subsection (a), the designated state or national bank, trust company or the federal home loan bank may arrange for such securities to be held in a clearing corporation. Such arrangement must be in accordance with a written agreement, approved by the commissioner of insurance, between the insurance company and its designated bank or trust company and must impose the same degree of responsibility on the bank or trust company as if such securities were held in definitive form by such bank or trust company.
(c) As used in this section "clearing corporation" means: (1) A corporation defined in subsection (5) of K.S.A. 84-8-102, and amendments thereto;
(2) any organization or system for clearance and settlement of securities transactions which is operated or owned by a bank, trust company or other entity that is subject to regulation by the United States federal reserve board or the United States comptroller of the currency; or
(3) any clearing agency registered with the securities and exchange commission pursuant to the securities exchange act of 1934, section 17A.
History: L. 1975, ch. 240, § 1; L. 1986, ch. 176, § 1; L. 1996, ch. 81, § 1; L. 1996, ch. 202, § 90; L. 2009, ch. 83, § 23; L. 2011, ch. 21, § 1; July 1.
As used in this section:
(a) (1) Acceptable collateral means:
(A) With respect to securities lending transactions, cash, cash equivalents, letters of credit, direct obligations of or securities that are fully guaranteed as to principal and interest by, the government of the United States or any agency of the United States, specifically including the federal national mortgage association and the federal home loan mortgage corporation, and with respect to lending foreign securities, sovereign debt rated 1 by the SVO, all to the extent authorized by K.S.A. 40-2a01 et seq., and amendments thereto;
(B) with respect to repurchase transactions, cash, cash equivalents and direct obligations of, or securities that are fully guaranteed as to principal and interest by the government of the United States or any agency of the United States specifically including the federal national mortgage association and the federal home loan mortgage corporation, all to the extent authorized by K.S.A. 40-2a01 et seq., and amendments thereto; and
(C) with respect to reverse repurchase transactions, cash and cash equivalents to the extent authorized by K.S.A. 40-2a01 et seq., and amendments thereto.
(2) "Cash equivalents" means short-term, highly rated and highly liquid investments or securities readily convertible to known amounts of cash without penalty and so near maturity that they present insignificant risk of change in value. For purposes of this definition:
(A) "Short-term" means investments with a remaining term to maturity of 90 days or less;
(B) "highly rated" means an investment rated "P-1" by Moody's Investor's Service, Inc. or "A-1" by Standard and Poor's, or its equivalent rating by a nationally recognized statistical rating organization recognized by the SVO; and
(C) cash equivalents include government money market mutual funds and money market mutual funds rated 1 by the SVO.
(3) "Equivalent securities" means:
(A) In a securities lending transaction, securities that are identical to the loaned securities including the amount thereof, except as to certificate number if held in physical form, provided that if any different security shall be exchanged for any loaned security by recapitalization, merger, consolidation or other corporate action, such different security shall be deemed to be the loaned security;
(B) in a repurchase transaction, securities that are identical to the purchased securities including the amount of the purchased securities, except as to certificate number if held in physical form; and
(C) in a reverse repurchase transaction, securities that are identical to the sold securities including the amount of the sold securities, except as to certificate number if held in physical form.
(4) "Letters of credit" means clean, irrevocable and unconditional letters of credit issued or confirmed by, and payable and presentable at, financial institutions on the list of financial institutions meeting the standards for issuing letters of credit pursuant to the purposes and procedures of the securities valuation office or any successor publication. To constitute acceptable collateral for the purposes of this section, a letter of credit must have an expiration date beyond the term of the subject transaction.
(5) "Market value" means for the purpose of this section:
(A) With respect to cash and letters of credit, the amounts thereof; and
(B) with respect to any security as of any date, the price for the security on that date obtained from a generally recognized source, or the most recent quotation from such a source, plus accrued but unpaid income thereon to the extent not included in such price as of that date.
(6) "Qualified business entity" means a business entity which is, or is a subsidiary or affiliate of:
(A) An issuer of obligations or preferred stock which are rated 1 or 2 by the SVO or an issuer of obligations, preferred stock or derivative instruments which are rated the equivalent of 1 or 2 by the SVO or by a nationally recognized statistical rating organization recognized by the SVO; or
(B) a primary dealer in United States government securities, as recognized by the federal reserve bank of New York.
(7) "Repurchase transaction" means a transaction in which an insurer purchases securities from a business entity which is obligated to repurchase the purchased securities or equivalent securities from the insurer at a specified price, and either within a specified period of time or upon demand.
(8) "Reverse repurchase transaction" means a transaction in which an insurer sells securities to a business entity and is obligated to repurchase the sold securities or equivalent securities from the business entity at a specified price and either within a specified period of time or upon demand.
(9) "Securities lending transaction" means a transaction in which securities are loaned by an insurer to a business entity which is obligated to return the loaned securities or equivalent securities to the insurer, within a specified period of time or upon demand.
(10) "Substantially similar securities" means securities that meet all the criteria for substantially similar securities specified in the NAIC accounting practices and procedures manual, as amended, and in an amount that constitutes good delivery form.
(11) "SVO" means the securities valuation office of the national association of insurance commissioners or any successor office established by the national association of insurance commissioners.
(b) Any property and casualty insurance company organized under any law of this state may enter into securities lending, repurchase and reverse repurchase transactions, subject to the following requirements:
(1) The insurer's board of directors shall adopt a resolution authorizing investments under this section and a written plan which specifies guidelines and objectives to be followed, such as:
(A) A description of how cash received will be invested or used for general corporate purposes of the insurer;
(B) operational procedures to manage interest rate risk, counterparty default risk and the use of acceptable collateral in a manner that reflects the liquidity needs of the transaction; and
(C) the extent to which an insurer may engage in these transactions.
(2) The insurer shall enter into a written agreement for all transactions authorized in this section. Such agreement shall adequately identify each security to which the agreement applies and shall require that each transaction terminate on a specified date no more than one year from its inception or upon earlier demand of the insurer. In a repurchase transaction, the agreement must also state that in the event of default by the party agreeing to repurchase the securities described in the agreement at the terms contained in the agreement, title to the described securities must pass immediately to the insurance company without recourse. Such agreement shall be with the counterparty business entity. For securities lending transactions the agreement may be with an agent acting on behalf of the insurer, if such agent is a qualified business entity, and if such agreement:
(A) Requires the agent to enter into separate agreements with each counterparty that are consistent with the requirements of this section; and
(B) prohibits securities lending transactions under the agreement with the agent or its affiliates.
(3) Cash received in a transaction under this section shall be invested in accordance with K.S.A. 40-2a01 et seq., and amendments thereto, and in a manner that recognizes the liquidity needs of the transaction, or shall be used by the insurer for its general corporate purposes. For so long as the transaction remains outstanding, the insurer, its agent or custodian shall maintain, in the United States, as to acceptable collateral received in a transaction under this section, either physically or through book entry systems of the federal reserve or through a clearing corporation as permitted by K.S.A. 40-2a20, and amendments thereto: (A) Possession of the acceptable collateral; or (B) a perfected security interest in the acceptable collateral.
(4) For purposes of calculating the limitations of K.S.A. 40-2a01 et seq., and amendments thereto, securities lending, repurchase and reverse repurchase transactions shall not be considered investments in the counterparty, or in any issue of securities issued by the counterparty, or in the jurisdiction in which the counterparty is located. For purposes of calculations made to determine compliance with this part 4 of subsection (b), no effect will be given to the insurer's future obligation to resell securities in the case of a repurchase transaction, or to repurchase securities in the case of a reverse repurchase transaction. An insurer may not enter into a transaction under this section if, as a result of and after giving effect to the transaction:
(A) The aggregate amount of all securities then loaned or sold to, or purchased from, any one business entity pursuant to this section would exceed 5% of its admitted assets. In calculating the amount sold to or purchased from a business entity pursuant to repurchase or reverse repurchase transactions, effect may be given to netting provisions under a master written agreement; or
(B) the aggregate amount of all securities then loaned or sold to, or purchased from, all business entities under this section, without the effect of netting referred to in subpart (A), would exceed 40% of its admitted assets.
(5) In a securities lending transaction, the insurer shall receive acceptable collateral having a market value as of the transaction date at least equal to 102% of the market value of the securities loaned by the insurer in such transaction as of that date. If at any time the market value of such acceptable collateral is less than the market value of the loaned securities, the business entity to which the securities are loaned shall be obligated to deliver additional acceptable collateral, the market value of which, together with the market value of all acceptable collateral then held in connection with the transaction, equals at least 102% of the market value of the loaned securities.
(6) In a reverse repurchase transaction, the insurer shall receive acceptable collateral having a market value as of the transaction date at least equal to 95% of the market value of the securities transferred by the insurer in such transaction as of that date. If at any time the market value of such acceptable collateral is less than 95% of the market value of the securities so transferred, the business entity shall be obligated to deliver additional acceptable collateral, the market value of which, together with the market value of all acceptable collateral then held in connection with the transaction, at least equals 95% of the market value of the transferred securities.
(7) In a repurchase transaction, the insurer shall receive as acceptable collateral transferred securities having a market value at least equal to 102% of the purchase price paid by the insurer for such securities. If at any time the market value of such acceptable collateral is less than 100% of the purchase price paid by the insurer, the business entity shall be obligated to provide additional acceptable collateral, the market value of which, together with the market value of all acceptable collateral then held in connection with the transaction, equals at least 102% of such purchase price. Securities acquired by an insurer in a repurchase transaction shall not be sold in a reverse repurchase transaction, loaned in a securities lending transaction, or otherwise pledged.
(c) Unless otherwise specified, an investment limitation computed on the basis of an insurer's admitted assets or capital and surplus shall relate to the amount required as shown on the insurer's last annual report as filed with the commissioner of insurance or a more recent quarterly financial statement as filed with the commissioner, on a form prescribed by the national association of insurance commissioners, within 45 days following the end of the calendar quarter to which the interim statement pertains. For purposes of computing any limitation based upon admitted assets, the insurer shall deduct from the amount of its admitted assets the amount of the liability recorded on such statutory balance sheet for:
(1) The return of acceptable collateral received in a reverse repurchase or a securities lending transaction; and
(2) the amount reported as borrowed money in the most recently filed financial statement to the extent not included in subpart (1).
History: L. 1982, ch. 201, § 2; L. 1996, ch. 27, § 1; July 1.
(a) Any insurance company other than life heretofore or hereafter organized under any law of this state may invest with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in shares of a corporation registered and operated as an open-end regulated investment company in accordance with the investment company act of 1940, as amended.
(b) Investments under this section, other than investments in money market mutual funds as described in subsection (c), shall be further limited as follows:
(1) The insurance company's aggregate investment under this provision and K.S.A. 40-2a08, and amendments thereto, combined shall not exceed 25% of its admitted assets as shown by the company's last annual report as filed with the state commissioner of insurance or a more recent quarterly financial statement as filed with the commissioner, on a form prescribed by the national association of insurance commissioners, within 45 days following the end of the calendar quarter to which the interim statement pertains;
(2) the investment company in which the insurance company acquires shares shall have assets of not less than $25,000,000 at the date of purchase;
(3) the insurance company shall not acquire more than 15% of the outstanding shares of any one investment company;
(4) investments in the shares of any one investment company shall not exceed 10% of the admitted assets of the insurance company as shown by the company's last annual report as filed with the commissioner of insurance, as determined on the basis of the cost of such shares to the insurance company at time of purchase.
(c) Investments in money market mutual funds shall not be subject to the limitations contained in subsection (b) when the assets of the fund represent qualified investments described in K.S.A. 40-2a01, 40-2a02, 40-2a03, 40-2a04, 40-2a05 and 40-2a21, and amendments thereto. Investments in money market mutual funds shall be further limited as follows:
(1) The investment company in which the insurance company acquires shares shall have assets of not less than $25,000,000 at the date of purchase; and
(2) investments in the shares of any one investment company shall not exceed 20% of the admitted assets of the insurance company as shown by the company's last annual report as filed with the commissioner of insurance, or a more recent quarterly financial statement as filed with the insurance commissioner, on a form prescribed by the national association of insurance commissioners, within 45 days following the end of the calendar quarter to which the interim statement pertains, as determined on the basis of the cost of such shares to the insurance company at the time of purchase.
History: L. 1983, ch. 156, § 15; L. 1985, ch. 162, § 1; L. 1987, ch. 160, § 6; L. 1995, ch. 96, § 1; July 1.
History: L. 1983, ch. 156, § 16; Repealed, L. 2000, ch. 147, § 58; July 1.
(a) Any insurance company other than life organized under any law of this state may use financial instruments under this section to engage in hedging transactions and certain income generation transactions or as these terms may be further defined in regulations promulgated by the commissioner. The insurance company shall be able to demonstrate to the commissioner the intended hedging characteristics and the ongoing effectiveness of the financial instrument transaction or combination of the transactions through cash flow testing or other appropriate analysis.
(b) As used in this section:
(1) "Cap" means an agreement obligating the seller to make payments to the buyer, each payment based on the amount by which a reference price or level or the performance or value of one or more underlying interest exceeds a predetermined number, sometimes called the strike rate or price.
(2) "Collar" means an agreement to receive payments as the buyer of an option, cap or floor and to make payments as the seller of a different option, cap or floor.
(3) (A) "Financial instrument" means an agreement, option, instrument or any series or combination thereof:
(i) To make or take delivery of, or assume or relinquish, a specified amount of one or more underlying interests, or to make a cash settlement in lieu thereof; or
(ii) which has a price, performance, value or cash flow based primarily upon the actual or expected price, level, performance, value or cash flow of one or more underlying interests.
(B) Financial instruments include options, warrants, caps, floors, collars, swaps, forwards, future and any other agreements, options or instruments substantially similar thereto, or any series or combination thereof.
(4) "Financial instrument transaction" means a transaction involving the use of one or more financial instruments.
(5) "Floor" means an agreement obligating the seller to make payments to the buyer in which each payment is based on the amount that a predetermined number, sometimes called the floor rate or price, exceeds a reference price, level, performance or value of one or more underlying interests.
(6) "Forward" means an agreement (other than a future) to make or take delivery of, or effect a cash settlement based on the actual or expected price, level, performance or value of one or more underlying interests.
(7) "Future" means an agreement traded on a qualified exchange, to make or take delivery of, or effect a cash settlement based on the actual or expected price, level, performance or value of one or more underlying interests.
(8) "Hedging transaction" means a financial instrument transaction which is entered into and maintained to reduce:
(A) The risk of a change in the value, yield, price, cash flow or quantity of assets or liabilities which the insurer has acquired or incurred or anticipates acquiring or incurring; or
(B) the currency exchange-rate risk or the degree of exposure as to assets or liabilities which an insurer has acquired or incurred or anticipates acquiring or incurring.
(9) "Income generation transaction" means a financial instrument transaction involving the writing of the covered call options which is intended to generate income or enhance return.
(10) "Option" means an agreement giving the buyer the right to buy or receive, sell or deliver, enter into, extend or terminate, or effect a cash settlement based on the actual or expected price, level, performance or value of one or more underlying interests.
(11) "Potential exposure" means:
(A) As to a futures position, the amount of the initial margin required for that position; or
(B) as to swaps' collars and forwards, .5% times the notional amount times the square root of the remaining years of maturity.
(12) "Swap" means an agreement to exchange for net payments at one or more times based on the actual or expected price, level, performance or value of one or more underlying interests.
(13) "Underlying interest" means the assets, other interests, or a combination thereof, underlying a financial instrument, such as any one or more securities, currencies, rates, indices, commodities or financial instruments.
(14) "Warrants" means an option to purchase or sell the underlying securities or investments at a given price and time or at a series of prices and times outlined in the warrant agreement. Warrants may be issued alone or in connection with the sale of other securities, as part of a merger or recapitalization agreement, or to facilitate divestiture of the securities of another corporation.
(c) An insurance company may enter into financial instrument transactions for the purpose of hedging except that the transaction shall not cause any of the following limits to be exceeded:
(1) The aggregate statement value of options, caps, floors and warrants not attached to any other security or investment purchase in hedging transactions may not exceed 110% of the excess of such insurer's capital and surplus as shown on the company's last annual or quarterly report filed with the commissioner of insurance over the minimum requirements of a new stock or mutual company to qualify for a certificate of authority to write the kind of insurance which the insurer is authorized to write;
(2) the aggregate statement value of options, caps and floors written in hedging transactions may not exceed 3% of the insurance company's admitted assets; and
(3) the aggregate potential exposure of collars, swaps, forwards and futures used in hedging transactions may not exceed 5% of the insurance company's admitted assets.
(d) An insurance company may enter into the following types of income generation transactions if:
(1) Selling covered call options on noncallable fixed income securities or financial instruments based on fixed income securities, but the aggregate statement value of assets subject to call during the complete term of the call options sold, plus the face value of fixed income securities underlying any financial instrument subject to call, may not exceed 10% of the insurance company's admitted assets; and
(2) selling covered call options on equity securities, if the insurance company holds in its portfolio the equity securities subject to call during the complete term of the call option sold.
(e) Upon request of the insurance company, the commissioner may approve additional transactions involving the use of financial instruments in excess of the limits of subsection (c) or for other risk management purposes, excluding replication transactions, pursuant to regulations promulgated by the commissioner.
(f) For the purposes of this section, the value or amount of an investment acquired or held under this section, unless otherwise specified in this code, shall be the value at which assets of an insurer are required to be reported for statutory accounting purposes as determined in accordance with procedures prescribed in published accounting and valuation standards of the national association of insurance commissioners (NAIC), including the purposes and procedures of the securities valuation office, the valuation of securities manual, the accounting practices and procedures manual, the annual statement instructions or any successor valuation procedures officially adopted by the NAIC.
(g) Prior to engaging in transactions in financial instruments, an insurer shall develop and adequately document policies and procedures regarding investment strategies and objectives, recordkeeping needs and reporting matters. Such policies and procedures shall address authorized investments, investment limitations, authorization and approval procedures, accounting and reporting procedures and controls and shall provide for review of activity in financial instruments by the insurer's board of directors or such board's designee.
Recordkeeping systems must be sufficiently detailed to permit internal auditors and insurance department examiners to determine whether operating personnel have acted in accordance with established policies and procedures, as provided in this section. Insurer records must identify for each transaction the related financial instruments contracts.
History: L. 1985, ch. 156, § 2; L. 1996, ch. 83, § 1; July 1.
Any insurance company other than life heretofore or hereafter organized under any law of this state may invest with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in:
(a) Mortgage related securities issued or guaranteed by the federal home loan mortgage corporation and federal national mortgage association but the amount invested in any one such issue shall not exceed the greater of $750,000 or two percent of the admitted assets of the company as shown by its last annual report or a more recent quarterly financial statement filed with the commissioner of insurance;
(b) mortgage related securities issued by or in the name of any private entity which are designated "1" or "2" by the SVO or its equivalent rating by a nationally recognized statistical rating organization recognized by the SVO at the time of acquisition. The investment in any one such issue shall not exceed two percent of the admitted assets of the company as shown by its last annual report or a more recent quarterly financial statement filed with the commissioner of insurance.
(c) For purposes of this section, "mortgage related securities" shall mean a security that either:
(1) Represents ownership of one or more promissory notes or certificates of interest or participation in such notes, including any rights designed to assure servicing of, or the receipt or timeliness of receipt by the holders of such notes, certificates, or participations of amounts payable under, such notes, certificates, or participations, which notes:
(A) Are directly secured by a first lien on a single parcel of real estate, including stock allocated to a dwelling unit in a residential cooperative housing corporation, upon which is located a dwelling or mixed residential and commercial structure, or on a residential manufactured home as defined in U.S.C. § 5402(6) of title 42, whether such manufactured home is considered real or personal property under the laws of the state in which it is to be located; and
(B) were originated by a savings and loan association, savings bank, commercial bank, credit union, insurance company, or similar institution which is supervised and examined by a federal or state authority, or by a mortgagee approved by the secretary of housing and urban development pursuant to U.S.C. §§ 1709 and 1715b of title 12, or, where such notes involve a lien on the manufactured home, by any such institution or by any financial institution approved for insurance by the secretary of housing and urban development pursuant to U.S.C. § 1703 of title 12; or
(2) is secured by one or more promissory notes or certificates of interest or participations in such notes, with or without recourse to the issuer thereof, and, by its terms, provides for payments of principal in relation to payments, or reasonable projections of payments, on notes meeting the requirements of subparagraphs (1)(A) and (B) or certificates of interest or participations in promissory notes meeting such requirements.
For the purposes of this paragraph, the term "promissory note," when used in connection with a manufactured home, shall also include a loan, advance, or credit sale as evidenced by a retail installment sales contract or other instrument; or
(3) involve offers or sales of one or more promissory notes directly secured by a first lien on a single parcel of real estate upon which is located a dwelling or other residential or commercial structure, and participation interests in such notes:
(A) Where such securities are originated by a savings and loan association, savings bank, commercial bank, or similar banking institution which is supervised and examined by a federal or state authority, and are offered and sold subject to the following conditions:
(i) The minimum aggregate sales price per purchaser shall not be less than $250,000;
(ii) the purchaser shall pay cash either at the time of the sale or within 60 days thereof; and
(iii) each purchaser shall buy for such purchaser's own account only; or
(B) where such securities are originated by a mortgagee approved by the secretary of housing and urban development pursuant to U.S.C. §§ 1709 and 1715b of title 12 and are offered or sold subject to the three conditions specified in subparagraph (3)(A) to any institution described in such subparagraph or to any insurance company subject to the supervision of the insurance commissioner, or any agency or officer performing like function, of any state or territory of the United States or the District of Columbia, or the federal home loan mortgage corporation, the federal national mortgage association, or the government national mortgage association.
Transactions between any of the entities described in subparagraph (3)(A) or (3)(B) involving nonassignable contracts to buy or sell the foregoing securities which are to be completed within two years, where the seller of the foregoing securities pursuant to any such contract is one of the parties described in subparagraph (3)(A) or (3)(B) who may originate such securities and the purchaser of such securities pursuant to any such contract is any institution described in subparagraph (3)(A) or any insurance company described in subparagraph (3)(B), the federal home loan mortgage corporation, federal national mortgage association, or the government national mortgage association and where the foregoing securities are subject to the three conditions for sale set forth in subparagraphs (3)(A)(i) through (iii).
History: L. 1992, ch. 118, § 1; L. 2015, ch. 7, § 4; July 1.
As used in K.S.A. 40-2a27 of this act:
(a) "Medium grade obligations" means obligations which are designated "3" by the SVO or its equivalent rating by a nationally recognized statistical rating organization recognized by the SVO.
(b) "Lower grade obligations" means obligations which are designated "4," "5" or "6" by the SVO or its equivalent rating by a nationally recognized statistical rating organization recognized by the SVO.
(c) "Admitted assets" means the amount shown on the insurer's last annual report as filed with the state commissioner of insurance or a more recent quarterly financial statement filed with the commissioner.
(d) "Aggregate amount" of medium grade and lower grade obligations means the aggregate statutory statement value thereof.
(e) "Institution" means a corporation, a joint-stock company, an association, a trust, a business partnership, a business joint venture or similar entity.
(f) "Insurance company" or "insurer" means an insurance company other than life organized under the laws of this state.
History: L. 1992, ch. 121, § 1; L. 2015, ch. 7, § 5; July 1.
(a) No insurance company shall acquire, directly or indirectly, any medium grade or lower grade obligation of any institution if, after giving effect to any such acquisition, the aggregate amount of all medium grade and lower grade obligations then held by such insurer would exceed 20% of its admitted assets. Within this limitation no more than 10% of its admitted assets shall consist of lower grade obligations; no more than three percent of its admitted assets shall consist of obligations designated "5" or "6" by the SVO or its equivalent rating by a nationally recognized statistical rating organization recognized by the SVO; and, no more than one percent of its admitted assets shall consist of obligations designated "6" by the SVO or its equivalent rating by a nationally recognized statistical rating organization recognized by the SVO. Attaining or exceeding the limit of any one category shall not preclude an insurer from acquiring obligations in other categories subject to the specific and multi-category limits.
(b) No insurer organized under the laws of this state may invest more than one percent of its admitted assets in medium grade obligations issued, guaranteed or insured by any one institution, nor may it invest more than one-half of one percent of its admitted assets in lower grade obligations issued, guaranteed or insured by any one institution. In no event shall such insurer invest more than one percent of its admitted assets in any medium or lower grade obligations issued, guaranteed or insured by any one institution.
(c) Nothing contained in this act shall prohibit an insurer from acquiring any obligations which it has committed to acquire if the insurer would have been permitted to acquire that obligation pursuant to this act on the date on which such insurer committed to purchase that obligation.
(d) Notwithstanding the limitations of subsection (b), an insurer may acquire an obligation of an institution in which the insurer already has one or more obligations, if the obligation is acquired in order to protect an investment previously made in the obligations of the institution, except all such acquired obligations shall not exceed one-half of one percent of the insurer's admitted assets.
(e) Nothing contained in this act shall prohibit an insurer to which this act applies from acquiring an obligation as a result of a restructuring of a medium or lower grade obligation already held or require such insurer to sell or otherwise dispose of any obligation legally acquired prior to the effective date of this act.
(f) Nothing contained in this act shall permit or be construed as permitting an insurer to exceed, alter or otherwise circumvent any of the limitations or restrictions applicable to the investments authorized by article 2a of chapter 40 of the Kansas Statutes Annotated, and amendments thereto.
(g) The board of directors of any insurance company organized under the laws of this state which acquires or invests, directly or indirectly, more than two percent of its admitted assets in medium grade and lower grade obligations, shall adopt a written plan for the making of such investments. The plan, in addition to guidelines with respect to the quality of the issues invested in, shall contain diversification standards acceptable to the commissioner which may include, but not be limited to, standards for issuer, industry, duration, liquidity and geographic location.
History: L. 1992, ch. 121, § 2; L. 2005, ch. 87, § 1; L. 2014, ch. 43, § 3; L. 2015, ch. 7, § 6; July 1.
(a) Any insurance company other than life organized under any law of this state may invest, by loans or otherwise, with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof, in asset-backed securities, subject to the following:
(1) To be an admitted asset under this section, an asset-backed security must, at the time of acquisition, be designated "1" or "2" by the SVO or its equivalent rating by a nationally recognized statistical rating organization recognized by the SVO;
(2) the investment in any one issue of asset-backed securities shall not exceed 2% of the admitted assets of the investing insurance company as shown by its last annual report or a more recent quarterly financial statement filed with the commissioner. Each issue designated as provided in paragraph (1) shall constitute a single issue regardless of any other obligations or securities issued by the same or any affiliated issuer.
(b) As used in this section:
(1) "Asset-backed security" means any security or other instrument representing or evidencing an interest in, a loan to, a participation in a loan to, or any other right to receive payments from a business entity of any type or form, which has as its primary business activity the acquisition and holding of financial assets, directly or through a trustee, for the benefit of such business entity's debt or equity holders;
(2) "financial asset" means a single asset or a pool of assets consisting of interest-bearing obligations or other contractual obligations representing or constituting the right to receive payment from the asset or pool of assets;
(3) "NAIC" means the national association of insurance commissioners; and
(4) "SVO" means the securities valuation office of the NAIC or any successor office established by the NAIC.
History: L. 1995, ch. 23, § 2; L. 2014, ch. 43, § 4; L. 2015, ch. 7, § 7; July 1.
Any life insurance company heretofore or hereafter organized under any law of this state may invest by loans or otherwise, with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in bonds or other evidences of indebtedness issued, assumed or guaranteed by the United States of America, or by any agency or instrumentality thereof. Such life insurance company may write call options on government obligations permitted under this section which it owns. Call options may be purchased for the sole purpose of closing out a position taken previously with respect to one or more options having been written. The purchase of a call option for any reason other than as a closing transaction and the writing of naked (uncovered) call options are hereby prohibited.
Any United States government obligation owned by an insurance company obligated under an unexpired written call option shall be valued at the lesser of the striking price or value established in accordance with the method of valuation as prescribed by the commissioner of insurance for financial reporting purposes.
"Striking price" means the price per United States government obligation, exclusive of selling costs, the company would receive should the call option be exercised by the holder.
History: L. 1972, ch. 179, § 1; L. 1989, ch. 134, § 2; July 1.
Any life insurance company heretofore or hereafter organized under any law of this state may invest by loans or otherwise, with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in bonds or other evidences of indebtedness issued, assumed or guaranteed by the District of Columbia, or by any state, insular or territorial possession of the United States of America, or by any county, city, town, school, road, drainage or other district, located within any state, or insular or territorial possession of the United States of America, or by any political or civil subdivision or governmental authority of any such state, or insular or territorial possession, or by any agency or instrumentality of any such state, or insular or territorial possession, political or civil subdivision, or governmental authority.
History: L. 1972, ch. 179, § 2; July 1.
Any life insurance company heretofore or hereafter organized under any law of this state may invest by loans or otherwise, with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in bonds or other evidences of indebtedness issued, assumed or guaranteed by the Dominion of Canada, or by any province thereof, or by any municipality, district, agency or instrumentality thereof.
History: L. 1972, ch. 179, § 3; July 1.
(a) As used in this section:
(1) "Business entity" means a sole proprietorship, corporation, limited liability company, association, partnership, joint-stock company, joint venture, mutual fund, trust, joint tenancy or other similar form of business organization, whether organized for-profit or not-for-profit.
(2) "Domestic jurisdiction" means the United States, Canada, and a state or political subdivision of the United States or Canada.
(3) "Foreign currency" means a currency other than that of the United States or Canada.
(4) "Foreign investment" means an investment in a foreign jurisdiction or in an asset domiciled in a foreign jurisdiction. An investment shall not be deemed to be foreign if the issuing business entity, qualified primary credit source or qualified guarantor is a domestic jurisdiction or a business entity domiciled in a domestic jurisdiction, unless:
(A) The issuing business entity is a shell business entity; and
(B) the investment is not assumed, accepted, guaranteed or insured or otherwise backed by a domestic jurisdiction or a business entity, that is not a shell business entity, domiciled in a domestic jurisdiction.
(5) "Foreign jurisdiction" means a jurisdiction outside of the United States or Canada.
(6) "Qualified guarantor" means a guarantor against which an insurer has a direct claim for full and timely payment evidenced by a contractual right for which an enforcement action can be brought in a domestic jurisdiction.
(7) "Qualified primary credit source" means the credit source to which an insurer looks for payment as to an investment and against which an insurer has a direct claim for full and timely payment evidenced by a contractual right for which an enforcement action can be brought in a domestic jurisdiction.
(8) "Shell business entity" means a business entity having no economic substance except as a vehicle for owning interests in assets issued, owned or previously owned by a business entity domiciled in a foreign jurisdiction.
(9) "SVO" means the securities valuation office of the national association of insurance commissioners or any successor office established by the national association of insurance commissioners.
(b) Any life insurance company organized under any law of this state may invest, by loans or otherwise, with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof, in foreign investments of the same types as those that an insurer is permitted to acquire under article 2b of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, if:
(1) The aggregate amount of foreign investments then held by the insurer does not exceed 20% of its admitted assets; and
(2) the aggregate amount of foreign investments then held by the insurer in a single foreign jurisdiction does not exceed 10% of its admitted assets for jurisdictions that have a sovereign debt rating of SVO 1, or 3% of its admitted assets for any other foreign jurisdiction.
(c) Any life insurance company organized under any law of this state may invest, by loans or otherwise, with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof, in investments of the same types as those that an insurer is permitted to acquire under article 2b of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, which are denominated in foreign currencies, whether or not they are foreign investments acquired under subsection (b), if:
(1) The aggregate amount of investments then held by the insurer denominated in foreign currencies does not exceed 10% of its admitted assets; and
(2) the aggregate amount of investments then held by the insurer denominated in the foreign currency of a single foreign jurisdiction does not exceed 10% of its admitted assets for jurisdictions that have a sovereign debt rating of SVO 1, or 3% of its admitted assets for any other foreign jurisdiction.
(d) Notwithstanding the provisions of K.S.A. 40-2b13, and amendments thereto, the insurer's total foreign investments and investments denominated in foreign currencies shall not exceed the limitations set forth in subsections (b) and (c).
(e) The investment limitations in subsections (b) and (c) computed on the basis of an insurer's admitted assets shall relate to the amount as shown on the insurer's last annual report as filed with the commissioner of insurance or a more recent quarterly financial statement as filed with the commissioner, on a form prescribed by the national association of insurance commissioners, within 45 days following the end of the calendar quarter to which the interim statement pertains.
(f) Investments acquired under this section shall be aggregated with investments of the same types made under all other sections of article 2b of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, and in a similar manner, for purposes of determining compliance with the limits, if any, contained in the other sections.
History: L. 1972, ch. 179, § 4; L. 1987, ch. 160, § 7; L. 1996, ch. 35, § 1; L. 2015, ch. 7, § 8; July 1.
Any life insurance company heretofore or hereafter organized under any law of this state may invest by loans or otherwise, with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in bonds or other evidences of indebtedness issued, assumed, or guaranteed by a business entity organized under the laws of the United States of America, or of any state, district, insular or territorial possession thereof; or of the Dominion of Canada or any province thereof which are designated "1" or "2" by the SVO or its equivalent rating by a nationally recognized statistical rating organization recognized by the SVO at the time of acquisition; or which meet the following qualifications:
(a) If fixed-interest bearing obligations, the average fixed charges shall have been covered at least 1½ times by the average net earnings available for fixed charges of the last five years, and the business entity shall have earnings in two of the last three fiscal years immediately preceding the date of acquisition. In the case of obligations of finance companies, the coverage shall be at least
1¼ times;
(b) if income, or other contingent interest obligations, the net earnings available for fixed charges of the business entity for the five fiscal years next preceding the date of acquisition of the obligations shall have averaged per year not less than 1½ times the sum of the fixed charges and the maximum contingent interest to which the business entity is subject as of the date of acquisition, and the business entity shall have earnings in two of the last three fiscal years immediately preceding the date of acquisition. In the case of obligations of finance companies, the coverage shall be at least 1¼ times;
(c) the business entity or a predecessor thereof must have been in existence for a period of not less than five years;
(d) investments in any obligations under this act shall not be eligible if the business entity is in default on any fixed obligations as of the date of acquisition. Statements adjusted to show the actual condition at the time of acquisition or at effect of new financing (known commercially as pro forma statements) may be used when determining investments in this act or in compliance with requirements.
(e) (1) The term "fixed charges" includes actual interest incurred in each year on funded and unfunded debt. In the testing of obligations where interest is partially or entirely contingent upon earnings fixed charges shall include contingent interest payments;
(2) the term "net earnings available for fixed charges" means income, before deducting interest on funded and unfunded debt and after deducting operating and maintenance expenses, taxes other than income taxes, depreciation and depletion. Extraordinary, nonrecurring items of income or expense shall be excluded;
(3) the term "business entity" includes a sole proprietorship, corporation, limited liability company, association, partnership, joint stock company, joint venture, mutual fund, trust, joint tenancy or similar form of business organization, whether organized for profit or not-for-profit;
(4) the term "NAIC" means the national association of insurance commissioners;
(5) the term "SVO" means the securities valuation office of the NAIC or any successor office established by the NAIC.
History: L. 1972, ch. 179, § 5; L. 1987, ch. 160, § 8; L. 1991, ch. 130, § 2; L. 2015, ch. 7, § 9; July 1.
Any life insurance company organized under any law of this state may invest by loans or otherwise, with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in preferred stocks of, or stocks guaranteed by, a corporation incorporated under the laws of the United States of America, or of any state, district, insular or territorial possession thereof, or of the Dominion of Canada, or any province thereof, in an amount not to exceed 25% of its admitted assets as shown by the company's last annual report, as filed with the state commissioner of insurance, or a more recent quarterly financial statement filed within 45 days following the end of the calendar quarter to which the interim statement pertains in the form and manner prescribed by the commissioner in rules and regulations.
History: L. 1972, ch. 179, § 6; L. 1983, ch. 156, § 6; L. 1987, ch. 160, § 9; L. 2022, ch. 17, § 1; July 1.
(a) Any life insurance company organized under any law of this state may invest by loans or otherwise, with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in the equity interests of any business entity organized and doing business under the laws of the United States or any state, or of the District of Columbia, or of the Dominion of Canada or any province thereof, in an amount, based upon cost, not to exceed 20% of its admitted assets as shown by the company's last annual report as filed with the commissioner of insurance or a more recent quarterly financial statement filed within 45 days following the end of the calendar quarter to which the interim statement pertains in the form and manner prescribed by the commissioner in rules and regulations. Such life insurance company may write exchange traded, covered call options on equity interests it owns and may purchase call options for the sole purpose of closing out a position taken previously with respect to one or more options having been written. The purchase of a call option for any reason other than as a closing transaction and the writing of naked, uncovered, call options are hereby prohibited. Investments in equity interests and the writing of call options shall be further limited as follows:
(1) At no time shall an insurance company invest more than 2% of such insurance company's admitted assets in the outstanding equity interests of any one such business entity, determined on the basis of the cost of such equity interests to the insurance company at time of purchase; and
(2) an equity interest owned by an insurance company that is obligated under an unexpired written call option shall be valued at the lesser of the striking price or current market value. For the purposes of this subsection, "striking price" means the price per equity interest, exclusive of selling costs, the company would receive should the call option be exercised by the holder.
(b) As used in this section:
(1) "Business entity" includes a sole proprietorship, corporation, limited liability company, association, partnership, joint stock company, joint venture, mutual fund, trust, joint tenancy or similar form of business organization, whether organized for profit or not-for-profit.
(2) "Equity interest" means any of the following:
(A) Common stock;
(B) trust certificate;
(C) equity investment in an investment company other than a money market mutual fund permitted under K.S.A. 40-2b24, and amendments thereto;
(D) investment in a common trust fund of a bank regulated by a federal or state agency;
(E) an ownership interest in minerals, oil or gas, the rights to which have been separated from the underlying fee interest in the real estate where the minerals, oil or gas are located;
(F) instruments that are mandatorily, or at the option of the issuer, convertible to equity;
(G) limited partnership interests;
(H) member interests in limited liability companies;
(I) warrants or other rights to acquire equity interests that are created by the person that owns or would issue the equity to be acquired; or
(J) any other security representing an ownership interest in a business entity.
History: L. 1972, ch. 179, § 7; L. 1978, ch. 172, § 2; L. 1983, ch. 156, § 7; L. 1987, ch. 160, § 10; L. 1995, ch. 22, § 2; L. 2014, ch. 43, § 5; L. 2022, ch. 17, § 2; July 1.
Any life insurance company heretofore or hereafter organized under any law of this state may invest by loans or otherwise, with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in bonds, certificates or other evidences of indebtedness secured by any transportation or other equipment used in the United States of America or Dominion of Canada, that provide a right to receive determined rental, purchase or other fixed obligatory payments adequate to retire the obligations and also provide for vesting of title to such equipment free from encumbrance in a corporate trustee, or for creation of a first lien on such equipment.
History: L. 1972, ch. 179, § 8; July 1.
Any life insurance company heretofore or hereafter organized under any law of this state may invest by loans or otherwise with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in:
(a) Bonds, notes, obligations or other evidences of indebtedness directly or indirectly secured by mortgages or deeds of trust which are a first or second lien upon otherwise unencumbered real property and appurtenances thereto within the United States of America, or any insular or territorial possession of the United States, or the Dominion of Canada, and upon leasehold estates in real property wherein the term of such including any options to extend is not less than 15 years beyond the maturity of the loan as made or extended. At the date of acquisition the total indebtedness secured by such lien shall not exceed 90% of the market value of the property upon which it is a lien, unless that portion of the total indebtedness in excess of 90% of market value is insured by a mortgage insurance company authorized by the commissioner of insurance to do business in this state. These limitations shall not apply to obligations described in subsections (b), (c), (d), (e) and (f). For the purpose of this section a mortgage or deed of trust shall not be deemed to be other than a first or second lien upon property within the meaning of this section by reason of the existence of taxes or assessments against real property and appurtenances thereto that are not delinquent, instruments creating or reserving mineral, oil, or timber rights, rights of way, joint driveways, sewer rights, rights in walls or by reason of building restrictions or other like restrictive covenants, or when such real estate is subject to lease in whole or in part whereby rents or profits are reserved to the owner or when there is in existence a fixed obligation or lien against the property where an escrow account or indemnification bond is or has been established or obtained sufficient to cover the maximum liability created by such obligation or lien;
(b) bonds, notes, or other evidences of indebtedness representing loans and advances of credit that have been issued, guaranteed or insured by the United States government or any agency or instrumentality thereof or insured by any insurance company authorized to transact such business in this state. Any uninsured or nonguaranteed portion shall not exceed 75% of the total amount;
(c) contracts of sale, purchase money mortgages or deeds of trust secured by property obtained through foreclosure, or in settlement or satisfaction of any indebtedness;
(d) bonds, notes, obligations, or other evidences of indebtedness directly or indirectly secured by mortgages or deeds of trust which are a first or second lien upon otherwise unencumbered personal or real or both personal and real property, including a leasehold of real estate, under lease, purchase contract, or lease purchase contract to any governmental body or instrumentality whose obligations qualify under K.S.A. 40-2b01, 40-2b02 or 40-2b03, and amendments thereto, or to a corporation whose obligations qualify under K.S.A. 40-2b05, and amendments thereto, if there is adequate rental, after making allowance of lessors' or sellers' obligations and liabilities, if any, under the terms of the lease or contract, to retire the loan as to payments of principal and interest and such rentals are pledged or assigned to the lender;
(e) bonds, notes or other evidences of indebtedness representing loans and advances of credit that have been issued, guaranteed or insured, in accordance with the terms and provisions of an act of the federal parliament of the Dominion of Canada approved March 18, 1954, cited as the national housing act, 1954, as heretofore and hereafter amended;
(f) participation in mortgage lending, including, without limitation, the types of mortgage lending set forth in subsections (a) and (d), is specifically permitted in this section as between Kansas domiciled life insurance companies, or, between Kansas domiciled life insurance companies and life insurance companies organized under the laws of another country, state, or territory, or, between a Kansas domiciled life insurance company and its affiliates, or, between Kansas domiciled life insurance companies and banks, trust companies or savings and loan associations, upon unencumbered real property and appurtenances thereto. At the date of acquisition the total indebtedness assumed by such lien shall not exceed 90% of the market value of the property upon which it is a lien, unless that portion of the total indebtedness in excess of 90% of market value is insured by a mortgage insurance company authorized by the commissioner of insurance to do business in this state;
(g) mortgages or deeds of trust upon improved real property to be occupied as a personal residence by an officer of the insurer, if the mortgage is at an interest rate that is no less than the prevailing rate of the insurer's existing portfolio of mortgage loans. Mortgages or deeds of trust entered into pursuant to this subsection shall be subject to the conditions set forth in subsection (a) relating to mortgages or deeds of trust generally;
(h) tax lien certificates issued by local taxing authorities, which for reporting in the annual statement may be pooled by state and year of issue, but the amount invested shall not exceed 10% of the admitted assets of the company as shown by its last annual report or a more recent quarterly financial statement filed with the commissioner of insurance.
History: L. 1972, ch. 179, § 9; L. 1983, ch. 156, § 8; L. 1996, ch. 22, § 1; L. 2015, ch. 7, § 10; July 1.
No life insurance company organized under the laws of this state shall purchase, hold or convey real estate, except for the purposes and in the manner herein set forth:
(a) Such as shall be requisite for its convenient present and future accommodation in the transaction of its business. In the erection or purchase of any buildings for such purpose, additional space may be included for home office rental income;
(b) such as shall have been mortgaged to it in good faith, by way of security for loans previously contracted or for money due;
(c) such as shall have been conveyed to it in satisfaction of debts previously contracted in their legitimate business or for money due;
(d) such as shall have been purchased at sales upon judgments, decrees or mortgages obtained or made for such debts; or
(e) such as shall have been acquired for development or income purposes.
It shall not be lawful for any such company to purchase, hold or convey real estate in any other case or for any other purpose, except nothing in this section shall be deemed to prohibit any such company from purchasing the principal residence owned and inhabited by an employee or prospective employee who is being transferred by the company to a different community; and all such real estate as may be acquired as aforesaid, and which shall not be necessary for the accommodation of such company in the transaction of its business, except real estate acquired for development or income purposes, shall be sold and disposed of within five years after such company shall have acquired title thereto, unless the company shall procure a certificate from the commissioner of insurance that the interests of the company will suffer materially by a forced sale thereof in which event the sale may be postponed for such period as the commissioner of insurance shall direct in such certificate. If the company so elects, real estate other than farm properties, which has been acquired under subsections (c) and (d) may be held by it for income purposes. The company's aggregate investment in real estate as herein provided shall not exceed 20% of the admitted assets of the company, as shown by its last annual report as filed with the commissioner of insurance or a more recent quarterly financial statement as filed with the commissioner, on a form prescribed by the national association of insurance commissioners, within 45 days following the end of the calendar quarter to which the interim statement pertains.
History: L. 1972, ch. 179, § 10; L. 1982, ch. 201, § 3; L. 1983, ch. 156, § 9; L. 1987, ch. 160, § 11; July 1.
Any life insurance company heretofore or hereafter organized under any law of this state may invest by loans or otherwise, with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in loans upon the security of the policies of the company and constituting a lien thereon in an amount not exceeding the legal reserve thereon.
History: L. 1972, ch. 179, § 11; July 1.
Any life insurance company heretofore or hereafter organized under any law of this state may invest by loans or otherwise, with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in loans secured by collateral consisting of a pledge of bonds, mortgages, securities, stock or evidence of indebtedness qualified in article 2b of chapter 40 of the Kansas Statutes Annotated, and amendments thereto. Except, the amount of the loan shall not exceed 80% of the market value of the asset securing the loan. In addition, all restrictions, limitations or conditions placed on any investment authorized within article 2b of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, shall apply to the collateral pledged to the payment of loans authorized in this section.
History: L. 1972, ch. 179, § 12; L. 2014, ch. 43, § 6; July 1.
Any life insurance company heretofore or hereafter organized under any law of this state may invest by loans or otherwise, with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in investments whether or not qualified and permitted under this act and notwithstanding any conditions or limitations prescribed therein, in an aggregate amount not more than 10% of its admitted assets as shown by the company's last annual report as filed with the insurance commissioner or a more recent quarterly financial statement filed with the commissioner, except that investments shall not be permitted in insolvent organizations or organizations in default with respect to the payment of principal or interest.
History: L. 1972, ch. 179, § 13; L. 1983, ch. 156, § 10; L. 2015, ch. 7, § 11; July 1.
History: L. 1972, ch. 179, § 14; Repealed, L. 2000, ch. 147, § 59; January 1, 2001.
Any life insurance company heretofore or hereafter organized under any law of this state may invest by loans or otherwise, with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in shares or savings deposits in a federally insured savings and loan association.
History: L. 1972, ch. 179, § 15; July 1.
Any life insurance company heretofore or hereafter organized under any law of this state may invest by loans or otherwise, with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in certificates of deposit in a federally insured bank.
History: L. 1972, ch. 179, § 16; July 1.
Any life insurance company organized under any law of this state may invest by loans or otherwise, with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in bonds or other evidences of indebtedness issued, assumed or guaranteed by the international bank for reconstruction and development, the inter-American development bank or by the African development bank.
History: L. 1972, ch. 179, § 17; L. 1986, ch. 175, § 2; April 24.
Any life insurance company heretofore or hereafter organized under any law of this state may invest by loans or otherwise, with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in shares of beneficial interest in or obligations issued by a real estate investment trust qualified under sections 856 through 858 of the federal internal revenue code which meet the following qualifications:
(a) The obligations shown on the last published annual statement of such trust must meet the qualifications specified for corporate obligations in subsections (a) through (d) of K.S.A. 40-2b05;
(b) cash dividends have been paid during each of the last three (3) years preceding the date of acquisition;
(c) the shares are registered on a national securities exchange regulated under the securities exchange act of 1934 as amended;
(d) the trust shall have earnings in three (3) of the last five (5) years preceding date of acquisition;
(e) no insurance company shall own more than five percent (5%) of the total number of shares of any one such trust, nor invest more than two percent (2%) of its admitted assets in shares of any one such trust.
Shares in each trust which has over one-half (½) of its assets invested in ownership of real estate or which has such ownership as its stated investment objective shall be considered a real estate investment for purposes of conforming with the limitation on real estate ownership imposed in K.S.A. 40-2b10.
History: L. 1972, ch. 179, § 18; July 1.
All investments owned by any life insurance company at the time this act becomes effective and purchased pursuant to and in accordance with prior investment laws of this state shall be deemed in compliance with this act.
History: L. 1972, ch. 179, § 19; July 1.
(a) Any life insurance company organized under any law of this state, with the direction or approval of a majority of its board of directors, may:
(1) Adopt a nominee name unique to such insurance company in which such insurance company's securities may be registered;
(2) designate a state or national bank, a trust company or a federal home loan bank having trust powers to obtain a nominee name for such insurance company in which such insurance company's securities may be registered; or
(3) designate a state or national bank or a trust company having trust powers as trustee to make any investment authorized by this act in the name of such trustee or such trustee's nominee.
(b) Under the provisions of paragraphs (2) and (3) of subsection (a), the designated state or national bank, the trust company or the federal home loan bank may arrange for such securities to be held in a clearing corporation. Such arrangement must be in accordance with a written agreement, approved by the commissioner of insurance, between the insurance company and its designated bank or trust company and must impose the same degree of responsibility on the bank or trust company as if such securities were held in definitive form by such bank or trust company.
(c) As used in this section "clearing corporation" means: (1) A corporation defined in subsection (3) of K.S.A. 84-8-102, and amendments thereto;
(2) any organization or system for the clearance and settlement of securities transactions which is operated or owned by a bank, trust company or other entity that is subject to regulation by the United States federal reserve board or the United States comptroller of the currency; or
(3) any clearing agency registered with the securities and exchange commission pursuant to the securities exchange act of 1934, section 17A.
History: L. 1972, ch. 179, § 20; L. 1983, ch. 156, § 11; L. 1986, ch. 176, § 2; L. 1995, ch. 87, § 1; L. 2009, ch. 83, § 24; L. 2012, ch. 18, § 1; July 1.
(a) As used in this section:
(1) "Acceptable collateral" means:
(A) With respect to securities lending transactions: Cash, cash equivalents, letters of credit, direct obligations of, or securities that are fully guaranteed as to principal and interest by, the government of the United States or any agency of the United States, specifically including the federal national mortgage association and the federal home loan mortgage corporation, and with respect to lending foreign securities, sovereign debt rated 1 by the SVO, all to the extent authorized by K.S.A. 40-2b01 et seq., and amendments thereto;
(B) with respect to repurchase transactions: Cash, cash equivalents, and direct obligations of, or securities that are fully guaranteed as to principal and interest by, the government of the United States or any agency of the United States, specifically including the federal national mortgage association and the federal home loan mortgage corporation, all to the extent authorized by K.S.A. 40-2b01 et seq., and amendments thereto; and
(C) with respect to reverse repurchase transactions: Cash and cash equivalents to the extent authorized by K.S.A. 40-2b01 et seq., and amendments thereto.
(2) "Cash equivalents" mean short-term, highly rated, and highly liquid investments or securities readily convertible to known amounts of cash without penalty and so near maturity that they present insignificant risk of change in value. For purposes of this definition:
(A) "Short-term" means investments with a remaining term to maturity of 90 days or less;
(B) "highly rated" means an investment rated "P-1" by Moody's Investor's Service, Inc. or "A-1" by Standard and Poor's, or its equivalent rating by a nationally recognized statistical rating organization recognized by the SVO; and
(C) cash equivalents include government money market mutual funds and money market mutual funds rated 1 by the SVO.
(3) "Equivalent securities" mean:
(A) In a securities lending transaction, securities that are identical to the loaned securities including the amount thereof, except as to certificate number if held in physical form, except if any different security is exchanged for any loaned security by recapitalization, merger, consolidation or other corporate action, such different security shall be deemed to be the loaned security.
(B) In a repurchase transaction, securities that are identical to the purchased securities including the amount of the purchased securities, except as to certificate number if held in physical form.
(C) In a reverse repurchase transaction, securities that are identical to the sold securities including the amount of the sold securities, except as to certificate number if held in physical form.
(4) "Letters of credit" means clean, irrevocable and unconditional letters of credit issued or confirmed by, and payable and presentable at, financial institutions on the list of financial institutions meeting the standards for issuing letters of credit pursuant to the purposes and procedures of the securities valuation office or any successor publication. To constitute acceptable collateral for the purposes of this section, a letter of credit must have an expiration date beyond the term of the subject transaction.
(5) "Market value" means for the purpose of this section:
(A) With respect to cash and letters of credit, the amounts thereof; and
(B) with respect to any security as of any date, the price for the security on that date obtained from a generally recognized source, or the most recent quotation from such a source, plus accrued but unpaid income thereon to the extent not included in such price as of that date.
(6) "Qualified business entity" means a business entity which is, or is a subsidiary or affiliate of:
(A) An issuer of obligations or preferred stock which are rated 1 or 2 by the SVO or an issuer of obligations, preferred stock, or derivative instruments which are rated the equivalent of 1 or 2 by the SVO or by a nationally recognized statistical rating organization recognized by the SVO; or
(B) A primary dealer in United States government securities, as recognized by the federal reserve bank of New York.
(7) "Repurchase transaction" means a transaction in which an insurer purchases securities from a business entity which is obligated to repurchase the purchased securities or equivalent securities from the insurer at a specified price, and either within a specified period of time or upon demand.
(8) "Reverse repurchase transaction" means a transaction in which an insurer sells securities to a business entity and is obligated to repurchase the sold securities or equivalent securities from the business entity at a specified price and either within a specified period of time or upon demand.
(9) "Securities lending transaction" means a transaction in which securities are loaned by an insurer to a business entity which is obligated to return the loaned securities or equivalent securities to the insurer, within a specified period of time or upon demand.
(10) "Substantially similar securities" mean securities that meet all the criteria for substantially similar securities specified in the NAIC accounting practices and procedures manual, as amended, and in an amount that constitutes good delivery form.
(11) "SVO" means the securities valuation office of the National Association of Insurance Commissioners or any successor office established by the National Association of Insurance Commissioners.
(b) Any life insurance company organized under any law of this state may enter into securities lending, repurchase and reverse repurchase transactions, subject to the following requirements:
(1) The insurer's board of directors shall adopt a resolution authorizing investments under this section and a written plan which specifies guidelines and objectives to be followed, such as:
(A) A description of how cash received will be invested or used for general corporate purposes of the insurer;
(B) operational procedures to manage interest rate risk, counterparty default risk and the use of acceptable collateral in a manner that reflects the liquidity needs of the transaction; and
(C) the extent to which an insurer may engage in these transactions.
(2) The insurer shall enter into a written agreement for all transactions authorized in this section. Such agreement shall adequately identify each security to which the agreement applies and shall require that each transaction terminate on a specified date no more than one year from its inception or upon earlier demand of the insurer. In a repurchase transaction, the agreement must also state that in the event of default by the party agreeing to repurchase the securities described in the agreement at the terms contained in the agreement, title to the described securities must pass immediately to the insurance company without recourse. Such agreement shall be with the counterparty business entity, except for securities lending transactions the agreement may be with an agent acting on behalf of the insurer, if such agent is a qualified business entity, and if such agreement:
(A) Requires the agent to enter into separate agreements with each counterparty that are consistent with the requirements of this section; and
(B) prohibits securities lending transactions under the agreement with the agent or its affiliates.
(3) Cash received in a transaction under this section shall be invested in accordance with K.S.A. 40-2b01 et seq., and amendments thereto, and in a manner that recognizes the liquidity needs of the transaction, or shall be used by the insurer for its general corporate purposes. For so long as the transaction remains outstanding, the insurer, its agent or custodian shall maintain in the United States, as acceptable collateral received in a transaction under this section, either physically or through book entry systems of the federal reserve or through clearing corporations as permitted by K.S.A. 40-2b20, and amendments thereto, (A) possession of the acceptable collateral; or (B) a perfected security interest in the acceptable collateral.
(4) For purposes of calculating the limitations of K.S.A. 40-2b01 et seq., and amendments thereto, securities lending, repurchase and reverse repurchase transactions shall not be considered investments in the counterparty, or in any issue of securities issued by the counterparty, or in the jurisdiction in which the counterparty is located. For purposes of calculations made to determine compliance with this subpart (4), no effect will be given to the insurer's future obligation to resell securities in the case of a repurchase transaction, or to repurchase securities in the case of a reverse repurchase transaction. An insurer may not enter into a transaction under this section if, as a result of and after giving effect to the transaction:
(A) The aggregate amount of all securities then loaned or sold to, or purchased from, any one business entity pursuant to this section would exceed 5% of its admitted assets. In calculating the amount sold to or purchased from a business entity pursuant to repurchase or reverse repurchase transactions, effect may be given to netting provisions under a master written agreement; or
(B) the aggregate amount of all securities then loaned or sold to, or purchased from, all business entities under this section, without the effect of netting referred to in subpart (A), would exceed 40% of its admitted assets.
(5) In a securities lending transaction, the insurer shall receive acceptable collateral having a market value as of the transaction date at least equal to 102% of the market value of the securities loaned by the insurer in such transaction as of that date. If at any time the market value of such acceptable collateral is less than the market value of the loaned securities, the business entity to which the securities are loaned shall be obligated to deliver additional acceptable collateral, the market value of which, together with the market value of all acceptable collateral then held in connection with the transaction, equals at least 102% of the market value of the loaned securities.
(6) In a reverse repurchase transaction (other than a dollar roll transaction), the insurer shall receive acceptable collateral having a market value as of the transaction date at least equal to 95% of the market value of the securities transferred by the insurer in such transaction as of that date. If at any time the market value of such acceptable collateral is less than 95% of the market value of the securities so transferred, the business entity shall be obligated to deliver additional acceptable collateral, the market value of which, together with the market value of all acceptable collateral then held in connection with the transaction, equals at least 95% of the market value of the transferred securities.
(7) In a dollar roll transaction, the insurer shall receive cash in an amount at least equal to the market value of the securities transferred by the insurer in such transaction as of the transaction date.
(8) In a repurchase transaction, the insurer shall receive as acceptable collateral transferred securities having a market value equal at least to 102% of the purchase price paid by the insurer for such securities. If at any time the market value of such acceptable collateral is less than 100% of the purchase price paid by the insurer, the business entity shall be obligated to provide additional acceptable collateral, the market value of which, together with the market value of all acceptable collateral then held in connection with the transaction, equals at least 102% of such purchase price. Securities acquired by an insurer in a repurchase transaction shall not be sold in a reverse repurchase transaction, loaned in a securities lending transaction or otherwise pledged.
(c) Unless otherwise specified, an investment limitation computed on the basis of an insurer's admitted assets or capital and surplus shall relate to the amount as shown on the insurer's last annual report as filed with the commissioner of insurance or a more recent quarterly financial statement as filed with the commissioner, on a form prescribed by the national association of insurance commissioners, within 45 days following the end of the calendar quarter to which the interim statement pertains. For purposes of computing any limitation based upon admitted assets, the insurer shall deduct from the amount of its admitted assets the amount of the liability recorded on such statutory balance sheet for:
(1) The return of acceptable collateral received in a reverse repurchase or a securities lending transaction; and
(2) the amount reported as borrowed money in the most recently filed financial statement to the extent not included in subpart (1).
History: L. 1982, ch. 201, § 4; L. 1996, ch. 28, § 1; July 1.
History: L. 1983, ch. 156, § 12; Repealed, L. 2000, ch. 147, § 58; July 1.
Any life insurance company heretofore or hereafter organized under any law of this state may invest with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in:
(a) Stock in any insurance company or health maintenance organization, notwithstanding subsection (e) of K.S.A. 40-2b07, and amendments thereto. Before more than 5% of the outstanding shares of stock of any insurance company or health maintenance organization is acquired, or a tender offer made therefor, prior written approval of the commissioner of insurance must be secured;
(b) stock in an incorporated insurance agency: (1) If 5% or less of the outstanding shares of such incorporated agency is acquired, the provisions of K.S.A. 40-2b07, and amendments thereto, shall apply; (2) if more than 5% of the outstanding shares of such incorporated agency is acquired, or a tender offer is made therefor, the prior approval of the commissioner of insurance shall be required and the provisions of subsection (d) of K.S.A. 40-2b07, and amendments thereto, shall apply. In valuing the stock of the agency, the assets of the agency shall be valued as if held directly by an insurance company; and (3) if majority interest in an incorporated insurance agency results from the organization of an agency by the insurance company to which this act applies, such investments shall be subject to the provisions of K.S.A. 40-2b13, and amendments thereto, until they have produced earnings for three out of five consecutive years. Such stock shall not be eligible for deposit with the commissioner of insurance as part of the legal reserve of such insurance company;
(c) stock in a holding corporation: (1) If 5% or less of the outstanding shares of stock of such holding corporation is acquired, the provisions of K.S.A. 40-2b07, and amendments thereto, shall apply; (2) if at least 55% of the holding corporation's voting stock is acquired, the prior approval of the commissioner of insurance shall be required and the provisions of K.S.A. 40-2b07, and amendments thereto, shall not apply. No insurer may purchase in excess of 5% of the outstanding voting stock of a holding corporation unless such insurer acquires at least 55% of such stock, nor shall the officers and directors of an insurer collectively own or control, directly or indirectly, more than 25% of such stock. The commissioner of insurance may direct an insurer to divest of its ownership in a holding corporation acquired pursuant to this subsection if it appears to the commissioner that the continued ownership or operation of the holding corporation is not in the best interest of the policyholders, or if the insurer's ownership in the holding corporation is less than 55% of the outstanding voting stock of the holding corporation, or if the officers and directors of the insurer collectively own or control, directly or indirectly, more than 25% of such stock. A holding corporation acquired pursuant to this subsection shall not acquire any investment not permitted for life insurance companies pursuant to article 2b of chapter 40 of the Kansas Statutes Annotated, and amendments thereto. In valuing the stock of any holding corporation acquired under this subsection in the annual financial statement of the insurer, value shall be assigned to the holding corporation's assets as though the assets were owned directly by the insurer. A percentage of the holding corporation's assets exactly equal to the insurer's ownership interest in the holding corporation will be added to the assets of the insurer in application of the insurer's investment limitations set forth in article 2b of chapter 40 of the Kansas Statutes Annotated, and amendments thereto. Stock in a holding corporation acquired under this subsection shall not be eligible for deposit with the commissioner of insurance as part of the legal reserves of such insurer.
History: L. 1983, ch. 156, § 13; L. 1987, ch. 161, § 2; L. 1994, ch. 86, § 2; July 1.
(a) Any life insurance company heretofore or hereafter organized under any law of this state may invest with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in shares of a corporation registered and operated as an open-end regulated investment company in accordance with the investment company act of 1940, as amended.
(b) Investments under this section, other than investments in money market mutual funds as described in subsection (c), shall be further limited as follows:
(1) The insurance company's aggregate investment under this provision and K.S.A. 40-2b07, and amendments thereto, combined shall not exceed 25% of its admitted assets as shown by the company's last annual report as filed with the commissioner of insurance or a more recent quarterly financial statement as filed with the commissioner, on a form prescribed by the national association of insurance commissioners, within 45 days following the end of the calendar quarter to which the interim statement pertains;
(2) the investment company in which the insurance company acquires shares shall have assets of not less than $25,000,000 at the date of purchase;
(3) the insurance company shall not acquire more than 15% of the outstanding shares of any one investment company;
(4) investments in the shares of any one investment company shall not exceed 10% of the admitted assets of the insurance company as shown by the company's last annual report as filed with the commissioner of insurance, as determined on the basis of the cost of such shares to the insurance company at time of purchase.
(c) Investments in money market mutual funds shall not be subject to the limitations contained in subsection (b) when the assets of the fund represent qualified investments described in K.S.A. 40-2b01, 40-2b02, 40-2b03, 40-2b04, 40-2b05 and 40-2b21, and amendments thereto. Investments in money market mutual funds shall be further limited as follows:
(1) The investment company in which the insurance company acquires shares shall have assets of not less than $25,000,000 at the date of purchase; and
(2) investments in the shares of any one investment company shall not exceed 20% of the admitted assets of the insurance company as shown by the company's last annual report as filed with the commissioner of insurance, or a more recent quarterly financial statement as filed with the insurance commissioner, on a form prescribed by the national association of insurance commissioners, within 45 days following the end of the calendar quarter to which the interim statement pertains, as determined on the basis of the cost of such shares to the insurance company at the time of purchase.
History: L. 1983, ch. 156, § 14; L. 1985, ch. 162, § 2; L. 1987, ch. 160, § 12; L. 1995, ch. 96, § 2; July 1.
(a) Any life insurance company heretofore or hereafter organized under any law of this state may use financial instruments under this section to engage in hedging transactions, replication transactions and certain income generation transactions or as these terms may be further defined in regulations promulgated by the commissioner. For each hedging transaction in which a life insurance company engages, such life insurance company shall be able to demonstrate to the commissioner the intended hedging characteristics and the ongoing effectiveness of the financial instrument transaction or combination of the transactions through cash flow testing or other appropriate analysis.
(b) As used in this section:
(1) "Cap" means an agreement obligating the seller to make payments to the buyer, each payment based on the amount by which a reference price or level or the performance or value of one or more underlying interest exceeds a predetermined number, sometimes called the strike rate or price.
(2) "Collar" means an agreement to receive payments as the buyer of an option, cap or floor and to make payments as the seller of a different option, cap or floor.
(3) "Commissioner" means the commissioner of insurance as defined in K.S.A. 40-102, and amendments thereto.
(4) "Counterparty" means the business entity with which a life insurance company enters into financial instrument transactions.
(5) "Crediting basis amount" means the amount of interest credited to an insured's account value for the percentage of change on an underlying index.
(6) (A) "Financial instrument" means an agreement, option, instrument or any series or combination thereof:
(i) To make or take delivery of, or assume or relinquish, a specified amount of one or more underlying interests, or to make a cash settlement in lieu thereof; or
(ii) which has a price, performance, value or cash flow based primarily upon the actual or expected price, level, performance, value or cash flow of one or more underlying interests.
(B) Financial instruments include options, warrants, caps, floors, collars, swaps, forwards, future and any other agreements, options or instruments substantially similar thereto, or any series or combination thereof.
(7) "Financial instrument transaction" means a transaction involving the use of one or more financial instruments.
(8) "Floor" means an agreement obligating the seller to make payments to the buyer in which each payment is based on the amount that a predetermined number, sometimes called the floor rate or price, exceeds a reference price, level, performance or value of one or more underlying interests.
(9) "Forward" means an agreement (other than a future) to make or take delivery of, or effect a cash settlement based on the actual or expected price, level, performance or value of one or more underlying interests.
(10) "Future" means an agreement traded on a qualified exchange, to make or take delivery of, or effect a cash settlement based on the actual or expected price, level, performance or value of one or more underlying interests.
(11) "Hedging transaction" means a financial instrument transaction which is entered into and maintained to reduce:
(A) The risk of a change in the value, yield, price, cash flow or quantity of assets or liabilities which the insurer has acquired or incurred or anticipates acquiring or incurring; or
(B) the currency exchange-rate risk or the degree of exposure as to assets or liabilities which an insurer has acquired or incurred or anticipates acquiring or incurring.
(12) "Income generation transaction" means a financial instrument transaction involving the writing of covered call options which is intended to generate income or enhance return.
(13) "Option" means an agreement giving the buyer the right to buy or receive, sell or deliver, enter into, extend or terminate, or effect a cash settlement based on the actual or expected price, level, performance or value of one or more underlying interests.
(14) "Potential exposure" means:
(A) As to a futures position, the amount of the initial margin required for that position; or
(B) as to swaps, collars and forwards, .5% times the notional amount times the square root of the remaining years to maturity.
(15) "Replication transaction" means a financial instrument transaction or combination of financial instrument transactions effected either separately or in conjunction with cash market investments included in a life insurance company's investment portfolio in order to replicate the investment characteristic of another authorized transaction, investment or instrument or operate as a substitute for cash market transactions. A financial instrument transaction entered into by a life insurance company as a hedging transaction, as defined in paragraph (11), or income generation transaction, as defined in paragraph (12), authorized pursuant to this section shall not be considered a replication transaction.
(16) "SVO" means the securities valuation office of the national association of insurance commissioners or any successor office established by the national association of insurance commissioners.
(17) "Swap" means an agreement to exchange for net payments at one or more times based on the actual or expected price, level, performance or value of one or more underlying interests.
(18) "Underlying index" means the index, market or financial futures contract used to determine the crediting basis amount.
(19) "Underlying interest" means the assets, other interests, or a combination thereof, underlying a financial instrument, such as any one or more securities, currencies, rates, indices, commodities or financial instruments.
(20) "Warrants" means an option to purchase or sell the underlying securities or investments at a given price and time or at a series of prices and times outlined in the warrant agreement. Warrants may be issued alone or in connection with the sale of other securities, as part of a merger or recapitalization agreement, or to facilitate divestiture of the securities of another corporation.
(c) A life insurance company may enter into financial instrument transactions for the purpose of hedging except that the transaction shall not cause any of the following limits to be exceeded:
(1) The aggregate statement value of options, caps, floors and warrants not attached to any other security or investment purchase in hedging transactions may not exceed 110% of the excess of such insurer's capital and surplus as shown on the company's last annual or quarterly report filed with the commissioner over the minimum requirements of a new stock or mutual company to qualify for a certificate of authority to write the kind of insurance which the insurer is authorized to write;
(2) the aggregate statement value of options, caps and floors written in hedging transactions may not exceed 3% of the life insurance company's admitted assets; and
(3) the aggregate potential exposure of collars, swaps, forwards and futures used in hedging transactions may not exceed 5% of the life insurance company's admitted assets.
(d) A life insurance company may enter into the following types of income generation transactions if:
(1) Selling covered call options on noncallable fixed income securities or financial instruments based on fixed income securities, but the aggregate statement value of assets subject to call during the complete term of the call options sold, plus the face value of fixed income securities underlying any financial instrument subject to call, may not exceed 10% of the life insurance company's admitted assets; and
(2) selling covered call options on equity securities, if the life insurance company holds in its portfolio the equity securities subject to call during the complete term of the call option sold.
(e) A life insurance company may enter into replication transactions if:
(1) Such life insurance company would otherwise be authorized to invest its funds under this article in the asset being replicated;
(2) the asset being replicated is subject to all provisions and limitation (including quantitative limits) on the making thereof specified in this article with respect to investments by such life insurance company, as if the transaction constituted a direct investment by such life insurance company in the asset being replicated;
(3) as a result of giving effect to the replication transaction, the aggregate statement value of all assets being replicated does not exceed 10% of such life insurance company's admitted assets; and
(4) the replication transaction is entered into in accordance with the requirements concerning replication transactions contained in the SVO purposes and procedures manual of the SVO entitled "Purposes and procedures manual of the securities valuation office of the national association of insurance commissioners" as published on December 31, 1999, or any later version as established in rules and regulations adopted by the commissioner.
(f) The limitations set forth in subsection (c) regarding financial instrument transactions for the purpose of hedging and in subsection (d) regarding income generation transactions shall not apply to any investments made by a life insurance company where such investments are used only to hedge the crediting basis amount an insured receives on a particular insurance policy which is determined by an underlying index, provided, however, that such investments shall not in the aggregate amount exceed 10% of the life insurance company's admitted assets as shown on the company's last annual or quarterly report, without the prior written approval of the commissioner. All investments made pursuant to this subsection shall only be made with counterparties that have a rating designated as "1" by the national association of insurance commissioners (NAIC) in its most recently published valuations of securities manual or supplement thereto, or its equivalent rating by a nationally recognized statistical rating organization recognized by the SVO.
(g) Upon request of the life insurance company, the commissioner may approve additional transactions involving the use of financial instruments in excess of the limits of subsection (c) or for other risk management purposes pursuant to regulations promulgated by the commissioner.
(h) For the purposes of this section, the value or amount of an investment acquired or held under this section, unless otherwise specified in this code, shall be the value at which assets of an insurer are required to be reported for statutory accounting purposes as determined in accordance with procedures prescribed in published accounting and valuation standards of the national association of insurance commissioners (NAIC), including the purposes and procedures of the securities valuation office, the valuation of securities manual, the accounting practices and procedures manual, the annual statement instructions or any successor valuation procedures officially adopted by the NAIC.
(i) Prior to engaging in transactions in financial instruments, an insurer shall develop and adequately document policies and procedures regarding investment strategies and objectives, recordkeeping needs and reporting matters. Such policies and procedures shall address authorized investments, investment limitations, authorization and approval procedures, accounting and reporting procedures and controls and shall provide for review of activity in financial instruments by the insurer's board of directors or such board's designee.
Recordkeeping systems must be sufficiently detailed to permit internal auditors and insurance department examiners to determine whether operating personnel have acted in accordance with established policies and procedures, as provided in this section. Insurer records must identify for each transaction the related financial instruments contracts.
(j) The commissioner shall have the authority to adopt rules and regulations necessary to implement this section.
History: L. 1985, ch. 156, § 1; L. 1995, ch. 102, § 1; L. 2000, ch. 7, § 1; L. 2001, ch. 93, § 1; July 1.
Any life insurance company heretofore or hereafter organized under any law of this state may invest with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof in:
(a) Mortgage related securities issued or guaranteed by the federal home loan mortgage corporation and federal national mortgage association but the amount invested in any one such issue shall not exceed the greater of $750,000 or two percent of the admitted assets of the company as shown by its last annual report or a more recent quarterly financial statement filed with the commissioner of insurance;
(b) mortgage related securities issued by or in the name of any private entity which are designated "1" or "2" by the SVO or its equivalent rating by a nationally recognized statistical rating organization recognized by the SVO at the time of acquisition. The investment in any one such issue shall not exceed two percent of the admitted assets of the company as shown by its last annual report or a more recent quarterly financial statement filed with the commissioner of insurance;
(c) for purposes of this section "mortgage related securities" shall mean a security that either:
(1) Represents ownership of one or more promissory notes or certificates of interest or participation in such notes, including any rights designed to assure servicing of, or the receipt or timeliness of receipt by the holders of such notes, certificates, or participations of amounts payable under, such notes, certificates, or participations, which notes:
(A) Are directly secured by a first lien on a single parcel of real estate, including stock allocated to a dwelling unit in a residential cooperative housing corporation, upon which is located a dwelling or mixed residential and commercial structure, or on a residential manufactured home as defined in U.S.C. § 5402(6) of title 42, whether such manufactured home is considered real or personal property under the laws of the state in which it is to be located; and
(B) were originated by a savings and loan association, savings bank, commercial bank, credit union, insurance company, or similar institution which is supervised and examined by a federal or state authority, or by a mortgagee approved by the secretary of housing and urban development pursuant to U.S.C. §§ 1709 and 1715b of title 12, or, where such notes involve a lien on the manufactured home, by any such institution or by any financial institution approved for insurance by the secretary of housing and urban development pursuant to U.S.C. § 1703 of title 12; or
(2) is secured by one or more promissory notes or certificates of interest or participations in such notes, with or without recourse to the issuer thereof, and, by its terms, provides for payments of principal in relation to payments, or reasonable projections of payments, on notes meeting the requirements of subparagraphs (1)(A) and (B) or certificates of interest or participations in promissory notes meeting such requirements.
For the purposes of this paragraph, the term "promissory note," when used in connection with a manufactured home, shall also include a loan, advance, or credit sale as evidenced by a retail installment sales contract or other instrument; or
(3) involve offers or sales of one or more promissory notes directly secured by a first lien on a single parcel of real estate upon which is located a dwelling or other residential or commercial structure, and participation interests in such notes:
(A) Where such securities are originated by a savings and loan association, savings bank, commercial bank, or similar banking institution which is supervised and examined by a federal or state authority, and are offered and sold subject to the following conditions:
(i) The minimum aggregate sales price per purchaser shall not be less than $250,000;
(ii) the purchaser shall pay cash either at the time of the sale or within 60 days thereof; and
(iii) each purchaser shall buy for such purchaser's own account only; or
(B) where such securities are originated by a mortgagee approved by the secretary of housing and urban development pursuant to U.S.C. §§ 1709 and 1715b of title 12 and are offered or sold subject to the three conditions specified in subparagraph (3)(A) to any institution described in such subparagraph or to any insurance company subject to the supervision of the insurance commissioner, or any agency or officer performing like function, of any state or territory of the United States or the District of Columbia, or the federal home loan mortgage corporation, the federal national mortgage association or the government national mortgage association.
Transactions between any of the entities described in subparagraph (3)(A) or (3)(B) involving nonassignable contracts to buy or sell the foregoing securities which are to be completed within two years, where the seller of the foregoing securities pursuant to any such contract is one of the parties described in subparagraph (3)(A) or (3)(B) who may originate such securities and the purchaser of such securities pursuant to any such contract is any institution described in subparagraph (3)(A) or any insurance company described in subparagraph (3)(B), the federal home loan mortgage corporation, federal national mortgage association, or the government national mortgage association and where the foregoing securities are subject to the three conditions for sale set forth in subparagraphs (3)(A)(i) through (iii);
(d) for purposes of this section:
(1) "NAIC" means the national association of insurance commissioners; and
(2) "SVO" means the securities valuation office of the NAIC or any successor office established by the NAIC.
History: L. 1992, ch. 118, § 2; L. 2015, ch. 7, § 12; July 1.
As used in K.S.A. 40-2b28:
(a) "Medium grade obligations" means obligations which are designated "3" by the SVO or its equivalent rating by a nationally recognized statistical rating organization recognized by the SVO.
(b) "Lower grade obligations" means obligations which are designated "4," "5" or "6" by the SVO or its equivalent rating by a nationally recognized statistical rating organization recognized by the SVO.
(c) "Admitted assets" means the amount shown on the insurer's last annual report as filed with the state commissioner of insurance or a more recent quarterly financial statement filed with the commissioner.
(d) "Aggregate amount" of medium grade and lower grade obligations means the aggregate statutory statement value thereof.
(e) "Institution" means a corporation, a joint-stock company, an association, a trust, a business partnership, a business joint venture or similar entity.
(f) "Insurance company" or "insurer" means any life insurance company organized under the laws of this state.
(g) "NAIC" means the national association of insurance commissioners.
(h) "SVO" means the securities valuation office of the NAIC or any successor office established by the NAIC.
History: L. 1992, ch. 121, § 3; L. 2015, ch. 7, § 13; July 1.
(a) No insurance company shall acquire, directly or indirectly, any medium grade or lower grade obligation of any institution if, after giving effect to any such acquisition, the aggregate amount of all medium grade and lower grade obligations then held by such insurer would exceed 20% of its admitted assets. Within this limitation no more than 10% of its admitted assets shall consist of lower grade obligations; no more than three percent of its admitted assets shall consist of obligations designated "5" or "6" by the SVO or its equivalent rating by a nationally recognized statistical rating organization recognized by the SVO; and, no more than one percent of its admitted assets shall consist of obligations designated "6" by the SVO or its equivalent rating by a nationally recognized statistical rating organization recognized by the SVO. Attaining or exceeding the limit of any one category shall not preclude an insurer from acquiring obligations in other categories subject to the specific and multi-category limits.
(b) No insurer organized under the laws of this state may invest more than one percent of its admitted assets in medium grade obligations issued, guaranteed or insured by any one institution nor may it invest more than one-half of one percent of its admitted assets in lower grade obligations issued, guaranteed or insured by any one institution. In no event, shall such insurer invest more than one percent of its admitted assets in any medium or lower grade obligations issued, guaranteed or insured by any one institution.
(c) Nothing contained in this act shall prohibit an insurer from acquiring any obligations which it has committed to acquire if the insurer would have been permitted to acquire that obligation pursuant to this act on the date on which such insurer committed to purchase that obligation.
(d) Notwithstanding the limitations of subsection (b), an insurer may acquire an obligation of an institution in which the insurer already has one or more obligations, if the obligation is acquired in order to protect an investment previously made in the obligations of the institution, except that all such acquired obligations shall not exceed one-half of one percent of the insurer's admitted assets.
(e) Nothing contained in this act shall prohibit an insurer to which this act applies from acquiring an obligation as a result of a restructuring of a medium or lower grade obligation already held or require such insurer to sell or otherwise dispose of any obligation legally acquired prior to the effective date of this act.
(f) Nothing contained in this act shall permit or be construed as permitting an insurer to exceed, alter or otherwise circumvent any of the limitations or restrictions applicable to the investments authorized by article 2b of chapter 40 of the Kansas Statutes Annotated, and amendments thereto.
(g) The board of directors of any insurance company organized under the laws of this state which acquires or invests, directly or indirectly, more than two percent of its admitted assets in medium grade and lower grade obligations, shall adopt a written plan for the making of such investments. The plan, in addition to guidelines with respect to the quality of the issues invested in, shall contain diversification standards acceptable to the commissioner which may include, but not be limited to, standards for issuer, industry, duration, liquidity and geographic location.
History: L. 1992, ch. 121, § 4; L. 2005, ch. 87, § 2; L. 2014, ch. 43, § 7; L. 2015, ch. 7, § 14; July 1.
(a) Any life insurance company organized under any law of this state may invest, by loans or otherwise, with the direction or approval of a majority of its board of directors or authorized committee thereof, any of its funds, or any part thereof, in asset-backed securities, subject to the following:
(1) To be an admitted asset under this section, an asset-backed security must, at the time of acquisition, be designated "1" or "2" by the SVO or its equivalent rating by a nationally recognized statistical rating organization recognized by the SVO; and
(2) the investment in any one issue of asset-backed securities shall not exceed 2% of the admitted assets of the life insurance company as shown by its last annual report or a more recent quarterly financial statement filed with the commissioner. Each issue designated as provided in paragraph (1) shall constitute a single issue regardless of any other obligations or securities issued by the same or any affiliated issuer.
(b) As used in this section:
(1) "Asset-backed security" means any security or other instrument representing or evidencing an interest in, a loan to, a participation in a loan to, or any other right to receive payments from a business entity of any type or form, which has as its primary business activity the acquisition and holding of financial assets, directly or through a trustee, for the benefit of such business entity's debt or equity holders;
(2) "financial asset" means a single asset or a pool of assets consisting of interest-bearing obligations or other contractual obligations representing or constituting the right to receive payment from the asset or pool of assets;
(3) "NAIC" means the national association of insurance commissioners; and
(4) "SVO" means the securities valuation office of the NAIC or any successor office established by the NAIC.
History: L. 1995, ch. 23, § 1; L. 2014, ch. 43, § 8; L. 2015, ch. 7, § 15; July 1.
(a) As used in this section:
(1) "Eligible derivative asset" means an option, as defined in K.S.A. 40-2b25, and amendments thereto, that is purchased or written to hedge the growth in interest credited to an indexed product as a direct result of changes in each related external index.
(2) "External index" means a list of securities, commodities or other financial instruments that is published or disseminated by a source other than an insurance company, including Standard & Poor's, nasdaq and dow jones.
(3) "Hedging transaction" has the meaning specified in K.S.A. 40-2b25, and amendments thereto.
(4) "Indexed annuity products" means contracts that:
(A) Provide a minimum guaranteed interest accumulation on a portion of all premium payments; and
(B) include provisions under which interest is credited based upon the performance of one or more external indices.
(5) "Indexed life products" means life insurance policies that:
(A) Provide a minimum guaranteed interest accumulation on a portion of all premium payments; and
(B) include provisions under which interest is credited based upon the performance of one or more external indices.
(6) "Indexed products" means indexed annuity products and indexed life products.
(7) "Interest-crediting period" means the length of time over which the performance of each external index is measured for purposes of determining the amount of interest credited under an indexed product.
(b) (1) Any insurance company may account for eligible derivative assets at amortized cost if the insurance company can demonstrate that such eligible derivative assets meet the following criteria for an economic hedge:
(A) At inception of the hedge, or as of the date that an insurance company begins using the accounting practices set forth herein, if later, there must be a formal documentation of the economic hedging relationship and the insurance company's risk management objective and strategy for undertaking the economic hedge, including identification of the specific eligible derivative assets purchased to hedge indexed products, the nature of the particular risk being hedged, and how the eligible derivative assets' effectiveness will be assessed, retrospectively and prospectively, on a qualitative basis; and
(B) at inception of the hedge, or as of the date that an insurance company begins using the accounting practices set forth herein, if later, and at the end of each quarterly reporting period thereafter, the insurance company must maintain documentation that the economic hedge is expected to be and continues to be highly effective as defined by the criteria in subparagraph (A) in achieving offsetting changes in fair value attributable to the hedged risk during the period that the economic hedge is designated.
(2) Eligible derivative assets purchased or written with a year or less to maturity or expiration shall not be required to be amortized.
(c) (1) The following accounting practices shall apply to the indexed annuity product reserves:
(A) Indexed annuity product reserve calculations shall be based on actuarial guideline XXXV assuming the market value of the eligible derivative assets associated with the current interest crediting period is zero, regardless of the observable market for the eligible derivative assets.
(B) At the conclusion of each interest-crediting period, the interest credited to an indexed annuity product shall be reflected in the indexed annuity product reserve as realized, based on the actual performance of the relevant external index or external indices.
(2) The accounting practices specified in this subsection shall not apply to the calculation of indexed life product reserves.
(d) (1) If an insurance company elects to use the alternative accounting practices prescribed herein, it shall report quarterly to the commissioner of insurance, for analysis purposes, the market value of its eligible derivative assets and what the actuarial guideline XXXV reserve would be, using the market value of such eligible derivative assets.
(2) An insurance company that elects to use the alternative accounting practices prescribed herein shall not change its accounting practices back to those that would apply in the absence of the statute without the prior approval of the commissioner of insurance.
(e) The commissioner of insurance shall have the power to adopt all reasonable rules and regulations necessary to implement this section.
History: L. 2019, ch. 46, § 1; July 1.
As used in this act:
(a) "Adjusted RBC report" means an RBC report that has been adjusted by the commissioner in accordance with K.S.A. 40-2c04, and amendments thereto.
(b) "Corrective order" means an order issued by the commissioner specifying corrective actions that the commissioner has determined are required to address an RBC level event.
(c) "Domestic insurer" means any insurance company or risk retention group that is licensed and organized in this state.
(d) "Foreign insurer" means any insurance company or risk retention group not domiciled in this state that is licensed or registered to do business in this state pursuant to article 41 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, or K.S.A. 40-209, and amendments thereto.
(e) "NAIC" means the national association of insurance commissioners.
(f) "Life and health insurer" means any insurance company licensed under article 4 or 5 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, or a licensed property and casualty insurer writing only accident and health insurance.
(g) "Property and casualty insurer" means any insurance company licensed under articles 9, 10, 11, 12, 12a, 15 or 16 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, but does not include monoline mortgage guaranty insurers, financial guaranty insurers and title insurers.
(h) "Negative trend" means, with respect to a life and health insurer, a negative trend over a period of time, as determined in accordance with the "trend test calculation" included in the RBC instructions defined in subsection (j).
(i) "RBC" means risk-based capital.
(j) "RBC instructions" means the risk-based capital instructions promulgated by the NAIC that are in effect as announced and noticed by the commissioner pursuant to K.S.A. 2025 Supp. 40-2,256, and amendments thereto.
(k) "RBC level" means an insurer's company action level RBC, regulatory action level RBC, authorized control level RBC or mandatory control level RBC where:
(1) "Company action level RBC" means, with respect to any insurer, the product of 2.0 and its authorized control level RBC;
(2) "regulatory action level RBC" means the product of 1.5 and its authorized control level RBC;
(3) "authorized control level RBC" means the number determined under the risk-based capital formula in accordance with the RBC instructions; and
(4) "mandatory control level RBC" means the product of 0.70 and the authorized control level RBC.
(l) "RBC plan" means a comprehensive financial plan containing the elements specified in K.S.A. 40-2c06, and amendments thereto. If the commissioner rejects the RBC plan, and it is revised by the insurer, with or without the commissioner's recommendation, the plan shall be called the "revised RBC plan."
(m) "RBC report" means the report required by K.S.A. 40-2c02, and amendments thereto.
(n) "Total adjusted capital" means the sum of:
(1) An insurer's capital and surplus or surplus only if a mutual insurer; and
(2) such other items, if any, as the RBC instructions may provide.
(o) "Commissioner" means the commissioner of insurance.
History: L. 1994, ch. 138, § 1; L. 1996, ch. 134, § 1; L. 1997, ch. 53, § 1; L. 1998, ch. 15, § 1; L. 1999, ch. 31, § 1; L. 2000, ch. 170, § 8; L. 2001, ch. 61, § 1; L. 2002, ch. 158, § 22; L. 2003, ch. 21, § 1; L. 2004, ch. 159, § 7; L. 2005, ch. 28, § 1; L. 2006, ch. 122, § 1; L. 2007, ch. 40, § 1; L. 2008, ch. 134, § 3; L. 2009, ch. 83, § 21; L. 2010, ch. 108, § 3; L. 2011, ch. 15, § 1; L. 2012, ch. 19, § 1; L. 2013, ch. 38, § 1; L. 2014, ch. 16, § 1; L. 2015, ch. 24, § 2; L. 2016, ch. 16, § 1; L. 2017, ch. 8, § 1; L. 2018, ch. 13, § 1; L. 2019, ch. 46, § 2; L. 2020, ch. 10, § 3; L. 2021, ch. 108, § 5; L. 2022, ch. 46, § 1; L. 2023, ch. 41, § 6; L. 2024, ch. 70, § 5; L. 2025, ch. 99, § 17; July 1.
History: L. 1994, ch. 138, § 1; L. 1996, ch. 134, § 1; L. 1997, ch. 53, § 1; L. 1998, ch. 15, § 1; L. 1999, ch. 31, § 1; L. 2000, ch. 170, § 8; L. 2001, ch. 61, § 1; L. 2002, ch. 158, § 22; L. 2003, ch. 21, § 1; L. 2004, ch. 159, § 7; L. 2005, ch. 28, § 1; L. 2006, ch. 122, § 1; L. 2007, ch. 40, § 1; L. 2008, ch. 144, § 1; Repealed, L. 2009, ch. 83, § 29; July 1.
Every domestic insurer, concurrent with or prior to submission of the annual statement required by K.S.A. 40-225, and amendments thereto, shall prepare and submit to the commissioner a report of its RBC levels as of the end of the calendar year just ended in a form and containing such information as is required by the RBC instructions. In addition, every domestic insurer shall file its RBC report:
(a) With the NAIC in accordance with the RBC instructions; and
(b) with the insurance commissioner in any state in which the insurer is authorized to do business, if such insurance commissioner has notified the insurer of its request in writing, in which case the insurer shall file its RBC report not later than the later of:
(1) Fifteen days from the receipt of notice to file its RBC report with that state; or
(2) the filing date otherwise specified in this subsection.
History: L. 1994, ch. 138, § 2; July 1.
(a) A life and health insurer's RBC shall be determined in accordance with the formula set forth in the RBC instructions. The formula shall take into account and may adjust for the covariance between:
(1) The risk with respect to the insurer's assets;
(2) the risk of adverse insurance experience with respect to the insurer's liabilities and obligations;
(3) the interest rate risk with respect to the insurer's business; and
(4) all other business risks and such other relevant risks as are set forth in the RBC instructions;
determined in each case by applying the factors in the manner set forth in the RBC instructions.
(b) A property and casualty insurer's RBC shall be determined in accordance with the formula set forth in the RBC instructions. The formula shall take into account and may adjust for the covariance between:
(1) Asset risk;
(2) credit risk;
(3) underwriting risk; and
(4) all other business risks and such other relevant risks as are set forth in the RBC instructions;
determined in each case by applying the factors in the manner set forth in the RBC instructions.
(c) An excess of capital over the amount produced by the risk-based capital requirements contained in this act and the formulas, schedules and instructions referenced in this act is desirable in the business of insurance. Accordingly, insurers should seek to maintain capital above the RBC levels required by this act. Additional capital is used and useful in the insurance business and helps to secure an insurer against various risks inherent in, or affecting, the business of insurance and not accounted for or only partially measured by the risk-based capital requirements contained in this act.
History: L. 1994, ch. 138, § 3; L. 1996, ch. 134, § 2; July 1.
If a domestic insurer files an RBC report which in the judgment of the commissioner is inaccurate, the commissioner shall adjust the RBC report to correct the inaccuracy and shall notify the insurer of the adjustment. The notice shall contain a statement of the reason for the adjustment. An RBC report as so adjusted is referred to as an adjusted RBC report.
History: L. 1994, ch. 138, § 4; July 1.
"Company action level event" means any of the following events:
(a) The filing of an RBC report by an insurer which indicates that:
(1) The insurer's total adjusted capital is greater than or equal to its regulatory action level RBC but less than its company action level RBC; or
(2) (A) a life and health insurer has total adjusted capital which is greater than or equal to its company action level RBC but less than the product of its authorized control level RBC and 3.0 and has a negative trend; or
(B) a property and casualty insurer has total adjusted capital which is greater than or equal to its company action level RBC but less than the product of its authorized control level RBC and 3.0 and triggers the trend test calculation included in the RBC instructions as defined in K.S.A. 40-2c01, and amendments thereto.
(b) The notification by the commissioner to the insurer of an adjusted RBC report that indicates the event described in subsection (a)(1) or (2), unless the insurer challenges the adjusted RBC report pursuant to K.S.A. 40-2c19, and amendments thereto, and such challenge has not been rejected by the commissioner.
History: L. 1994, ch. 138, § 5; L. 1996, ch. 134, § 3; L. 2009, ch. 19, § 1; L. 2013, ch. 38, § 2; July 1.
In the event of a company action level event, the insurer shall prepare and submit to the commissioner an RBC plan which shall:
(a) Identify the conditions in the insurer's operation which contribute to the company action level event;
(b) contain proposals of corrective actions which the insurer intends to take that would be expected to result in the elimination of the company action level event;
(c) provide projections of the insurer's financial results in the current year and at least the four succeeding years, both in the absence of the proposed corrective actions and giving effect to the proposed corrective actions, including projections of statutory operating income, net income, capital and surplus or surplus only with respect to a mutual insurer. The projections for both new and renewal business may include separate projections for each major line of business and separately identify each significant income, expense and benefit component;
(d) identify the key assumptions impacting the insurer's projections and the sensitivity of the projections to the assumptions; and
(e) identify the quality of, and problems associated with, the insurer's business, including, but not limited to, its assets, anticipated business growth and associated surplus strain, extraordinary exposure to risk, mix of business and use of reinsurance in each case, if any.
History: L. 1994, ch. 138, § 6; July 1.
The RBC plan shall be submitted:
(a) Within 45 days of the company action level event; or
(b) within 45 days after notification to the insurer that the commissioner has rejected the insurer's challenge to an adjusted RBC report pursuant to K.S.A. 40-2c19.
History: L. 1994, ch. 138, § 7; July 1.
Within 60 days after the submission by an insurer of an RBC plan to the commissioner, the commissioner shall notify the insurer whether the RBC plan shall be implemented or is, in the judgment of the commissioner, unsatisfactory. If the commissioner determines the RBC plan is unsatisfactory, the notification to the insurer shall state the reasons for the determination, and may state proposed revisions which, in the judgment of the commissioner, will render the RBC plan satisfactory. Upon notification from the commissioner, the insurer shall prepare a revised RBC plan and shall submit the revised RBC plan to the commissioner:
(a) Within 45 days after the notification from the commissioner; or
(b) within 45 days after a notification to the insurer that the commissioner has, pursuant to K.S.A. 40-2c19, rejected the insurer's challenge to the commissioner's original findings as authorized by this section.
History: L. 1994, ch. 138, § 8; July 1.
In the event of a notification by the commissioner to an insurer that the insurer's RBC plan or revised RBC plan is unsatisfactory, the commissioner, subject to the insurer's right to a hearing under K.S.A. 40-2c19, may specify in the notification that the notification constitutes a regulatory action level event.
History: L. 1994, ch. 138, § 9; July 1.
Every domestic insurer that files an RBC plan or revised RBC plan with the commissioner shall file a copy of the RBC plan or revised RBC plan with the insurance commissioner in any state in which the insurer is authorized to do business if:
(a) Such state has an RBC provision substantially similar to K.S.A. 40-2c20; and
(b) the insurance commissioner of that state has notified the insurer of such insurance commissioner's request for the filing in writing, in which case the insurer shall file a copy of the RBC plan or revised RBC plan in that state no later than the later of:
(1) Fifteen days after the receipt of notice to file a copy of its RBC plan or revised RBC plan with the state; or
(2) the date on which the final RBC plan or revised RBC plan is filed under K.S.A. 40-2c07 and 40-2c08.
History: L. 1994, ch. 138, § 10; July 1.
"Regulatory action level event" means, with respect to any insurer, any of the following events:
(a) The filing of an RBC report by the insurer which indicates that the insurer's total adjusted capital is greater than or equal to its authorized control level RBC but less than its regulatory action level RBC;
(b) the notification by the commissioner to an insurer of an adjusted RBC report that indicates the result described in subsection (a) if the insurer does not challenge the adjusted RBC report pursuant to K.S.A. 40-2c19, and amendments thereto;
(c) the filing of an adjusted RBC report that indicates the result described in subsection (a) if the commissioner has rejected the insurer's challenge after a hearing held pursuant to K.S.A. 40-2c19, and amendments thereto;
(d) the failure of the insurer to file an RBC report by the filing date, unless the insurer has provided an explanation for such failure which is satisfactory to the commissioner and has cured the failure within 10 days after the filing date;
(e) the failure of the insurer to submit an RBC plan to the commissioner within the time period set forth in K.S.A. 40-2c07, and amendments thereto;
(f) notification by the commissioner to the insurer that:
(1) The RBC plan or revised RBC plan submitted by the insurer is, in the judgment of the commissioner, unsatisfactory; and
(2) (A) the insurer has not challenged the determination pursuant to K.S.A. 40-2c19, and amendments thereto; or
(B) the commissioner has rejected such challenge.
(g) Notification by the commissioner to the insurer that the insurer has failed to adhere to its RBC plan or revised RBC plan, but only if such failure has a substantial adverse effect on the ability of the insurer to eliminate the company action level event in accordance with its RBC plan or revised RBC plan and the commissioner has so stated in the notification, if:
(1) The insurer has not challenged such determination pursuant to K.S.A. 40-2c19, and amendments thereto; or
(2) the commissioner has rejected such challenge.
History: L. 1994, ch. 138, § 11; L. 1996, ch. 134, § 4; July 1.
In the event of a regulatory action level event, the commissioner shall:
(a) Require the insurer to prepare and submit an RBC plan or, if applicable, a revised RBC plan;
(b) perform such examination or analysis as the commissioner deems necessary of the assets, liabilities and operations of the insurer including a review of its RBC plan or revised RBC plan; and
(c) subsequent to the examination or analysis, issue a corrective order specifying such actions as the commissioner determines are required.
History: L. 1994, ch. 138, § 12; July 1.
In determining corrective actions, the commissioner may take into account such factors as are deemed relevant with respect to the insurer based upon the commissioner's examination or analysis of the assets, liabilities and operations of the insurer, including, but not limited to, the results of any sensitivity tests undertaken pursuant to the RBC instructions. The RBC plan or revised RBC plan shall be submitted:
(a) Within 45 days after the occurrence of the regulatory action level event;
(b) within 45 days after the notification to the insurer that the commissioner has rejected the insurer's challenge to an adjusted RBC report pursuant to K.S.A. 40-2c19, and amendments thereto; or
(c) within 45 days after notification to the insurer that the commissioner has rejected the insurer's challenge to a revised RBC plan pursuant to K.S.A. 40-2c19, and amendments thereto.
History: L. 1994, ch. 138, § 13; L. 1996, ch. 134, § 5; July 1.
The commissioner may retain actuaries and investment experts and other consultants as may be necessary in the judgment of the commissioner to review the insurer's RBC plan or revised RBC plan, examine or analyze the assets, liabilities and operations of the insurer and formulate the corrective order with respect to the insurer. The reasonable fees, costs and expenses relating to consultants shall be borne by the affected insurer or other party as directed by the commissioner.
History: L. 1994, ch. 138, § 14; July 1.
"Authorized control level event" means any of the following events:
(a) The filing of an RBC report by the insurer which indicates that the insurer's total adjusted capital is greater than or equal to its mandatory control level RBC but less than its authorized control level RBC;
(b) the notification by the commissioner to the insurer of an adjusted RBC report that indicates the event described in subsection (a) if:
(1) The insurer does not challenge the adjusted RBC report pursuant to K.S.A. 40-2c19, and amendments thereto; or
(2) the commissioner has rejected such challenge;
(c) the failure of the insurer to respond, in a manner satisfactory to the commissioner, to a corrective order if the insurer has not challenged the corrective order under K.S.A. 40-2c19, and amendments thereto; or
(d) if the commissioner has rejected the challenge to the corrective order or modified the corrective order pursuant to K.S.A. 40-2c19, and amendments thereto, the failure of the insurer to respond, in a manner satisfactory to the commissioner, to the corrective order subsequent to rejection or modification by the commissioner.
History: L. 1994, ch. 138, § 15; L. 1996, ch. 134, § 6; July 1.
In the event of an authorized control level event with respect to an insurer, the commissioner shall:
(a) Take such actions as are required under K.S.A. 40-2c11 through 40-2c14 regarding an insurer with respect to which a regulatory action level event has occurred; or
(b) if the commissioner deems it to be in the best interests of the policyholders and creditors of the insurer and of the public, take such actions as are necessary to cause the insurer to be placed under regulatory control pursuant to K.S.A. 40-3605 et seq., and amendments thereto. In the event the commissioner takes such actions, the authorized control level event shall be deemed sufficient grounds for the commissioner to take action under K.S.A. 40-3605 et seq., and amendments thereto, and the commissioner shall have the rights, powers and duties with respect to the insurer as are set forth in K.S.A. 40-3605 et seq., and amendments thereto. In the event the commissioner takes actions under this subsection pursuant to an adjusted RBC report, the insurer shall be entitled to such protections as are afforded to insurers under the provisions of K.S.A. 77-601 et seq., and amendments thereto, pertaining to summary proceedings.
History: L. 1994, ch. 138, § 16; July 1.
"Mandatory control event" means any of the following events:
(a) The filing of an RBC report which indicates that the insurer's total adjusted capital is less than its mandatory control level RBC;
(b) notification by the commissioner to the insurer of an adjusted RBC report that indicates the event described in subsection (a) if:
(1) The insurer does not challenge the adjusted RBC report pursuant to K.S.A. 40-2c19; or
(2) the commissioner has rejected such challenge.
History: L. 1994, ch. 138, § 17; July 1.
In the event of a mandatory control level event with respect to: (a) A life and health insurer, the commissioner shall take actions as are necessary to cause the insurer to be placed under regulatory control under K.S.A. 40-3605 et seq., and amendments thereto. In that event, the mandatory control level event shall be deemed sufficient grounds for the commissioner to take action under K.S.A. 40-3605 et seq., and amendments thereto, and the commissioner shall have the rights, powers, and duties with respect to the insurer as are set forth in K.S.A. 40-3605 et seq., and amendments thereto. In the event the commissioner takes actions pursuant to an adjusted RBC report, the insurer shall be entitled to such protections as are afforded to insurers under the provisions of K.S.A. 77-601 et seq., and amendments thereto, pertaining to summary proceedings. Notwithstanding any of the foregoing, the commissioner may forego action for up to 90 days after the mandatory control level event if there is a reasonable expectation that the mandatory control level event may be eliminated within the 90-day period;
(b) A property and casualty insurer, the commissioner shall take such actions as are necessary to place the insurer under regulatory control under K.S.A. 40-3605 et seq., and amendments thereto, or, in the case of an insurer which is writing no business and which is running-off its existing business, may allow the insurer to continue its run-off under the supervision of the commissioner. In either event, the mandatory control level event shall be deemed sufficient grounds for the commissioner to take action under K.S.A. 40-3605 et seq., and amendments thereto and the commissioner shall have the rights, powers and duties with respect to the insurer as are set forth in K.S.A. 40-3605 et seq., and amendments thereto. If the commissioner takes actions pursuant to an adjusted RBC report, the insurer shall be entitled to such protections as are afforded to insurers under the provisions of K.S.A. 77-601 et seq., and amendments thereto, pertaining to summary proceedings. Notwithstanding any of the foregoing, the commissioner may forego action for up to 90 days after the mandatory control level event if there is a reasonable expectation that the mandatory control level event may be eliminated with the 90-day period.
History: L. 1994, ch. 138, § 18; L. 1996, ch. 134, § 7; July 1.
(a) Upon notification to an insurer by the commissioner of an adjusted RBC report; or
(b) upon notification to an insurer by the commissioner that:
(1) The insurer's RBC plan or revised RBC plan is unsatisfactory; and
(2) such notification constitutes a regulatory action level event with respect to such insurer; or
(c) upon notification to any insurer by the commissioner that the insurer has failed to adhere to its RBC plan or revised RBC plan and that such failure has a substantial adverse effect on the ability of the insurer to eliminate the company action level event with respect to the insurer in accordance with its RBC plan or revised RBC plan; or
(d) upon notification to an insurer by the commissioner of a corrective order with respect to the insurer,
the insurer shall have the right to a hearing under the Kansas administrative procedure act, at which the insurer may challenge any determination or action by the commissioner. The insurer shall notify the commissioner of its request for a hearing within five days after the notification by the commissioner under subsections (a), (b), (c) or (d). Upon receipt of the insurer's request for a hearing, the commissioner shall set a date for the hearing, which date shall be no less than 10 nor more than 30 days after receipt of the insurer's request. Such hearing shall be governed by K.S.A. 77-513 through 77-532, and amendments thereto.
History: L. 1994, ch. 138, § 19; July 1.
(a) All RBC reports, RBC plans and any corrective orders, including the working papers and the results of any analysis of an insurer performed under this act shall be kept confidential by the commissioner. This information shall not be made public or subject to subpoena, other than by the commissioner and then only for the purpose of enforcement actions taken by the commissioner pursuant to this act or any other provision of the insurance laws of this state.
(b) RBC instructions, RBC reports, adjusted RBC reports, RBC plans and revised RBC plans are intended solely for use by the commissioner in monitoring the solvency of insurers and the need for possible corrective action with respect to insurers and shall not be used by the commissioner for ratemaking nor considered or introduced as evidence in any rate proceeding nor used by the commissioner to calculate or derive any elements of an appropriate premium level or rate of return for any line of insurance which an insurer or any affiliate is authorized to write.
History: L. 1994, ch. 138, § 20; L. 1996, ch. 134, § 8; July 1.
The comparison of an insurer's total adjusted capital to any of its RBC levels is a regulatory tool, and shall not be used to rank insurers generally. Therefore, except as otherwise required under the provisions of this act, the making, publishing, disseminating, circulating or placing before the public, or causing, directly or indirectly to be made, published, disseminated, circulated or placed before the public, in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio or television station, or in any other way, an advertisement, announcement or statement containing an assertion, representation or statement with regard to the RBC levels of any insurer, or of any component derived in the calculation, by any insurer, agent, broker or other person engaged in any manner in the insurance business is prohibited. Notwithstanding the foregoing, if any materially false statement with respect to the comparison regarding an insurer's total adjusted capital to any of its RBC levels or an inappropriate comparison of any other amount to the insurer's RBC levels is published in any written publication and the insurer is able to demonstrate to the commissioner with substantial proof the falsity or misrepresentative nature of such statement, the insurer may publish a rebuttal if the sole purpose of such publication is to rebut the materially false or improper statement.
History: L. 1994, ch. 138, § 21; July 1.
The provisions of this act are supplemental to any other provisions of the laws of this state, and shall not preclude nor limit any other powers or duties of the commissioner under such laws, including, but not limited to K.S.A. 40-222b and 40-3605 et seq., and amendments thereto.
History: L. 1994, ch. 138, § 22; July 1.
Any foreign insurer shall, upon the written request of the commissioner, submit to the commissioner an RBC report as of the end of the calendar year just ended the later of:
(a) The date an RBC report would be required to be filed by a domestic insurer under this act; or
(b) fifteen days after the request is received by the foreign insurer.
Any foreign insurer, at the written request of the commissioner, shall submit promptly to the commissioner a copy of any RBC plan that is filed with the insurance commissioner of any other state.
History: L. 1994, ch. 138, § 23; July 1.
In the event of a company action level event, regulatory action level event or authorized control level event with respect to any foreign insurer as determined under the RBC statute applicable in the state of domicile of the insurer or, if no RBC provision is in force in that state, under the provisions of this act, if the insurance commissioner of the state of domicile of the foreign insurer fails to require the foreign insurer to file an RBC plan in the manner specified under the RBC statute or, if there are no RBC provisions in force in the state, under K.S.A. 40-2c05, 40-2c06, 40-2c07, 40-2c08, 40-2c09 and 40-2c10, and amendments thereto, the commissioner may require the foreign insurer to file an RBC plan with the commissioner. In such event, the failure of the foreign insurer to file an RBC plan with the commissioner shall be grounds to order the insurer to cease and desist from writing new insurance business in this state.
History: L. 1994, ch. 138, § 24; L. 1996, ch. 134, § 9; July 1.
In the event of a mandatory control level event with respect to any foreign insurer, if no domiciliary receiver has been appointed with respect to the foreign insurer under the rehabilitation and liquidation statute applicable in the state of domicile of the foreign insurer, the commissioner may make application to the district court as permitted under K.S.A. 40-3605 et seq., and amendments thereto with respect to the liquidation of property of foreign insurers found in this state, and the occurrence of the mandatory control level event shall be considered adequate grounds for the application.
History: L. 1994, ch. 138, § 25; July 1.
All notices by the commissioner to an insurer which may result in regulatory action under this act shall be effective upon dispatch if transmitted by registered or certified mail, or in the case of any other transmission shall be effective upon the insurer's receipt of such notice.
History: L. 1994, ch. 138, § 26; July 1.
If any provisions of this act, or the application of the act to any person or circumstance, is held invalid, such determination shall not affect the provisions or applications of this act which can be given effect without the invalid provision or application, and to that end the provisions of this act are severable.
History: L. 1994, ch. 138, § 27; July 1.
The commissioner may exempt from the application of K.S.A. 40-2c01 through 40-2c27, and amendments thereto, any domestic property and casualty insurer which:
(a) Writes direct business only in this state;
(b) writes direct annual premiums of $2,000,000 or less; and
(c) assumes no reinsurance in excess of 5% of direct premiums written.
History: L. 1996, ch. 134, § 10; July 1.
On and after July 1, 2009, the commissioner may adopt by rules and regulations, any later version of the RBC instructions promulgated by the NAIC, which are consistent with the provisions of this act, including the provisions of K.S.A. 40-2c03, and amendments thereto, provided that before any later version may be adopted by the commissioner in rules and regulations, the commissioner shall prepare an impact statement indicating the projected impact upon domestic insurers and notify any affected insurer of the projected impact. If the projected impact is likely to cause the amount of a domestic insurer's total adjusted capital or its RBC report for the previous year to vary by more than 2.5% or to cause a domestic insurer's control level to change upon application of the later version of the risk-based capital instructions, then such later version shall not be adopted in rules and regulations until such later version is approved by legislative action.
History: L. 2009, ch. 83, § 20; April 23.
As used in K.S.A. 40-2d01 through 40-2d30, and amendments thereto:
(a) "Adjusted RBC report" means an RBC report that has been adjusted by the commissioner in accordance with K.S.A. 40-2d04, and amendments thereto.
(b) "Corrective order" means an order issued by the commissioner specifying corrective actions that the commissioner has determined are required.
(c) "Domestic health organization" means any health organization that is licensed and organized in this state.
(d) "Foreign health organization" means any health organization not domiciled in this state that is licensed to do business in this state pursuant to articles 19a, 19c or 32 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto.
(e) "NAIC" means the national association of insurance commissioners.
(f) "Health organization" means a health maintenance organization, limited health service organization, dental or vision plan, hospital, medical and dental indemnity or service corporation or other managed care organization licensed under articles 19a, 19c or 32 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, or an organization that is licensed as a life and health insurer under article 4 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, and has been determined by the commissioner to report predominantly health lines of business in accordance with a health statement test. "Health organization" does not include an organization that is licensed as either a life and health insurer or a property and casualty insurer under articles 4, 5, 9, 10, 11, 12, 12a, 15 or 16 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, and is otherwise subject to either the life or property and casualty RBC requirements in K.S.A. 40-2c01 et seq., and amendments thereto.
(g) "RBC" means risk-based capital.
(h) "RBC instructions" means the risk-based capital instructions for managed care organizations promulgated by the NAIC that are in effect as announced and noticed by the commissioner pursuant to K.S.A. 2025 Supp. 40-2,256, and amendments thereto.
(i) "RBC level" means a health organization's company action level RBC, regulatory action level RBC, authorized control level RBC, or mandatory control level RBC where:
(1) "Company action level RBC" means, with respect to any health organization, the product of 2.0 and its authorized control level RBC;
(2) "regulatory action level RBC" means the product of 1.5 and its authorized control level RBC;
(3) "authorized control level RBC" means the number determined under the risk-based capital formula in accordance with the RBC instructions; and
(4) "mandatory control level RBC" means the product of .70 and the authorized control level RBC.
(j) "RBC plan" means a comprehensive financial plan containing the elements specified in K.S.A. 40-2d05, and amendments thereto. If the commissioner rejects the RBC plan, and it is revised by the health organization, with or without the commissioner's recommendation, the plan shall be called the "revised RBC plan."
(k) "RBC report" means the report required by K.S.A. 40-2d02, 40-2d03 and 40-2d04, and amendments thereto.
(l) "Total adjusted capital" means the sum of:
(1) A health organization's capital and surplus as determined in accordance with the annual financial statements required to be filed under chapter 40 of the Kansas Statutes Annotated, and amendments thereto; and
(2) such other items, if any, as the RBC instructions may provide.
(m) "Commissioner" means the commissioner of insurance.
History: L. 2000, ch. 147, § 2; L. 2025, ch. 99, § 18; July 1.
(a) Except as provided in paragraph (b), every domestic health organization shall prepare and submit to the commissioner, on or before March 1, a report of its RBC levels as of the end of the calendar year just ended in a form and containing such information as is required by the RBC instructions. In addition, every domestic health organization shall file its RBC report:
(1) With the NAIC in accordance with the RBC instructions; and
(2) with the insurance commissioner in any state in which the health organization is authorized to do business, if such insurance commissioner has notified the health organization of its request in writing, in which case, the health organization shall file its RBC report not later than the later of:
(A) 15 days from the receipt of notice to file its RBC report with that state; or
(B) the filing date otherwise specified in this subsection.
(b) The risk-based capital requirements of this section shall not apply to any health organization contracting with the Kansas department for children and families to provide services provided under title XIX and title XXI of the social security act or any other public benefits, provided the public benefit contracts represent at least 90% of the premium volume of the health organization.
History: L. 2000, ch. 147, § 3; L. 2014, ch. 115, § 186; July 1.
(a) A health organization's RBC shall be determined in accordance with the formula set forth in the RBC instructions. The formula shall take into account and may adjust for the covariance between:
(1) Asset risk;
(2) credit risk;
(3) underwriting risk; and
(4) all other business risks and such other relevant risks as are set forth in the RBC instructions; determined in each case by applying the factors in the manner set forth in the RBC instructions.
(b) An excess of capital over the amount produced by the risk-based capital requirements contained in this act and the formulas, schedules and instructions referenced in this act is desirable in the business of insurance. Accordingly, each health organization should seek to maintain capital above the RBC levels required by this act. Additional capital is used and useful in the insurance business and helps to secure a health organization against various risks inherent in, or affecting, the business of insurance and not accounted for or only partially measured by the risk-based capital requirements contained in this act.
History: L. 2000, ch. 147, § 4; July 1.
If a domestic health organization files an RBC report which in the judgment of the commissioner is inaccurate, the commissioner shall adjust the RBC report to correct the inaccuracy and shall notify such health organization of the adjustment. The notice shall contain a statement of the reason for the adjustment. A RBC report as so adjusted is referred to as an adjusted RBC report.
History: L. 2000, ch. 147, § 5; July 1.
"Company action level event" means any of the following events:
(a) The filing of an RBC report by a health organization which indicates that:
(1) The health organization's total adjusted capital is greater than or equal to its regulatory action level RBC but less than its company action level RBC; or
(2) the health organization has total adjusted capital which is greater than or equal to its company action level RBC but less than the product of its authorized control level RBC and 3.0, and triggers the trend test determined in accordance with the trend test calculation included in the health RBC instructions as defined in K.S.A. 40-2d01, and amendments thereto.
(b) The notification by the commissioner to the health organization of an adjusted RBC report that indicates the event described in subsection (a) if:
(1) The health organization does not challenge the adjusted RBC report pursuant to K.S.A. 40-2d19, and amendments thereto; or
(2) the commissioner has rejected such challenge after a hearing.
History: L. 2000, ch. 147, § 6; L. 2013, ch. 39, § 1; July 1.
In the event of a company action level event, the health organization shall prepare and submit to the commissioner an RBC plan which shall:
(a) Identify the conditions in the health organization's operation which contribute to the company action level event;
(b) contain proposals of corrective actions which the health organization intends to take that would be expected to result in the elimination of the company action level event;
(c) provide projections of the health organization's financial results in the current year and at least the two succeeding years, both in the absence of the proposed corrective actions and giving effect to the proposed corrective actions, including projections of statutory balance sheets, operating income, net income, capital and surplus, and RBC levels. The projections for both new and renewal business may include separate projections for each major line of business and separately identify each significant income, expense and benefit component;
(d) identify the key assumptions impacting the health organization's projections and the sensitivity of the projections to the assumptions; and
(e) identify the quality of, and problems associated with, the health organization's business, including, but not limited to, its assets, anticipated business growth and associated surplus strain, extraordinary exposure to risk, mix of business and use of reinsurance in each case, if any.
History: L. 2000, ch. 147, § 7; July 1.
The RBC plan shall be submitted:
(a) Within 45 days of the company action level event; or
(b) within 45 days after notification to the health organization that the commissioner has rejected the health organization's challenge to an adjusted RBC report pursuant to K.S.A. 40-2d19, and amendments thereto.
History: L. 2000, ch. 147, § 8; July 1.
Within 60 days after the submission by a health organization of an RBC plan to the commissioner, the commissioner shall notify the health organization whether the RBC plan shall be implemented or is, in the judgment of the commissioner, unsatisfactory. If the commissioner determines the RBC plan is unsatisfactory, the notification to the health organization shall state the reasons for the determination, and may state proposed revisions which, in the judgments of the commissioner, will render the RBC plan satisfactory. Upon notification from the commissioner, the health organization shall prepare a revised RBC plan and shall submit the revised RBC plan to the commissioner:
(a) Within 45 days after the notification from the commissioner; or
(b) within 45 days after a notification to the health organization that the commissioner has, pursuant to K.S.A. 40-2d19, and amendments thereto, rejected the health organization's challenge to the commissioner's original findings as authorized by this section.
History: L. 2000, ch. 147, § 9; July 1.
In the event of a notification by the commissioner to a health organization that the health organization's RBC plan or revised RBC plan is unsatisfactory, the commissioner, subject to the health organization's right to a hearing under K.S.A. 40-2d19, and amendments thereto, may specify in the notification that the notification constitutes a regulatory action level event.
History: L. 2000, ch. 147, § 10; July 1.
Every domestic health organization that files an RBC plan or revised RBC plan with the commissioner shall file a copy of the RBC plan or revised RBC plan with the insurance commissioner in any state in which the health organization is authorized to do business if:
(a) Such state has an RBC provision substantially similar to K.S.A. 40-2d20, and amendments thereto; and
(b) the insurance commissioner of that state has notified the health organization of such insurance commissioner's request for the filing in writing, in which case the health organization shall file a copy of the RBC plan or revised RBC plan in that state no later than the later of:
(1) 15 days after the receipt of notice to file a copy of its RBC plan or revised RBC plan with the state; or
(2) the date on which the final RBC plan or revised RBC plan is filed under K.S.A. 40-2d07 or 40-2d08, and amendments thereto.
History: L. 2000, ch. 147, § 11; July 1.
"Regulatory action level event" means, with respect to any health organization, any of the following events:
(a) The filing of an RBC report by the health organization which indicates that the health organization's total adjusted capital is greater than or equal to its authorized control level RBC but less than its regulatory action level RBC;
(b) the notification by the commissioner to the health organization of an adjusted RBC report that indicates the event described in subsection (a) if:
(1) The health organization does not challenge the adjusted RBC report pursuant to K.S.A. 40-2d19, and amendments thereto; or
(2) the commissioner has rejected such challenge after a hearing; and
(c) the failure of the health organization to file an RBC report by the filing date, unless the health organization has provided an explanation for such failure which is satisfactory to the commissioner and has cured the failure within 10 days after the filing date;
(d) the failure of the health organization to submit an RBC plan to the commissioner within the time period set forth in K.S.A. 40-2d07, and amendments thereto;
(e) notification by the commissioner to the health organization that:
(1) The RBC plan or revised RBC plan submitted by the health organization is, in the judgment of the commissioner, unsatisfactory; and
(2) (A) the health organization has not challenged the determination pursuant to K.S.A. 40-2d19, and amendments thereto; or
(B) the commissioner has rejected such challenge.
(f) Notification by the commissioner to the health organization that the health organization has failed to adhere to its RBC plan or revised RBC plan, but only if such failure has a substantial adverse effect on the ability of the health organization to eliminate the company action level event in accordance with its RBC plan or revised RBC plan and the commissioner has so stated in the notification, if:
(1) The health organization has not challenged such determination pursuant to K.S.A. 40-2d19, and amendments thereto; or
(2) the commissioner has rejected such challenge after a hearing.
History: L. 2000, ch. 147, § 12; July 1.
In the event of a regulatory action level event, the commissioner shall:
(a) Require the health organization to prepare and submit an RBC plan or, if applicable, a revised RBC plan;
(b) perform such examination or analysis as the commissioner deems necessary of the assets, liabilities and operations of the health organization including a review of its RBC plan or revised RBC plan; and
(c) subsequent to the examination or analysis, issue a corrective order specifying such actions as the commissioner determines are required.
History: L. 2000, ch. 147, § 13; July 1.
In determining corrective actions, the commissioner may take into account such factors as are deemed relevant with respect to the health organization based upon the commissioner's examination or analysis of the assets, liabilities and operations of the health organization, including, but not limited to, the results of any sensitivity tests undertaken pursuant to the RBC instructions. The RBC plan or revised RBC plan shall be submitted:
(a) Within 45 days after the occurrence of the regulatory action level event;
(b) within 45 days after the notification to the health organization that the commissioner has rejected the health organization's challenge to an adjusted RBC report pursuant to K.S.A. 40-2d19, and amendments thereto; or
(c) within 45 days after notification to the health organization that the commissioner has rejected the health organization's challenge to a revised RBC plan pursuant to K.S.A. 40-2d19, and amendments thereto.
History: L. 2000, ch. 147, § 14; July 1.
The commissioner may retain actuaries and investment experts and other consultants as may be necessary in the judgment of the commissioner to review the health organization's RBC plan or revised RBC plan, examine or analyze the assets, liabilities and operations of the health organization and formulate the corrective order with respect to the health organization. The reasonable fees, costs and expenses relating to consultants shall be borne by the affected health organization or other party as directed by the commissioner.
History: L. 2000, ch. 147, § 15; July 1.
"Authorized control level event" means any of the following events:
(a) The filing of an RBC report by the health organization which indicates that the health organization's total adjusted capital is greater than or equal to its mandatory control level RBC but less than its authorized control level RBC;
(b) the notification by the commissioner to the health organization of an adjusted RBC report that indicates the event described in subsection (a) if:
(1) The health organization does not challenge the adjusted RBC report pursuant to K.S.A. 40-2d19, and amendments thereto; or
(2) the commissioner has rejected such challenge after a hearing;
(c) the failure of the health organization to respond, in a manner satisfactory to the commissioner, to a corrective order if the health organization has not challenged the corrective order under K.S.A. 40-2d19, and amendments thereto; or
(d) if the commissioner has rejected the challenge to the corrective order or modified the corrective order pursuant to K.S.A. 40-2d19, and amendments thereto, the failure of the health organization to respond, in a manner satisfactory to the commissioner, to the corrective order subsequent to rejection or modification by the commissioner.
History: L. 2000, ch. 147, § 16; July 1.
In the event of an authorized control level event with respect to a health organization, the commissioner:
(a) Shall take such actions as are required under K.S.A. 40-2d11 through 40-2d14, and amendments thereto, regarding a health organization with respect to which a regulatory action level event has occurred; or
(b) if the commissioner deems it to be in the best interests of the policyholders and creditors of the health organization and of the public, shall take such actions as are necessary to cause the health organization to be placed under regulatory control pursuant to K.S.A. 40-3605 et seq., and amendments thereto. In the event the commissioner takes such actions, the authorized control level event shall be deemed sufficient grounds for the commissioner to take action under K.S.A. 40-3605 et seq., and amendments thereto, and the commissioner shall have the rights, powers and duties with respect to the health organization as are set forth in K.S.A. 40-3605 et seq., and amendments thereto. In the event the commissioner takes actions under this subsection pursuant to an adjusted RBC report, the health organization shall be entitled to such protections as are afforded to health organizations under the provisions of K.S.A. 77-501 et seq., and amendments thereto, pertaining to summary proceedings.
History: L. 2000, ch. 147, § 17; July 1.
"Mandatory control event" means any of the following events:
(a) The filing of an RBC report by the health organization which indicates that the health organization's total adjusted capital is less than its mandatory control level RBC;
(b) the notification by the commissioner to the health organization of an adjusted RBC report that indicates the event described in subsection (a) if:
(1) The health organization does not challenge the adjusted RBC report pursuant to K.S.A. 40-2d19, and amendments thereto; or
(2) the commissioner has rejected such challenge.
History: L. 2000, ch. 147, § 18; July 1.
In the event of a mandatory control level event the commissioner shall take actions as are necessary to cause the health organization to be placed under regulatory control under K.S.A. 40-3605 et seq., and amendments thereto. In that event, the mandatory control level event shall be deemed sufficient grounds for the commissioner to take action under K.S.A. 40-3605 et seq., and amendments thereto, and the commissioner shall have the rights, powers and duties with respect to the health organization as are set forth in K.S.A. 40-3605 et seq., and amendments thereto. In the event the commissioner takes actions pursuant to an adjusted RBC report, the health organization shall be entitled to such protections as are afforded to health organizations under the provisions of K.S.A. 77-501 et seq., and amendments thereto, pertaining to summary proceedings. Notwithstanding any of the foregoing, the commissioner may forego action for up to 90 days after the mandatory control level event if there is a reasonable expectation that the mandatory control level event may be eliminated within the 90-day period.
History: L. 2000, ch. 147, § 19; July 1.
(a) Upon notification to a health organization by the commissioner of an adjusted RBC report; or
(b) upon notification to an health organization by the commissioner that:
(1) The health organization's RBC plan or revised RBC plan is unsatisfactory; and
(2) such notification constitutes a regulatory action level event with respect to such health organization; or
(c) upon notification to any health organization by the commissioner that the health organization has failed to adhere to its RBC plan or revised RBC plan and that such failure has a substantial adverse effect on the ability of the health organization to eliminate the company action level event with respect to the health organization in accordance with its RBC plan or revised RBC plan; or
(d) upon notification to an health organization by the commissioner of a corrective order with respect to the health organization, the health organization shall have the right to a hearing under the Kansas administrative procedure act, at which the health organization may challenge any determination or action by the commissioner. The health organization shall notify the commissioner of its request for a hearing within five days after the notification by the commissioner under subsections (a), (b), (c) or (d). Upon receipt of the health organization's request for a hearing, the commissioner shall set a date for the hearing, which date shall be no less than 10 nor more than 30 days after receipt of the health organization's request. Such hearing shall be governed by K.S.A. 77-513 through 77-532, and amendments thereto.
History: L. 2000, ch. 147, § 20; July 1.
(a) All RBC reports, RBC plans and any corrective orders, including the working papers and the results of any analysis of a health organization performed under this act shall be kept confidential by the commissioner. This information shall not be made public or subject to subpoena, other than by the commissioner and then only for the purpose of enforcement actions taken by the commissioner pursuant to this act or any other provision of the insurance laws of this state.
(b) RBC instructions, RBC reports, adjusted RBC reports, RBC plans and revised RBC plans are intended solely for use by the commissioner in monitoring the solvency of health organizations and the need for possible corrective action with respect to health organizations and shall not be used by the commissioner for ratemaking nor considered or introduced as evidence in any rate proceeding nor used by the commissioner to calculate or derive any elements of an appropriate premium level or rate of return for any line of insurance which an health organization or any affiliate is authorized to write.
(c) (1) The commissioner may share or exchange any documents, materials or other information, including confidential and privileged documents referred to in subsection (a), received in the performance of the commissioner's duties under this act, with:
(A) The NAIC;
(B) other state, federal or international regulatory agencies; and
(C) other state, federal or international law enforcement authorities.
(2) (A) The sharing or exchanging of documents, materials or other information under this subsection shall be conditioned upon the recipient's authority and agreement to maintain the confidential and privileged status, if any, of the documents, materials or other information being shared or exchanged.
(B) No waiver of an existing privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the commissioner under this section or as a result of sharing as authorized by paragraph (1) of subsection (c).
(3) The commissioner of insurance is hereby authorized to adopt such rules and regulations establishing protocols governing the exchange of information as may be necessary to implement and carry out the provisions of this act.
History: L. 2000, ch. 147, § 21; July 1.
The comparison of a health organization's total adjusted capital to any of its RBC levels is a regulatory tool, and shall not be used to rank health organizations generally. Therefore, except as otherwise required under the provisions of this act, the making, publishing, disseminating, circulating or placing before the public, or causing, directly or indirectly to be made, published, disseminated, circulated or placed before the public, in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio or television station, or in any other way, an advertisement, announcement or statement containing an assertion, representation or statement with regard to the RBC levels of any health organization, or of any component derived in the calculation, by any health organization, agent, broker or other person engaged in any manner in the insurance business is prohibited. Notwithstanding the foregoing, if any materially false statement with respect to the comparison regarding a health organization's total adjusted capital to any of its RBC levels or an inappropriate comparison of any other amount to the health organization's RBC levels is published in any written publication and the health organization is able to demonstrate to the commissioner with substantial proof the falsity or misrepresentative nature of such statement, the health organization may publish a rebuttal if the sole purpose of such publication is to rebut the materially false or improper statement.
History: L. 2000, ch. 147, § 22; July 1.
The provisions of this act are supplemental to any other provisions of the laws of this state, and shall not preclude nor limit any other powers or duties of the commissioner under such laws, including but not limited to K.S.A. 40-3605 et seq., and amendments thereto.
History: L. 2000, ch. 147, § 23; July 1.
Any foreign health organization, upon the written request of the commissioner, shall submit to the commissioner an RBC report as of the end of the calendar year just ended the later of:
(a) The date an RBC report would be required to be filed by a domestic health organization under this act; or
(b) Fifteen days after the request is received by the foreign health organization.
Any foreign health organization, at the written request of the commissioner, shall submit promptly to the commissioner a copy of any RBC plan that is filed with the insurance commissioner of any other state.
History: L. 2000, ch. 147, § 24; July 1.
In the event of a company action level event, regulatory action level event or authorized control level event with respect to any foreign health organization as determined under the RBC statute applicable in the state of domicile of the health organization or, if no RBC provision is in force in that state, under the provisions of this act, if the insurance commissioner of the state of domicile of the foreign health organization fails to require the foreign health organization to file an RBC plan in the manner specified under the RBC statute or, if there are no RBC provisions in force in the state, under K.S.A. 40-2d05, 40-2d06, 40-2d07, 40-2d08, 40-2d09 and 40-2d10, and amendments thereto, the commissioner may require the foreign health organization to file an RBC plan with the commissioner. In such event, the failure of the foreign health organization to file an RBC plan with the commissioner shall be grounds to order the health organization to cease and desist from writing new insurance business in this state.
History: L. 2000, ch. 147, § 25; July 1.
In the event of a mandatory control level event with respect to any foreign health organization, if no domiciliary receiver has been appointed with respect to the foreign health organization under the rehabilitation and liquidation statute applicable in the state of domicile of the foreign health organization, the commissioner may make application to the district court as permitted under K.S.A. 40-3605 et seq., and amendments thereto with respect to the liquidation of property of foreign health organizations found in this state, and the occurrence of the mandatory control level event shall be considered adequate grounds for the application.
History: L. 2000, ch. 147, § 26; July 1.
All notices by the commissioner to a health organization which may result in regulatory action under this act shall be effective upon dispatch if transmitted by registered or certified mail, or in the case of any other transmission shall be effective upon the health organization's receipt of such notice.
History: L. 2000, ch. 147, § 27; July 1.
If any provision of this act, or the application of the act to any person or circumstance, is held invalid, such determination shall not affect the provisions or applications of this act which can be given effect without the invalid provision or application, and to that end the provisions of this act are severable.
History: L. 2000, ch. 147, § 28; July 1.
(a) Any regulatory action based upon any RBC report required to be filed by a health organization for such health organization's operations during calendar years 2000 and 2001 shall be subject to the following:
(1) In the event of a company action level event with respect to any health organization, the commissioner shall take no regulatory action under this act with respect to such health organization.
(2) In the event of a regulatory action level event with respect to any health organization under either subsection (a) or (b) of K.S.A. 40-2d11, and amendments thereto, the commissioner shall take such action with respect to such health organization under K.S.A. 40-2d05 through 40-2d10, inclusive, and amendments thereto, as the commissioner deems necessary.
(3) In the event of a regulatory action level event with respect to any health organization under any of subsections (c), (d), (e) or (f) of K.S.A. 40-2d11, and amendments thereto, or an authorized control level event, the commissioner shall take such action with respect to such health organization under K.S.A. 40-2d11 through 40-2d14, inclusive, and amendments thereto, as the commissioner deems necessary.
(4) In the event of a mandatory control level event with respect to any health organization, the commissioner shall take action with respect to such health organization as required under K.S.A. 40-2d15 and 40-2d16, and amendments thereto.
(b) The provisions of subsection (a) shall not limit the right of the commissioner to proceed as authorized by any other provision of chapter 40 of the Kansas Statutes Annotated, and amendments thereto or any rule and regulation adopted thereunder.
History: L. 2000, ch. 147, § 29; July 1.
The commissioner may adopt reasonable rules and regulations necessary for the implementation of this act.
History: L. 2000, ch. 147, § 30; July 1.
K.S.A. 40-2d01 through 40-2d30, inclusive, and amendments thereto, shall constitute and may be cited as the health organization risk-based capital act.
History: L. 2000, ch. 147, § 31; July 1.
For the purpose of this article the term "insurance company" shall apply to domestic insurance companies having a capital stock; and may include foreign insurance companies having a capital stock when reference is made to the union, merger, consolidation and re-insurance of insurance companies.
History: L. 1927, ch. 231, 40-301; L. 1933, ch. 200, § 1; June 5.
Every insurance company organized under the provisions of this article shall have a minimum capital as provided by the articles of this code relative to the particular purpose or purposes for which such company is organized, and the shares of capital stock shall have a par value which shall be fixed by the articles of incorporation.
History: L. 1927, ch. 231, 40-302; June 1.
The board of directors of any insurance company organized under this article shall have power to adopt a seal, and make such bylaws and amendments thereto, not inconsistent with the constitution and laws of this state, as may be deemed necessary for the regulation and management of its affairs.
History: L. 1927, ch. 231, 40-303; June 1.
After filing a copy of its charter with the commissioner of insurance, and receiving a certificate of authority for the sale of stock as provided in this code, the persons named in the charter shall be commissioners to open books for the subscription of stock in the company, at such times and places as they shall deem convenient and proper, and shall keep the same open until the full amount specified in the certificate of incorporation is subscribed.
History: L. 1927, ch. 231, 40-304; June 1.
The affairs of any such insurance company, now existing or hereafter organized under the laws of this state, shall be managed by a board of directors. The board of directors shall consist of one or more members, the number of which shall be fixed by the bylaws, unless the articles of incorporation establish the number of directors, in which case a change in the number of directors shall be made only by amendment of the articles.
The directors shall be elected by ballot, and each full-paid share of stock shall be entitled to one vote. Shares may be voted by proxy, signed by the person legally entitled to vote the same. Each stockholder shall have the right to cast as many votes in the aggregate as shall equal the number of shares of stock held by him, multiplied by the number of directors to be elected, and each stockholder may cast the whole number of votes for one candidate, or may divide his votes among two or more candidates. A majority of the total number of directors shall constitute a quorum for the transaction of business, unless the articles of incorporation or the bylaws require a greater number.
History: L. 1927, ch. 231, 40-305; L. 1971, ch. 164, § 1; L. 1997, ch. 102, § 1; L. 2005, ch. 41, § 1; July 1.
(a) Every insurance company having capital stock, now existing or hereafter organized under the laws of this state, shall have such officers with such titles and duties as shall be stated in the bylaws or in a resolution of the board of directors which is not inconsistent with the bylaws.
(b) Officers shall be chosen in such manner and shall hold their offices for such terms as are prescribed by the bylaws or determined by the board of directors or other governing body.
(c) The board of directors shall have power to appoint any agents necessary for transacting the business of the company, pay such salaries and require such bonds as they may deem reasonable; and it shall be their duty to keep full and correct entries of their transactions, which shall at all times be open to the inspection of the stockholders.
History: L. 1927, ch. 231, 40-306; L. 1973, ch. 192, § 1; L. 2004, ch. 128, § 4; L. 2005, ch. 41, § 2; July 1.
Any such insurance company may by a two-thirds vote of its paid-up stockholders amend its charter. The amendment shall be filed with the secretary of state and a certified copy thereof filed with the commissioner of insurance. No amendment to increase or decrease the capital stock shall be approved by the secretary of state until there has been filed with the secretary of state a certificate from the commissioner of insurance showing that the interests of all policyholders and all liabilities and obligations of the company have been properly safeguarded. Such increase or decrease in the capital stock may be carried out as provided under the general corporation laws of this state: Provided, however, That the decrease herein provided for shall not be construed to permit any such company to decrease its capital stock to an amount less than the minimum capital required for such a company by this code.
History: L. 1927, ch. 231, 40-307; L. 1949, ch. 280, § 1; June 30.
The shares of stock of any insurance company shall be deemed personal property and shall be transferred on the books of the company in such manner as the bylaws thereof may direct; but no transfer of stock shall be valid against an insurance company so long as the registered holder thereof shall be liable as principal debtor, surety or otherwise to the insurance company for any debt which shall be due or unpaid, nor in such case shall any dividend, interest or profit be paid on such stock so long as such liability continues, and such dividends, interest or profit shall be retained by the insurance company and applied to the discharge of such liabilities, and no stock shall be transferred on the books of any insurance company without the consent of the board of directors where the registered holder thereof is indebted to the insurance company.
History: L. 1927, ch. 231, 40-308; June 1.
(a) (1) Any insurance company and any health maintenance organization of this state may unite, merge or consolidate with any other company or companies of this or any other state engaged in like business and having similar corporate powers, upon such terms and conditions, including the reinsurance of the business in force, as may be approved at a meeting of the stockholders of any such company or companies of this state, called for that purpose, such approval to be by vote of stockholders owning not less than two-thirds of the shares of stock of any such company or companies of this state. The agreement for such union, merger, consolidation and reinsurance shall be subject to the approval of the commissioner of insurance. There shall be filed with the commissioner of insurance a verified schedule by the actuaries of the companies or health maintenance organizations interested showing that the legal reserve for the policyholders of each of the several companies is of the amount required by law.
(2) Where companies of other states are uniting, consolidating, merging and reinsuring with a company or health maintenance organization of this state the commissioner of insurance also shall approve in the same manner such amendments to the articles of incorporation of such companies of this state as may be necessary and proper. Such agreement shall provide for payment in cash to any dissenting stockholder of an amount equal to the fair value of the stock if the stockholder shall refuse to assent to the union, merger or consolidation.
(3) When a company or health maintenance organization of this state shall be merged, consolidated or united with a company organized under the laws of any other state, the commissioner of insurance in the commissioner's order of approval shall direct that the assets of the domestic company or health maintenance organization be delivered to the company with which the domestic company is united, merged or consolidated.
(b) For the purposes of this section the term "health maintenance organization" shall have the meaning ascribed to it in K.S.A. 40-3202, and amendments thereto.
History: L. 1927, ch. 231, 40-309; L. 1933, ch. 200, § 2; L. 1972, ch. 53, § 5; L. 1978, ch. 173, § 1; L. 1996, ch. 25, § 4; L. 2007, ch. 122, § 2; July 1.
(a) Any insurance company organized under article 3 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, may make and issue contracts of insurance, in addition to those specified in subsections (a) through (g) of K.S.A. 40-901, and amendments thereto, which include such amount and kind of insurance against legal liability for injury, damage or loss to the person or property of others, and for medical, hospital and surgical expense related to such injury, as the commissioner of insurance deems to be reasonably incidental to insurance of real or personal property against fire or other perils under policies covering residential properties involving not more than two families with or without incidental office, professional, private school or studio occupancy by an insured, whether or not the premium or rate charged for certain perils so covered is specified in the policy. Any provision of K.S.A. 40-901 or 40-902, and amendments thereto, to the contrary notwithstanding: (1) No insurer having paid-up capital stock of at least $600,000 and a bona fide net surplus of at least $400,000 but less than $1,500,000 paid-up capital and surplus combined authorized as to property insurance only shall, pursuant to this subsection (a), retain risk as to any one subject of insurance as to hazards other than property insurance hazards in an amount exceeding 3% of its surplus to policyholders; and (2) no insurer having at least paid-up capital stock of $450,000 and a bona fide net surplus of at least $300,000 but less than $1,000,000 paid-up capital stock and surplus combined authorized as to property insurance only shall, pursuant to subsection (a), retain any risk other than property insurance hazards, and all such companies shall reinsure all such risks as to hazards other than property insurance hazards.
(b) It is required when a company is acting under this section that its board of directors authorize such action by the affirmative vote of at least ⅔ of its membership. Any company which has acted under this section shall certify such action to the commissioner of insurance, together with a statement showing its financial status and a net surplus sufficient to warrant such action.
(c) Any company operating under this section shall maintain unearned premium reserves equal to a pro rata amount of the premiums received on all unexpired risks and such unearned premium reserves shall be held and regarded as an absolute liability of the company.
History: L. 1994, ch. 87, § 2; April 7.
Any 10 or more persons, a majority of whom are citizens of this state, may associate in accordance with the provisions of this code and form an incorporated company, upon either the stock or mutual plan, to make insurance upon the lives of persons and every insurance appertaining thereto or connected therewith and to grant, purchase or dispose of annuities, and to issue funding agreements, guaranteed investment contracts and synthetic guaranteed investment contracts. Such companies may incorporate: (a) In their policies provisions or conditions for the waiver of premiums or for the granting of an annuity to the insured, or for special surrender values or other benefits in the event the insured shall from any cause become unemployed or totally and permanently disabled; (b) in their policies provisions for acceleration of life or annuity benefits in advance of the time they would otherwise be payable subject to such reserve and other regulatory standards as the commissioner may prescribe by rules and regulations, except that any provision providing for acceleration of life or annuity benefits for persons diagnosed as having a medical condition usually requiring continuous confinement for the rest of the person's life in a nursing home or other eligible facility as defined in the policy, may also provide for acceleration of benefits upon diagnosis of such condition even if the person is not confined in a nursing home or similar facility; (c) in their policies and annuity contracts provisions or conditions for waiver of surrender charges upon terms and conditions as specified in the policy or contract, subject to rules and regulations adopted by the commissioner of insurance; or (d) in their policies provisions for the payment of a larger sum if death is caused by accident than if it results from any other causes.
Prior to the payment of any accelerated benefit, the insurer shall receive from any assignee or irrevocable beneficiary of the policy a signed acknowledgment of concurrence for the payment. For the purposes of this section, "totally and permanently disabled" means disabled continuously for a period, such period to be specified in any such provision, of not less than 60 days nor more than one year, except this provision shall not apply to and specifically excludes group life insurance. Such company may make insurance on the health of individuals, against accidental personal injury, disablement or death and against loss, liability or expense on account thereof. Such company so transacting such health and accident insurance business, or either kind, shall maintain statutory and separate reserves for such business, shall issue such contracts only in separate policies except as otherwise permitted herein and shall make separate reports to the commissioner of insurance of the premiums received and expenses and losses incurred in connection with such business, except that such reports will not be required for accelerated benefits incorporated in a life or annuity policy. Long-term care insurance meeting the applicable requirements of K.S.A. 40-2227 and 40-2228, and amendments thereto, may be incorporated in life insurance policies and annuities if approved by the commissioner.
The business of life insurance in this state shall not be in any way conducted or transacted by any company which in this state makes insurance on marine, fire, inland or any other like risks, except that: (a) Life, health and accident insurance on the group or industrial plan may be combined in one policy, which shall show the premium charged for life insurance and the premium charged for health and accident insurance, and the insured, at the insured's option, may discontinue either and by payment of the stated premium continue the other; and (b) (1) specified disease or critical illness riders, or both, meeting the applicable requirements of K.S.A. 40-2201 et seq., and amendments thereto, and article 4 of the Kansas administrative regulations, may be incorporated in life insurance policies which shall show the premium charged for specified disease or critical illness, or both, insurance and the premium charged for life insurance; and (2) the insured, at the insured's option, may discontinue the disease or critical illness rider, or both, and continue the life insurance policy by payment of the stated premium. The amount of capital stock of a company organized on the stock plan shall be not less than $600,000.
Companies organized on the mutual plan shall be required to have applications from at least 200 persons for insurance upon their lives, aggregating not less than $400,000, upon which one full annual premium in cash shall have been paid. No such company shall transact any business of insurance until, if a stock company, all the capital stock named in its charter has been paid in cash including all contributions to surplus to be made by the original purchasers of such stock. The surplus shall be at least $600,000, and at least $400,000 in securities authorized by this code shall have been deposited with the commissioner of insurance pursuant to K.S.A. 40-229a, and amendments thereto, and if a mutual company, a guaranty fund of at least $1,200,000, and at least $400,000 of which shall be in securities as authorized in this code and deposited with the commissioner of insurance pursuant to K.S.A. 40-229a, and amendments thereto. The guaranty fund may be returned to the contributors with interest at 6% per annum whenever the surplus shall equal the amount of such guaranty fund and interest, and no company shall transact any business of insurance unless it shall maintain the capital or surplus or both required of a company commencing to transact business, or, if a mutual company, the required number and amount of applications for insurance have been received and the annual premiums collected in cash. The securities deposited pursuant to this section shall be held by the commissioner of insurance in trust for the benefit and protection of the policyholders or creditors, or both, of the company depositing the same and may be withdrawn only upon order of the commissioner of insurance.
The commissioner of insurance may adopt rules and regulations to implement the provisions of this section.
History: L. 1927, ch. 231, 40-401; L. 1965, ch. 300, § 1; L. 1969, ch. 237, § 1; L. 1975, ch. 242, § 2; L. 1984, ch. 169, § 1; L. 1989, ch. 135, § 1; L. 1990, ch. 164, § 1; L. 1993, ch. 92, § 1; L. 1995, ch. 46, § 1; L. 1996, ch. 25, § 5; L. 2005, ch. 42, § 1; L. 2010, ch. 103, § 1; L. 2013, ch. 109, § 1; July 1.
It shall not be lawful for any life insurance company organized or incorporated under the laws of the United States or of any other state of the United States to transact business in this state unless, if a stock company, it shall have and maintain a paid-up capital stock of at least $600,000 and a surplus of at least $600,000, and shall have deposited $400,000, or if a mutual company, a surplus of at least $1,200,000, and shall have deposited $400,000 in approved securities for the benefit of all of its policyholders or creditors, or both, with the commissioner, superintendent of insurance or chief financial officer of the state in which such company is incorporated, or, if such company is incorporated under the laws of the United States, with some financial officer of the United States, or if incorporated under the laws of any foreign government, such deposit shall be made with such an officer in any state of the United States. Any such company not having such deposit made in the state in which it is organized, or with some officer of the United States, shall make such deposit in this state in the manner prescribed by K.S.A. 40-229a.
History: L. 1927, ch. 231, 40-402; L. 1965, ch. 300, § 2; L. 1969, ch. 237, § 2; L. 1984, ch. 169, § 2; L. 1996, ch. 25, § 6; July 1.
History: L. 1927, ch. 231, 40-403; L. 1933, ch. 70, § 1 (Special Session); L. 1935, ch. 198, § 1; L. 1937, ch. 251, § 1; L. 1945, ch. 213, § 1; L. 1947, ch. 274, § 1; L. 1953, ch. 227, § 1; L. 1957, ch. 277, § 1; L. 1959, ch. 211, § 1; L. 1961, ch. 233, § 1; Repealed, L. 1968, ch. 374, § 3; July 1.
History: L. 1935, ch. 198, § 2; Repealed, L. 1968, ch. 374, § 3; July 1.
Any life insurance company organized under the laws of another country, state, or territory and authorized to do business in the state of Kansas, shall, within the limitations of the powers vested in it by the laws of the state wherein it was incorporated, be permitted to invest its capital, reserve and surplus funds within the state of Kansas in the same manner, to the same extent and in the same investments as are permitted to domestic life insurance companies organized under the laws of this state: Provided, That nothing herein contained shall be so construed as to prohibit any such foreign company from investing its capital, reserve, and surplus funds as permitted by its charter and the laws of its domiciliary state: And provided further, That such company shall not engage in the agricultural or horticultural business of producing, planting, raising, harvesting or gathering of wheat, corn, barley, oats, rye or potatoes, or the milking of cows for dairy purposes.
History: L. 1947, ch. 283, § 1; April 12.
History: L. 1968, ch. 374, § 1; L. 1971, ch. 165, § 1; Repealed, L. 1972, ch. 179, § 21; July 1.
Revisor's Note: Later act, see 40-229a.
History: L. 1927, ch. 231, 40-404; L. 1937, ch. 252, § 1; L. 1939, ch. 208, § 1; L. 1953, ch. 228, § 1; L. 1957, ch. 278, § 1; L. 1971, ch. 185, § 13; L. 1986, ch. 177, § 1; L. 1987, ch. 162, § 1; Repealed, L. 1996, ch. 25, § 17; July 1.
Revisor's Note: Later act, see 40-229a.
History: L. 1933, ch. 201, § 1; L. 1935, ch. 199, § 1; L. 1937, ch. 252, § 2; L. 1947, ch. 275, § 1; L. 1971, ch. 166, § 1; L. 1986, ch. 177, § 2; Repealed, L. 1996, ch. 25, § 17; July 1.
History: L. 1933, ch. 201, § 2; Repealed, L. 1937, ch. 252, § 4; March 9.
Revisor's Note: Later act, see 40-229a.
History: L. 1987, ch. 162, § 2; Repealed, L. 1996, ch. 25, § 17; July 1.
Revisor's Note: Later act, see 40-229a.
History: L. 1927, ch. 231, 40-405; L. 1945, ch. 214, § 1; L. 1947, ch. 276, § 1; Repealed, L. 1996, ch. 25, § 17; July 1.
Revisor's Note: Later act, see 40-229a.
History: L. 1927, ch. 231, 40-406; Repealed, L. 1996, ch. 25, § 17; July 1.
History: L. 1927, ch. 231, 40-407; L. 1937, ch. 252, § 3; L. 1957, ch. 279, § 1; L. 1959, ch. 212, § 1; L. 1965, ch. 301, § 1; Repealed, L. 1972, ch. 180, § 1; July 1.
History: L. 1927, ch. 231, 40-408; Repealed, L. 1972, ch. 180, § 1; July 1.
(a) For the purposes of this section, the following definitions apply on or after the operative date of the valuation manual:
(1) "Accident and health insurance" means contracts that incorporate morbidity risk and provide protection against economic loss resulting from accident, sickness or medical conditions and as may be specified in the valuation manual;
(2) "appointed actuary" means a qualified actuary who is appointed in accordance with the valuation manual to prepare the actuarial opinion required in subsection (b-1);
(3) "company" means an entity which: (A) Has written, issued or reinsured life insurance contracts, accident and health insurance contracts or deposit-type contracts in this state and has at least one such policy in force or on claim; or (B) has written, issued or reinsured life insurance contracts, accident and health insurance contracts or deposit-type contracts in any state and is required to hold a certificate of authority to write life insurance, accident and health insurance or deposit-type contracts in this state;
(4) "deposit-type contract" means contracts that do not incorporate mortality or morbidity risks and as may be specified in the valuation manual;
(5) "life insurance" means contracts that incorporate mortality risk, including annuity and pure endowment contracts, and as may be specified in the valuation manual;
(6) "NAIC" means the national association of insurance commissioners;
(7) "policyholder behavior" means any action a policyholder, contract holder or any other person with the right to elect options, such as a certificate holder, may take under a policy or contract subject to this act including, but not limited to, lapse, withdrawal, transfer, deposit, premium payment, loan, annuitization or benefit elections prescribed by the policy or contract, but excluding events of mortality or morbidity that result in benefits prescribed in their essential aspects by the terms of the policy or contract;
(8) "principle-based valuation" means a reserve valuation that uses one or more methods or one or more assumptions determined by the insurer and is required to comply with subsection (h), as specified in the valuation manual;
(9) "qualified actuary" means an individual who is qualified to sign the applicable statement of actuarial opinion in accordance with the American academy of actuaries qualification standards for actuaries who sign such statements and who meet the requirements specified in the valuation manual;
(10) "tail risk" means a risk that occurs either where the frequency of low probability events is higher than expected under a normal probability distribution or where there are observed events of very significant size or magnitude; and
(11) "valuation manual" means the manual of valuation instructions adopted by the NAIC as specified in this section or as subsequently amended.
(a-1) (1) Every life insurance company transacting business in this state shall annually file, on or before March 1 of each year, with the commissioner of insurance a certified valuation of its policies in force as of December 31 of the preceding year.
(2)
Policies and contracts issued prior to the operative date of the valuation manual.
(A) It shall be the duty of the commissioner of insurance to annually make or cause to be made net valuations of all the outstanding policies and additions thereto of every life insurance company transacting business in this state prior to the operative date of the valuation manual, except that in the case of an alien company such valuation shall be limited to its insurance transactions in the United States. In making the valuations of life insurance companies organized under the laws of this state, the valuation shall include unpaid dividends, and all other policy obligations. Whenever the laws of any other state of the United States shall authorize the valuation of life insurance policies by some designated state officer according to the same standard as herein provided, or some other standard which will require a reserve not less than the standard herein provided, the valuation made according to the standard by such officer of the policies and other obligations of any life insurance company not organized under the laws of this state, and certified by such officer, may be received as true and correct, and no further valuation of the same shall be required of such company by the commissioner of insurance. It shall be the duty of the commissioner of insurance, whenever requested so to do by any life insurance company organized under the laws of this state, to make annual valuations of all the outstanding policies and additions thereto of every such company and deliver to such company certificates of such valuation, specifying the amount of the company's reserve on policies thus valued. And for the performance of the duties prescribed by this section the commissioner of insurance shall be authorized to employ an actuary, whose compensation shall be paid by the company whose policies, additions, unpaid dividends or other outstanding policy obligations are valued, upon a certificate by the commissioner of insurance showing the compensation due therefor.
(B) The provisions set forth in subsections (d) and (e) shall apply to all policies and contracts, as appropriate, subject to this section issued on or after the operative date of K.S.A.
40-428, and amendments thereto, and prior to the operative date of the valuation manual, and the provisions set forth in subsections (g) and (h) shall not apply to any such policies and contracts.
(C) The minimum standard for the valuation of policies and contracts issued prior to the operative date of K.S.A.
40-428, and amendments thereto, shall be that provided in subsection (c).
(3)
Policies and contracts issued on or after the operative date of the valuation manual.
(A) The commissioner shall annually value, or cause to be valued, the reserve liabilities, hereinafter called reserves, for all outstanding life insurance contracts, annuity and pure endowment contracts, accident and health contracts and deposit-type contracts of every company issued on or after the operative date of the valuation manual. In lieu of the valuation of the reserves required of a foreign or alien company, the commissioner may accept a valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when the valuation complies with the minimum standard provided in this section.
(B) The provisions set forth in subsections (g) and (h) shall apply to all policies and contracts issued on or after the operative date of the valuation manual.
(4) Any such company which at any time shall have adopted any standards of valuation producing greater aggregate reserves than those calculated according to the minimum standards hereinafter provided may, with the approval of the commissioner of insurance, adopt any lower standard of valuation, but not lower than the minimum herein provided.
(b) This subsection shall become operative for the year ending December 31, 1995, and each subsequent calendar year, prior to the operative date of the valuation manual.
(1) Every life insurance company doing business in this state shall annually submit the opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the commissioner by regulation are computed appropriately, are based on assumptions which satisfy contractual provisions, are consistent with prior reported amounts and comply with applicable laws of this state. The commissioner shall adopt an administrative regulation defining the specific application, scope and content of this opinion.
(2) Except as otherwise provided by law or rules and regulations of the commissioner, every life insurance company shall also annually include in the opinion required by paragraph (1), an opinion of the same qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the commissioner, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including but not limited to the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, making adequate provision for the company's obligations under the policies and contracts, including but not limited to the benefits under and expenses associated with the policies and contracts.
(3) The commissioner may provide for a transition period for establishing any higher reserves which the qualified actuary deems necessary in order to render the opinion required by this section.
(4) Each opinion required by paragraph (2) shall comply with the following provisions:
(A) A memorandum, in form and substance acceptable to or prescribed by the commissioner shall be prepared to support each actuarial opinion; and
(B) if the insurance company fails to provide a supporting memorandum within a period specified or the commissioner determines that the supporting memorandum provided by the insurance company fails to meet the prescribed standards or is otherwise unacceptable to the commissioner, the commissioner is authorized to employ an actuary whose compensation and expenses shall be paid by the company whose policies, additions, unpaid dividends or other outstanding policy or contractual obligations are valued upon a certificate by the commissioner showing the compensation and expenses due therefor.
(5) Every opinion of the actuary shall comply with the following provisions:
(A) The opinion shall be submitted with the annual statement required by K.S.A.
40-225, and amendments thereto, reflecting the valuation of such reserve liabilities for each year ending on or after December 31, 1995;
(B) the opinion shall apply to all business in force including individual and group health insurance plans;
(C) the opinion shall be based on standards adopted from time to time by the actuarial standards board of the American academy of actuaries and on such additional standards as the commissioner prescribes;
(D) in the case of an opinion required to be submitted by an insurance company not domiciled in this state, the commissioner may accept the opinion filed by that company with the insurance supervisory official of another state if the commissioner determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state;
(E) for the purposes of this subsection, "qualified actuary" means a member in good standing of the American academy of actuaries;
(F) except in cases of fraud or willful misconduct, the qualified actuary shall not be liable for damages to any person, other than the insurance company and the commissioner, for any act, error, omission, decision or conduct with respect to the actuary's opinion required by this act; and
(G) any memorandum in support of the opinion, and any other material provided by the company to the commissioner in connection with the opinion, shall be kept confidential by the commissioner and shall not be made public and shall not be subject to subpoena, other than for the purpose of defending an action seeking damages from any person by reason of any action required by this subsection or by rules and regulations adopted pursuant to this subsection. Notwithstanding the provisions of this paragraph, the memorandum or other material may be released by the commissioner: (i) With the written consent of the company; or (ii) to the American academy of actuaries upon request stating that the memorandum or other material is required for the purpose of professional disciplinary proceedings and setting forth procedures satisfactory to the commissioner for preserving the confidentiality of the memorandum or other material. Once any portion of the confidential memorandum is cited by the company in its marketing or is cited before any governmental agency other than a state insurance department or is released by the company to the news media, all portions of the confidential memorandum shall be no longer confidential.
(b-1) This subsection shall become operative after the operative date of the valuation manual.
(1) Every company with outstanding life insurance contracts, accident and health insurance contracts or deposit-type contracts in this state and subject to regulation by the commissioner shall annually submit the opinion of the appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts and comply with applicable laws of this state. The valuation manual will prescribe the specifics of this opinion including any items deemed to be necessary to its scope.
(2) Every company with outstanding life insurance contracts, accident and health insurance contracts or deposit-type contracts in this state and subject to regulation by the commissioner, except as exempted in the valuation manual, shall also annually include in the opinion required by paragraph (1), an opinion of the same appointed actuary as to whether the reserves and related actuarial items, including, but not limited to, the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company's obligations under the policies and contracts, including, but not limited to, the benefits under and expenses associated with the policies and contracts.
(3) Each opinion required by subsection (b-1) shall be governed by the following provisions:
(A) A memorandum, in form and substance as specified in the valuation manual, and acceptable to the commissioner, shall be prepared to support each actuarial opinion; and
(B) if the insurance company fails to provide a supporting memorandum at the request of the commissioner within a period specified in the valuation manual or the commissioner determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by the valuation manual or is otherwise unacceptable to the commissioner, the commissioner may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting memorandum required by the commissioner.
(4) Every opinion subject to subsection (b-1) shall be governed by the following provisions:
(A) The opinion shall be in form and substance as specified in the valuation manual and acceptable to the commissioner;
(B) the opinion shall be submitted with the annual statement reflecting the valuation of such reserve liabilities for each year ending on or after the operative date of the valuation manual;
(C) the opinion shall apply to all policies and contracts subject to subsection (b-1)(2), plus other actuarial liabilities as may be specified in the valuation manual;
(D) the opinion shall be based on standards adopted from time to time by the actuarial standards board or its successor, and on such additional standards as may be prescribed in the valuation manual;
(E) in the case of an opinion required to be submitted by a foreign or alien company, the commissioner may accept the opinion filed by such company with the insurance supervisory official of another state if the commissioner determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state;
(F) except in cases of fraud or willful misconduct, the appointed actuary shall not be liable for damages to any person, other than the insurance company and the commissioner, for any act, error, omission, decision or conduct with respect to the appointed actuary's opinion; and
(G) disciplinary action by the commissioner against the company or the appointed actuary shall be defined in rules and regulations by the commissioner.
(c) This subsection shall apply to only those policies and contracts issued prior to the operative date of K.S.A.
40-428, and amendments thereto, the standard nonforfeiture law, except as provided in subsection (d).
For the purpose of such valuations and for making special examinations of the condition of life insurance companies, as provided by the laws of this state, and for valuing all outstanding policies of every life insurance company, the method and basis of valuation shall be the same as prescribed by the insurance code of this state in the valuation of such contracts before June 1, 1927. The legal minimum standard for the valuation of life insurance contracts issued on or after June 1, 1927, shall be the one-year preliminary-term method of valuation, except as hereinafter modified, on the basis of the American experience table of mortality with interest at 4% per annum. If the premium charged for term insurance under limited-payment life preliminary-term policy providing for the payment of all premiums thereon in less than 20 years from the date of policy, or under an endowment preliminary-term policy, exceeds that charged for life insurance under twenty-payment life preliminary-term policy of the same company, the reserve thereon at the end of any year, including the first, shall not be less than the reserve on a twenty-payment life preliminary-term policy issued in the same year and at the same age, together with an amount which shall be equivalent to the accumulation of a net level premium sufficient to provide for a pure endowment at the end of the premium-payment period, equal to the difference between the value at the end of such period of such a twenty-payment life preliminary-term policy and the full net level premium reserve at such time of such a limited-payment life or endowment policy. The premium-payment period is the period during which premiums are concurrently payable, under such twenty-payment life preliminary-term policy and such limited-payment life or endowment policy. Policies issued on the preliminary-term method shall contain a clause specifying that the reserve thereof shall be computed in accordance with the modified preliminary-term method of valuation provided therein. Except as otherwise provided for group annuity and pure endowment contracts in paragraphs (1-a) and (1-b) of subsection (d), the legal minimum standard for the valuation of annuities shall be McClintock's "table of mortality among annuitants," with interest at 4% per annum, but annuities deferred 10 or more years and written in connection with life insurance shall be valued on the same basis as that used in computing the consideration or premiums therefor, or upon any higher standard at the option of the company. The commissioner of insurance may, in the commissioner's discretion, vary the above standard of interest and mortality in cases of companies organized under the laws of a foreign country and in particular cases of invalid lives or other extra hazards.
Reserves for all such policies and contracts may be calculated, at the option of the company, according to any standards which produce greater aggregate reserves for all such policies and contracts than the minimum reserves required by this subsection.
(d)
Standard valuation law.
This subsection shall apply to only those policies and contracts issued on or after the operative date of K.S.A. 40-428, and amendments thereto, the standard nonforfeiture law, except as otherwise provided in paragraphs (1-a) and (1-b) for group annuity and pure endowment contracts issued prior to such operative date, and except as provided in subsection (e).
(1) Except as otherwise provided in paragraphs (1-a) and (1-b), the minimum standard for the valuation of all such policies and contracts shall be the commissioners' reserve valuation methods defined in paragraphs (2), (2-a) and (5), 3½% interest or in the case of policies and contracts, other than annuity and pure endowment contracts, issued on or after July 1, 1973, 4% interest for such policies issued prior to July 1, 1978, 5½% interest for single premium life insurance policies and 4½% interest for all other such policies issued on or after July 1, 1978, and the following specified tables:
(A) For ordinary policies of life insurance issued on the standard basis, excluding any disability and accidental death benefits in such policies—the commissioners' 1941 standard ordinary mortality table for such policies issued prior to the operative date of K.S.A.
40-428(d-1), and amendments thereto, the commissioners' 1958 standard ordinary mortality table and the commissioners' 1958 extended term insurance table, as applicable, for such policies issued on or after the operative date of K.S.A.
40-428(d-1), and amendments thereto, and prior to the operative date of K.S.A.
40-428(d-3), and amendments thereto, provided that for any category of such policies issued on female risks, the modified net premiums and present values, referred to in subsection (d)(2), may be calculated, according to an age not more than six years younger than the actual age of the insured; and for such policies issued on or after the operative date of K.S.A.
40-428(d-3), and amendments thereto: (i) The commissioners' 1980 standard ordinary mortality table; or (ii) at the election of the company for any one or more specified plans of life insurance, the commissioners' 1980 standard ordinary mortality table with ten-year select mortality factors; or (iii) any ordinary mortality table, adopted after 1980 by the NAIC, that is approved by rules and regulations promulgated by the commissioner for use in determining the minimum standard of valuation for such policies.
(B) For all industrial life insurance policies issued on the standard basis, excluding any disability and accidental death benefits in such policies—the 1941 standard industrial mortality table for such policies issued prior to the operative date of K.S.A.
40-428(d-2), and amendments thereto, and for such policies issued on or after such operative date the commissioners' 1961 standard industrial mortality table or any industrial mortality table, adopted after 1980 by the NAIC, that is approved by rules and regulations promulgated by the commissioner for use in determining the minimum standard of valuation for such policies.
(C) For individual annuity and pure endowment contracts, excluding any disability and accidental death benefits in such policies, and excluding annuities involving life contingencies provided or available under optional modes of settlement in life insurance policies or annuity contracts—the 1937 standard annuity mortality table, or, at the option of the company, the annuity mortality table for 1949, ultimate, or any modification of either of these tables approved by the commissioner.
(D) For group annuity and pure endowment contracts, excluding any disability and accidental death benefits in such policies—the group annuity mortality table for 1951, any modification of such table approved by the commissioner, or at the option of the company, any of the tables or modifications of tables specified for individual annuity and pure endowment contracts.
(E) For total and permanent disability benefits in or supplementary to ordinary policies or contracts—for policies or contracts issued on or after January 1, 1961, either the tables of period 2 disablement rates and the 1930 to 1950 termination rates of the 1952 disability study of the society of actuaries, with due regard to the type of benefit, any tables of disablement rates and termination rates, adopted after 1980 by the NAIC, that are approved by rules and regulations promulgated by the commissioner for use in determining the minimum standard of valuation for such policies, or, at the option of the company, the class (3) disability table (1926); and for policies issued prior to January 1, 1961, the class (3) disability table (1926). Any such table shall, for active lives, be combined with a mortality table permitted for calculating the reserve for life insurance policies.
(F) For accidental death benefits in or supplementary to policies—for policies issued on or after January 1, 1961, either the 1959 accidental death benefits table, any accidental death benefits table, adopted after 1980 by the NAIC, that is approved by rules and regulations promulgated by the commissioner for use in determining the minimum standard of valuation for such policies, or, at the option of the company, the inter-company double indemnity mortality table; and for policies issued prior to January 1, 1961, the inter-company double indemnity mortality table. Either table shall be combined with a mortality table permitted for calculating the reserves for life insurance policies.
(G) For group life insurance, life insurance issued on the substandard basis, annuities involving life contingencies provided or available under optional modes of settlement in life insurance policies or annuity contracts and other special benefits—such tables as may be approved by the commissioner of insurance.
(H) For all credit life insurance having initial terms of 10 years or less, excluding any disability and accidental death benefits in such policies, the 1980 commissioners' extended term mortality table or any later version as established in rules and regulations adopted by the commissioner of insurance.
(1-a) Except as provided in paragraph (1-b), the minimum standard of valuation for individual annuity and pure endowment contracts issued on or after the operative date of this paragraph (1-a), as defined herein, and for all annuities and pure endowments purchased on or after such operative date under group annuity and pure endowment contracts, shall be the commissioners' reserve valuation methods defined in paragraphs (2) and (2-a) and the following tables and interest rates:
(A) For individual annuity and pure endowment contracts issued prior to July 1, 1978, excluding any disability and accidental death benefits in such contracts—the 1971 individual annuity mortality table, or any modification of this table approved by the commissioner of insurance, and 6% interest for single premium immediate annuity contracts, and 4% interest for all other individual annuity and pure endowment contracts.
(B) For individual single premium immediate annuity contracts issued on or after July 1, 1978, excluding any disability and accidental death benefits in such contracts—the 1971 individual annuity mortality table, or any individual annuity mortality table, adopted after 1980 by the NAIC, that is approved by rules and regulations promulgated by the commissioner for use in determining the minimum standard of valuation for such contracts, or any modification of these tables approved by the commissioner, and 7½% interest.
(C) For individual annuity and pure endowment contracts issued on or after July 1, 1978, other than single premium immediate annuity contracts, excluding any disability and accidental death benefits in such contracts—the 1971 individual annuity mortality table, or any individual annuity mortality table, adopted after 1980 by the NAIC, that is approved by rules and regulations promulgated by the commissioner for use in determining the minimum standard of valuation for such contracts, or any modification of these tables approved by the commissioner, and 5½% interest for single premium deferred annuity and pure endowment contracts and 4½% interest for all other such individual annuity and pure endowment contracts.
(D) For all annuities and pure endowments purchased prior to July 1, 1978, under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under such contracts—the 1971 group annuity mortality table, or any modification of this table approved by the commissioner of insurance, and 6% interest.
(E) For all annuities and pure endowments purchased on or after July 1, 1978, under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under such contracts—the 1971 group annuity mortality table, or any group annuity mortality table, adopted after 1980 by the NAIC, that is approved by rules and regulations promulgated by the commissioner for use in determining the minimum standard of valuation for such annuities and pure endowments, or any modification of these tables approved by the commissioner, and 7½% interest.
After July 1, 1973, any company may file with the commissioner of insurance a written notice of its election to comply with the provisions of this paragraph after a specified date before January 1, 1979, which shall be the operative date of this paragraph for such company. A company may elect a different operative date for individual annuity and pure endowment contracts from that elected for group annuity and pure endowment contracts. If a company makes no such election, the operative date of this paragraph for such company shall be January 1, 1979.
(1-b) (A) Applicability of this paragraph:
(1) The interest rates used in determining the minimum standard for the valuation of:
(a) Life insurance policies issued in a particular calendar year, on or after the operative date of K.S.A.
40-428(d-3), and amendments thereto;
(b) individual annuity and pure endowment contracts issued in a particular calendar year on or after January 1, 1983;
(c) annuities and pure endowments purchased in a particular calendar year on or after January 1, 1983, under group annuity and pure endowment contracts; and
(d) the net increase, if any, in a particular calendar year after January 1, 1983, in amounts held under guaranteed interest contracts shall be the calendar year statutory valuation interest rates as defined in this paragraph (1-b).
(B) Calendar year statutory valuation interest rates:
(1) The calendar year statutory valuation interest rates, I, shall be determined as follows and the results rounded to the nearer ¼%:
(a) For life insurance,
I = .03 + W (R1 - .03) + W/2 (R2 - .09);
(b) For single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and from guaranteed interest contracts with cash settlement options,
I = .03 + W (R - .03)
where R1 is the lesser of R and .09,
R2 is the greater of R and .09,
R is the reference interest rate defined in this paragraph and W is the weighting factor defined in this paragraph.
(c) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on an issue year basis, except as stated in (b) above, the formula for life insurance stated in (a) above shall apply to annuities and guaranteed interest contracts with guarantee durations in excess of 10 years and the formula for single premium immediate annuities stated in (b) above shall apply to annuities and guaranteed interest contracts with guarantee duration of 10 years or less.
(d) For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the formula for single premium immediate annuities stated in (b) above shall apply.
(e) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, the formula for single premium immediate annuities stated in (b) above shall apply.
(2) However, if the calendar year statutory valuation interest rate for any life insurance policies issued in any calendar year determined without reference to this sentence differs from the corresponding actual rate for similar policies issued in the immediately preceding calendar year by less than ½%, the calendar year statutory valuation interest rate for such life insurance policies shall be equal to the corresponding actual rate for the immediately preceding calendar year. For purposes of applying the immediately preceding sentence, the calendar year statutory valuation interest rate for life insurance policies issued in a calendar year shall be determined for 1980, using the reference interest rate defined for 1979, and shall be determined for each subsequent calendar year regardless of when K.S.A. 40-428(d-3), and amendments thereto, becomes operative.
(C) Weighting factors:
(1) The weighting factors referred to in the formulas stated above are given in the following tables:
(a) Weighting factors for life insurance:
For life insurance, the guarantee duration is the maximum number of years the life insurance can remain in force on a basis guaranteed in the policy or under options to convert to plans of life insurance with premium rates or nonforfeiture values, or both, which are guaranteed in the original policy;
(b) Weighting factor for single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options:
.80
(c) Weighting factors for other annuities and for guaranteed interest contracts, except as stated in (b) above, shall be as specified in tables (i), (ii) and (iii) below, according to the rules and definitions in (iv), (v) and (vi) below:
(i) For annuities and guaranteed interest contracts valued on an issue year basis:
(ii)
(iii)
(iv) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the guarantee duration is the number of years for which the contract guarantees interest rates in excess of the calendar year statutory valuation interest rate for life insurance policies with guarantee duration in excess of 20 years. For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the guarantee duration is the number of years from the date of issue or date of purchase to the date annuity benefits are scheduled to commence.
(v) Plan type as used in the above tables is defined as follows:
Plan type A: At any time policyholder may withdraw funds only: (1) With an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurer; or (2) without such adjustment but in installments over five years or more; or (3) as an immediate life annuity; or (4) no withdrawal permitted.
Plan type B: Before expiration of the interest rate guarantee, policyholder may withdraw funds only: (1) With an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurer; or (2) without such adjustment but in installments over five years or more; or (3) no withdrawal permitted. At the end of interest rate guarantee, funds may be withdrawn without such adjustment in a single sum or installments over less than five years.
Plan type C: Policyholder may withdraw funds before expiration of interest rate guarantee in a single sum or installments over less than five years either: (1) Without adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company; or (2) subject only to a fixed surrender charge stipulated in the contract as a percentage of the fund.
(vi) A company may elect to value guaranteed interest contracts with cash settlement options and annuities with cash settlement options on either an issue year basis or on a change in fund basis. Guaranteed interest contracts with no cash settlement options and other annuities with no cash settlement options must be valued on an issue year basis. As used in this paragraph (1-b), an issue year basis of valuation refers to a valuation basis under which the interest rate used to determine the minimum valuation standard for the entire duration of the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of issue or year of purchase of the annuity or guaranteed interest contract, and the change in fund basis of valuation refers to a valuation basis under which the interest rate used to determine the minimum valuation standard applicable to each change in the fund held under the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of the change in the fund.
(D) Reference interest rate:
(1) The reference interest rate referred to in paragraph(1-b)(B) shall be defined as follows:
(a) For all life insurance, the lesser of the average over a period of 36 months and the average over a period of 12 months, ending on June 30 of the calendar year next preceding the year of issue, of Moody's corporate bond yield average—monthly average corporates, as published by Moody's investors service, inc.
(b) For single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the average over a period of 12 months, ending on June 30 of the calendar year of issue or year of purchase, of Moody's corporate bond yield average—monthly average corporates, as published by Moody's investors service, inc.
(c) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year of issue basis, except as stated in (b) above, with guarantee duration in excess of 10 years, the lesser of the average over a period of 36 months and the average over a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of Moody's corporate bond yield average—monthly average corporates, as published by Moody's investors service, inc.
(d) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year of issue basis, except as stated in (b) above, with guaranteed duration of 10 years or less, the average over a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of Moody's corporate bond yield average—monthly average corporates, as published by Moody's investors service, inc.
(e) For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the average over a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of Moody's corporate bond yield average—monthly average corporates, as published by Moody's investors service, inc.
(f) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, except as stated in (b) above, the average over a period of 12 months, ending on June 30 of the calendar year of the change in the fund, of Moody's corporate bond yield average—monthly average corporates, as published by Moody's investors service, inc.
(E) Alternative method for determining reference interest rates:
(1) In the event that Moody's corporate bond yield average—monthly average corporates is no longer published by Moody's investors service, inc., or in the event that the NAIC determines that Moody's corporate bond yield average—monthly average corporates as published by Moody's investors service, inc., is no longer appropriate for the determination of the reference interest rate, then an alternative method for determination of the reference interest rate, which is adopted by the NAIC and approved by regulation promulgated by the commissioner, may be substituted.
(2) Commissioners' reserve valuation method. Except as otherwise provided in paragraphs (2-a) and (5), reserves according to the commissioners' reserve valuation method, for the life insurance and endowment benefits of policies providing for a uniform amount of insurance and requiring the payment of uniform premiums, shall be the excess, if any, of the present value, at the date of valuation, of such future guaranteed benefits provided for by such policies, over the then present value of any future modified net premiums therefor.
The modified net premiums for any such policy shall be such uniform percentage of the respective contract premiums for benefits such that the present value, at the date of issue of the policy, of all such modified net premiums shall be equal to the sum of the then present value of such benefits provided for by the policy and the excess of (A) over (B), as follows:
(A) A net level annual premium equal to the present value, at the date of issue, of such benefits provided for after the first policy year, divided by the present value, at the date of issue, of an annuity of one per annum payable on the first and each subsequent anniversary of such policy on which a premium falls due. Such net level annual premium shall not exceed the net level annual premium on the nineteen-year premium whole life plan for insurance of the same amount at an age one year higher than the age at issue of such policy.
(B) A net one-year term premium for such benefits provided for in the first policy year.
Except for any life insurance policy issued on or after January 1, 1985, for which the contract premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for such excess and which provides an endowment benefit or a cash surrender value or a combination thereof in an amount greater than such excess premium, the reserve according to the commissioners' reserve valuation method as of any policy anniversary occurring on or before the assumed ending date defined herein as the first policy anniversary on which the sum of any endowment benefit and any cash surrender value then available is greater than such excess premium shall, except as otherwise provided in paragraph (5), be the greater of the reserve as of such policy anniversary calculated as described in this paragraph and the reserve as of such policy anniversary calculated as described in this paragraph, but with: (i) The value defined in subparagraph (A) of this paragraph being reduced by 15% of the amount of such excess first-year premium; (ii) all present values of benefits and premiums being determined without reference to premiums or benefits provided for by the policy after the assumed ending date; (iii) the policy being assumed to mature on such date as an endowment; and (iv) the cash surrender value provided on such date being considered as an endowment benefit. In making the above comparison the mortality and interest bases stated in paragraphs (1) and (1-b) shall be used.
Reserves according to the commissioners' reserve valuation method for: (i) Life insurance policies providing for a varying amount of insurance or requiring the payment of varying premiums; (ii) group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer, including a partnership or sole proprietorship, or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under section 408 of the internal revenue code, as now or hereafter amended; (iii) disability and accidental death benefits in all policies and contracts; and (iv) all other benefits, except life insurance and endowment benefits in life insurance policies and benefits provided by all other annuity and pure endowment contracts, shall be calculated by a method consistent with the principles of this paragraph (2).
Reserves according to the commissioners' reserve valuation method for universal life contracts issued after December 31, 2006, providing for death benefits that are guaranteed to remain in effect if specified conditions, as defined in the universal life insurance contract are met by the contract owner, shall calculate the value of the guarantee by a method consistent with the principles of this paragraph (2). The use of anticipated lapse rates in such calculations shall not exceed 2% per annum.
(2-a) This section shall apply to all annuity and pure endowment contracts other than group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer, including a partnership or sole proprietorship, or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under section 408 of the internal revenue code, as now or hereafter amended.
Reserves according to the commissioners' annuity reserve method for benefits under annuity or pure endowment contracts, excluding any disability and accidental death benefits in such contracts, shall be the greatest of the respective excesses of the present values, at the date of valuation, of the future guaranteed benefits, including guaranteed nonforfeiture benefits, provided for by such contracts at the end of each respective contract year, over the present value, at the date of valuation, of any future valuation considerations derived from future gross considerations, required by the terms of such contract, that become payable prior to the end of such respective contract year. The future guaranteed benefits shall be determined by using the mortality table, if any, and the interest rate, or rates, specified in such contracts for determining guaranteed benefits. The valuation considerations are the portions of the respective gross considerations applied under the terms of such contracts to determine nonforfeiture values.
(3) In no event shall a company's aggregate reserves for all life insurance policies, excluding disability and accidental death benefits, be less than the aggregate reserves calculated in accordance with the methods set forth in paragraphs (2), (2-a), (5) and (6) and the mortality table or tables and rate or rates of interest used in calculating nonforfeiture benefits for such policies.
(3-a) In no event shall the aggregate reserves for all policies, contracts and benefits be less than the aggregate reserves determined by the appointed actuary rendering the opinion required by subsection (b) and (b-1).
(4) Reserves for any category of policies, contracts or benefits as established by the commissioner of insurance may be calculated at the option of the company, according to any standards which produce greater aggregate reserves for such category than those calculated according to the minimum standard herein provided, but the rate or rates of interest used for policies and contracts, other than annuity and pure endowment contracts, shall not be greater than the corresponding rate or rates of interest used in calculating any nonforfeiture benefits provided in the policies or contracts.
(5) If in any contract year the gross premium charged by any life insurance company on any policy or contract is less than the valuation net premium for the policy or contract calculated by the method used in calculating the reserve thereon but using the minimum valuation standards of mortality and rate of interest, the minimum reserve required for such policy or contract shall be the greater of either the reserve calculated according to the mortality table, rate of interest, and method actually used for such policy or contract, or the reserve calculated by the method actually used for such policy or contract but using the minimum valuation standards of mortality and rate of interest and replacing the valuation net premium by the actual gross premium in each contract year for which the valuation net premium exceeds the actual gross premium.
The minimum valuation standards of mortality and rate of interest referred to in this section are those standards stated in paragraphs (1) and (1-b).
Except for any life insurance policy issued on or after January 1, 1988, for which the gross premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for such excess and which provides an endowment benefit or a cash surrender value or a combination thereof in an amount greater than such excess premium, the foregoing provisions of this paragraph (5) shall be applied as if the method actually used in calculating the reserve for such policy were the method described in paragraph (2), ignoring the third paragraph of paragraph (2). The minimum reserve at each policy anniversary of such a policy shall be the greater of the minimum reserve calculated in accordance with paragraph (2), including the third paragraph of paragraph (2), and the minimum reserve calculated in accordance with this paragraph (5).
(6) In the case of any plan of life insurance which provides for future premium determination, the amounts of which are to be determined by the insurance company based on then estimates of future experience, or in the case of any plan of life insurance or annuity which is of such a nature that the minimum reserves cannot be determined by the methods described in paragraphs (2), (2-a) and (5), the reserves which are held under any such plan must:
(A) Be appropriate in relation to the benefits and the pattern of premiums for that plan, and
(B) be computed by a method which is consistent with the principles of this standard valuation law, as determined by regulations promulgated by the commissioner.
(e) Any company organized under the laws of this state, which shall desire to do business in any other states wherein it is not permitted to issue or deliver policies valued as provided in subsection (d), may value its policies issued and delivered in such other states as provided in subsection (c).
(f) For accident and sickness contracts issued prior to the operative date of the valuation manual, the commissioner shall adopt rules and regulations establishing the minimum standard of valuation and may adopt other rules and regulations necessary to administer the provisions of this section. For accident and health insurance contracts issued on or after the operative date of the valuation manual, the standard prescribed in the valuation manual is the minimum standard of valuation required under subsection (a-1)(3).
(g)
Valuation manual for policies issued on or after the operative date of the valuation manual.
(1) For policies issued on or after the operative date of the valuation manual, the standard prescribed in the valuation manual is the minimum standard of valuation required under subsection (a-1)(3), except as provided under paragraphs (5) or (7).
(2) The operative date of the valuation manual is January 1 of the first calendar year following the first July 1 as of which all of the following have occurred:
(A) The valuation manual has been adopted by the NAIC by an affirmative vote of at least 42 members, or ¾ of the members voting, whichever is greater;
(B) the standard valuation law, as amended by the NAIC in 2009, or legislation including substantially similar terms and provisions, has been enacted by states representing greater than 75% of the direct premiums written as reported in the following annual statements submitted for 2008: (i) Life, accident and health annual statements; (ii) health annual statements; or (iii) fraternal annual statements; and
(C) the standard valuation law, as amended by the NAIC in 2009, or legislation including substantially similar terms and provisions, has been enacted by at least 42 of the following 55 jurisdictions: (i) The 50 states of the United States; (ii) American Samoa; (iii) the American Virgin Islands; (iv) the District of Columbia; (v) Guam; and (vi) Puerto Rico.
(3) Unless a change in the valuation manual specifies a later effective date, changes to the valuation manual shall be effective on January 1 following the date when the change to the valuation manual has been adopted by the NAIC by an affirmative vote representing:
(A) At least ¾ of the members of the NAIC voting, but not less than a majority of the total membership; and
(B) members of the NAIC representing jurisdictions totaling greater than 75% of the direct premiums written as reported in the following annual statements most recently available prior to the vote in subparagraph (A): (i) Life, accident and health insurance statements; (ii) health annual statements; or (iii) fraternal annual statements, pursuant to K.S.A. 40-225, and amendments thereto.
(4) The valuation manual must specify all of the following:
(A) Minimum valuation standards for and definitions of the policies or contracts subject to subsection (a-1)(3). Such minimum valuation standards shall be:
(i) The commissioner's reserve valuation method for life insurance contracts, other than annuity contracts, subject to subsection (a-1)(3);
(ii) the commissioner's annuity reserve valuation method for annuity contracts subject to subsection (a-1)(3); and
(iii) minimum reserves for all other policies or contracts subject to subsection (a-1)(3);
(B) which policies or contracts or types of policies or contracts that are subject to the requirements of a principle-based valuation in subsection (h)(1) and the minimum valuation standards consistent with those requirements;
(C) for policies and contracts subject to a principle-based valuation under subsection (h):
(i) Requirements for the format of reports to the commissioner under subsection (h)(2)(C) and which shall include information necessary to determine if the valuation is appropriate and in compliance with this section;
(ii) assumptions shall be prescribed for risks over which the company does not have significant control or influence; and
(iii) procedures for corporate governance and oversight of the actuarial function, and a process for appropriate waiver or modification of such procedures;
(D) for policies not subject to a principle-based valuation under subsection (h), the minimum valuation standard shall either:
(i) Be consistent with the minimum standard of valuation prior to the operative date of the valuation manual; or
(ii) develop reserves that quantify the benefits and guarantees, and the funding, associated with the contracts and their risks at a level of conservatism that reflects conditions that include unfavorable events that have a reasonable probability of occurring.
(E) other requirements, including, but not limited to, those relating to reserve methods, models for measuring risk, generation of economic scenarios, assumptions, margins, use of company experience, risk measurement, disclosure, certifications, reports, actuarial opinions and memorandums, transition rules and internal controls; and
(F) the data and form of the data required under subsection (i), with whom the data must be submitted, and may specify other requirements including data analyses and reporting of analyses.
(5) In the absence of a specific valuation requirement or if a specific valuation requirement in the valuation manual is not, in the opinion of the commissioner, in compliance with this section, then the company shall, with respect to such requirements, comply with minimum valuation standards prescribed by the commissioner by rules and regulations.
(6) The commissioner may engage a qualified actuary, at the expense of the company, to perform an actuarial examination of the company and opine on the appropriateness of any reserve assumption or method used by the company, or to review and opine on a company's compliance with any requirement set forth in this section. The commissioner may rely upon the opinion, regarding provisions contained within this section, of a qualified actuary engaged by the commissioner of another state, district or territory of the United States. As used in this paragraph, the term "engage" includes employment and contracting.
(7) The commissioner may require a company to change any assumption or method that in the opinion of the commissioner is necessary in order to comply with requirements of the valuation manual or this section; and the company shall adjust the reserves as required by the commissioner. The commissioner may take other disciplinary action as permitted pursuant to K.S.A. 77-501 et seq., and amendments thereto.
(h)
Requirements of a principle-based valuation.
(1) A company must establish reserves using a principle-based valuation that meets the following conditions for policies or contracts as specified in the valuation manual:
(A) Quantify the benefits and guarantees, and the funding, associated with the contracts and their risks at a level of conservatism that reflects conditions that include unfavorable events that have a reasonable probability of occurring during the lifetime of the contracts. For policies or contracts with significant tail risk, a level of conservatism that reflects conditions appropriately adverse to quantify the tail risk;
(B) incorporate assumptions, risk analysis methods and financial models and management techniques that are consistent with, but not necessarily identical to, those utilized within the company's overall risk assessment process, while recognizing potential differences in financial reporting structures and any prescribed assumptions or methods;
(C) incorporate assumptions that are derived in one of the following manners:
(i) The assumption is prescribed in the valuation manual; and
(ii) for assumptions that are not prescribed, the assumptions shall be established utilizing the company's available experience, to the extent it is relevant and statistically credible; or to the extent that company data is not available, relevant or statistically credible, be established utilizing other relevant, statistically credible experience; and
(D) provide margins for uncertainty, including adverse deviation and estimation error, such that the greater the uncertainty the larger the margin and resulting reserve.
(2) A company using a principle-based valuation for one or more policies or contracts subject to this subsection as specified in the valuation manual shall:
(A) Establish procedures for corporate governance and oversight of the actual valuation function consistent with those described in the valuation manual;
(B) provide to the commissioner and the board of directors an annual certification of the effectiveness of the internal controls with respect to the principle-based valuation. Such controls shall be designed to assure that all material risks inherent in the liabilities and associated assets subject to such valuation are included in the valuation, and that valuations are made in accordance with the valuation manual. The certification shall be based on the controls in place as of the end of the preceding calendar year; and
(C) develop, and file with the commissioner upon request, a principle-based valuation report that complies with standards prescribed in the valuation manual.
(3) A principle-based valuation may include a prescribed formulaic reserve component.
(i)
Experience reporting for policies in force on or after the operative date of the valuation manual.
A company shall submit mortality, morbidity, policyholder behavior or expense experience and other data as prescribed in the valuation manual.
(j)
Confidentiality.
(1) For purposes of this subsection, "confidential information" means:
(A) A memorandum in support of an opinion submitted under subsections (b) or (b-1) and any other documents, materials and other information, including, but not limited to, all working papers, and copies thereof, created, produced or obtained by or disclosed to the commissioner or any other person in connection with such memorandum;
(B) all documents, materials and other information, including, but not limited to, all working papers, and copies thereof, created, produced or obtained by or disclosed to the commissioner or any other person in the course of an examination made under subsection (g)(6); except, that if an examination report or other material prepared in connection with an examination made under K.S.A. 40-222, and amendments thereto, is not held as private and confidential information under K.S.A. 40-222, and amendments thereto, an examination report or other material prepared in connection with an examination made under subsection (g)(6) shall not be "confidential information" to the same extent as if such examination report or other material had been prepared under K.S.A. 40-222, and amendments thereto;
(C) any reports, documents, materials and other information developed by a company in support of, or in connection with, an annual certification by the company under subsection (h)(2)(B) evaluating the effectiveness of the company's internal controls with respect to a principle-based valuation and any other documents, materials and other information, including, but not limited to, all working papers, and copies thereof, created, produced or obtained by or disclosed to the commissioner or any other person in connection with such reports, documents, materials or other information;
(D) any principle-based valuation report developed under subsection (h)(2)(C) and any other documents, materials and other information, including, but not limited to, all working papers, and copies thereof, created, produced or obtained by or disclosed to the commissioner or any other person in connection with such report; and
(E) any documents, materials, data and other information submitted by a company under subsection (i), collectively, "experience data," and any other documents, materials, data and other information, including, but not limited to, all working papers, and copies thereof, created or produced in connection with such experience data, in each case that include any potentially company-identifying or personally identifiable information, that is provided to or obtained by the commissioner, together with any "experience data," the "experience materials," and any other documents, materials, data and other information, including, but not limited to, all working papers, and copies thereof, created, produced or obtained by or disclosed to the commissioner or any other person in connection with such experience materials.
(2)
Privilege for, and confidentiality of, confidential information.
(A) Except as provided in this subsection, a company's confidential information is confidential by law and privileged, and shall not be subject to K.S.A.
45-215 et seq., and amendments thereto, shall not be subject to subpoena and shall not be subject to discovery or admissible in evidence in any private civil action; except, that the commissioner is authorized to use the confidential information in the furtherance of any regulatory or legal action brought against the company as a part of the commissioner's official duties.
(B) Neither the commissioner nor any person who received confidential information while acting under the authority of the commissioner shall be permitted or required to testify in any private civil action concerning any confidential information.
(C) In order to assist in the performance of the commissioner's duties, the commissioner may share confidential information: (i) With other state, federal and international regulatory agencies and with the NAIC and its affiliates and subsidiaries; and (ii) in the case of confidential information specified in subsections (j)(1)(A) and (j)(1)(D) only, with the actuarial board for counseling and discipline or its successor upon request stating that the confidential information is required for the purpose of professional disciplinary proceedings and with state, federal and international law enforcement officials; in the case of (i) and (ii), provided that such recipient agrees, and has the legal authority to agree, to maintain the confidentiality and privileged status of such documents, materials, data and other information in the same manner and to the same extent as required for the commissioner.
(D) The commissioner may receive documents, materials, data and other information, including otherwise confidential and privileged documents, materials, data or information, from the NAIC and its affiliates and subsidiaries, from regulatory or law enforcement officials of other foreign or domestic jurisdictions and from the actuarial board for counseling and discipline or its successor and shall maintain as confidential or privileged any document, material, data or other information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or other information.
(E) The commissioner may enter into agreements governing sharing and use of information consistent with this subsection (j)(2).
(F) No waiver of any applicable privilege or claim of confidentiality in the confidential information shall occur as a result of disclosure to the commissioner under this subsection or as a result of sharing as authorized in subsection (j)(2)(C).
(G) A privilege established under the law of any state or jurisdiction that is substantially similar to the privilege established under this subsection (j)(2) shall be available and enforced in any proceeding in, and in any court of, this state.
(H) In this subsection, "regulatory agency," "law enforcement agency" and the "NAIC" include, but are not limited to, their employees, agents, consultants and contractors.
(3) Notwithstanding subsection (j)(2), any confidential information specified in subsections (j)(1)(A) and (j)(1)(D):
(A) May be subject to subpoena for the purpose of defending an action seeking damages from the appointed actuary submitting the related memorandum in support of an opinion submitted under subsections (b) or (b-1) or principle-based valuation report developed under subsection (h)(2)(C) of this section by reason of an action required by this section or by rules and regulations promulgated hereunder;
(B) may otherwise be released by the commissioner with the written consent of the company; and
(C) once any portion of a memorandum in support of an opinion submitted under subsections (b) or (b-1) or a principle-based valuation report developed under subsection (h)(2)(C) is cited by the company in its marketing or is publicly volunteered to or before a governmental agency other than a state insurance department or is released by the company to the news media, all portions of such memorandum or report shall no longer be confidential.
(k)
Single state exemption.
(1) The commissioner may exempt specific product forms or product lines of a domestic company that is licensed and doing business only in Kansas from the requirements of subsection (g) if:
(A) The commissioner has issued an exemption in writing to the company and has not subsequently revoked the exemption in writing; and
(B) the company computes reserves using assumptions and methods used prior to the operative date of the valuation manual in addition to any requirements established by the commissioner and promulgated by rules and regulations.
(2) For any company granted an exemption under this subsection, subsections (b), (b-1), (d) and (f) shall be applicable. With respect to any company applying this exemption, any reference to subsection (g) found in subsections (b), (b-1), (d) and (f) shall not be applicable.
History: L. 1927, ch. 231, 40-409; L. 1947, ch. 277, § 1; L. 1957, ch. 280, § 1; L. 1959, ch. 213, § 1; L. 1965, ch. 302, § 1; L. 1973, ch. 193, § 1; L. 1978, ch. 175, § 1; L. 1980, ch. 129, § 2; L. 1982, ch. 202, § 1; L. 1994, ch. 101, § 1; L. 2004, ch. 128, § 1; L. 2007, ch. 105, § 1; L. 2015, ch. 10, § 1; July 1.
It shall be unlawful for any life insurance company, other than fraternal, doing business in this state within six (6) months after default in payment of any premium or installment of premium, to forfeit or cancel any life insurance policy on account of nonpayment of any such premium or installment of premium thereon, without first giving notice in writing to the policyowner of such policy of its intention to forfeit or cancel the same: Provided, however, That this section shall not apply to any policy under the terms of which the premium is to be paid weekly, biweekly or monthly and under which a grace period of at least four (4) weeks is granted for the payment of every premium after the first, during which time the insurance shall continue in force, and shall not apply to general or blanket contracts insuring groups of lives. Policyowner as used herein shall be the owner of the policy as shown by the records of the life insurance company. When the policyowner is other than the insured, the company, upon specific written request by the insured to the company at its home office at any time before a premium is due, shall thereafter furnish the insured a duplicate of any notice required to be sent to the policyowner hereunder.
History: L. 1927, ch. 231, 40-410; L. 1959, ch. 214, § 1; June 30.
Before any such cancellation or forfeiture can be made for the non-payment of any such premium the insurance company shall notify the policyowner of any such policy that the premium thereon, stating the amount thereof, is due and unpaid, and of its intention to forfeit or cancel the same, and such policyowner shall have the right, at any time within thirty (30) days after such notice has been duly deposited in the post office, postage prepaid, and addressed to such policyowner to the address last known by such company, to pay such premium: Provided, That in lieu of the notice hereinbefore provided, in the case of policies providing for a period of grace of not less than thirty (30) days, or one month, for the payment of premiums and containing any provision for cancellation or forfeiture in case of nonpayment of premiums at the end of such period, the insurance company may, not more than thirty (30) days prior to the date specified in such policy when any premium will become due and payable without grace, in like manner notify the policyowner under any such policy, of the date when such premium will fall due, stating the amount thereof, and its intention to forfeit or cancel the same if such premium be not paid within the period of grace provided in the policy; and any attempt on the part of such insurance company, within six (6) months after default in the payment of any premium, to cancel or forfeit any such policy without the notice herein provided shall be null and void. The affidavit of any responsible officer, clerk or agent of the corporation authorized to mail such notice, that the notice required by this section has been duly addressed and mailed by the corporation issuing such policy shall be prima facie evidence that such notice has been duly given.
History: L. 1927, ch. 231, 40-411; L. 1959, ch. 214, § 2; June 30.
No action shall be maintained upon or in respect to any contract of life insurance heretofore or hereafter made, upon which any premium shall remain unpaid after the expiration of the period specified in the policy for the payment of such premium, for the enforcement of any right under such contract which is by the terms of the policy conditioned upon the payment of such premium, or which is by the terms of the policy subject to termination or cancellation for failure to pay such premium, unless such action, or an action to reinstate such policy as a premium-paying policy, shall be commenced within six months after the expiration of the period specified in the policy for the payment of the premium so remaining unpaid in cases of failure to pay which may hereafter occur, or within six months from the date hereof in cases of failure to pay which have heretofore occurred.
History: L. 1927, ch. 231, 40-412; June 1.
In case any life insurance company organized under the laws of this state shall have issued or may hereafter issue any policy of insurance upon the life of any person or persons for another's benefit in which the right to change the beneficiary is not reserved, and such beneficiary dies during the lifetime of the person or persons whose life or lives are insured by such insurance policy or policies, it shall be lawful for such company to receive from the person or persons whose lives are insured an affidavit setting forth the facts in the case; and if it shall appear from such affidavit that the affiants have theretofore paid the annual premium on such policy or policies, and intended thereby to insure for the benefit of the person or persons named in such policy or policies as beneficiary, that such person or persons are dead, and that such policy or policies have not been assigned or transferred to any person or persons, and nominating or appointing some other person or persons as beneficiary in place of such deceased in such policy or policies named, it shall then be the duty of such insurance company to take up and cancel such policies, at the request of the assured, and issue in like terms another policy or policies upon the life or lives of such insured for the benefit of the beneficiary in such affidavit nominated.
History: L. 1927, ch. 231, 40-413; June 1.
(a) If a life insurance company or fraternal benefit society issues any policy of insurance or beneficiary certificates upon the life of an individual and payable at the death of the insured, or in any given number of years, to any person or persons having an insurable interest in the life of the insured, the policy and its reserves, or their present value, shall inure to the sole and separate use and benefit of the beneficiaries named in the policy and shall be free from:
(1) The claims of the insured or the insured's creditors and representatives;
(2) the claims of any policyholder or the policyholder's creditors and representatives, subject to the provisions of subsection (b);
(3) all taxes, subject to the provisions of subsection (d); and
(4) the claims and judgments of the creditors and representatives of any person named as beneficiary in the policy of insurance.
(b) The nonforfeiture value of a life insurance policy shall not be exempt from:
(1) Claims of the creditors of a policyholder who files a bankruptcy petition under 11 U.S.C. § 101 et seq. on or within one year after the date the policy is issued; or
(2) the claim of any creditor of a policyholder if execution on judgment for the claim is issued on or within one year after the date that the policy is issued.
(c) Nothing in this section shall be construed as restricting the right of the insured to change the beneficiary if the policy reserves that right to the insured.
(d) Nothing in this section shall be construed as exempting from taxation any real estate which may at any time be carried by any life insurance company as a part of its legal reserve.
(e) The provisions of subsection (b) shall apply only to life insurance policies purchased on or after July 1, 1988.
(f) The provisions of subsection (b) shall not apply to that portion of the nonforfeiture value of a life insurance policy, issued on or within one year of the filing of a bankruptcy petition under 11 U.S.C. § 101 et seq. or an execution on judgment for the claim of the creditor, which is derived from the surrender of a life insurance policy issued more than one year prior to such bankruptcy petition or such execution.
History: L. 1927, ch. 231, 40-414; L. 1933, ch. 71, § 1 (Special Session); L. 1984, ch. 170, § 1; L. 1988, ch. 217, § 1; July 1.
When a contract of annuity, a policy of insurance, or other contract of a life insurance company authorized to do business in this state is entered into with any person for the benefit of another, and such contract so provides, a person entitled to any of the proceeds retained thereunder by said company or to interest thereon shall not be permitted to commute, anticipate, encumber, alienate, or assign the principal or interest thereon, or any part thereof, nor shall any part of such principal or interest be subject to the claims of creditors of any such person, nor be in any way subject to such person's debts, contracts, or engagements, or to any judicial process to levy upon or attach such proceeds for payment of such claims or demands, and such contracts shall be valid and enforceable.
History: L. 1933, ch. 204, § 1; June 5.
In all cases of the death of the beneficiary in any insurance policy before the death of the insured, and thereafter the insured dies without having named another beneficiary and without having disposed of said insurance by will, then said insurance shall go to the estate of the insured, the same as other property not exempt.
History: L. 1927, ch. 231, 40-415; June 1.
A life insurance company may enter into subsequent agreements in writing with the insured, which need not be attached to the policy, to extend the time for the payment of any premium, or part thereof, upon condition that failure to comply with the terms of such agreement shall lapse the policy as provided in said agreement. Subject to such lien as may be created to secure any indebtedness contracted by the insured in consideration of such extension, said agreement shall not impair any right existing under the policy.
History: L. 1927, ch. 231, 40-416; June 1.
Any solicitor, agent, examining physician or other person who shall knowingly or willfully make any false or fraudulent statement or representation in or with reference to any application for life insurance, or who shall make any such statement for the purpose of obtaining any fee, commission, money or benefits from any company transacting business under this act shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be punished by a fine of not more than five hundred dollars or imprisonment in the county jail for not more than one year, or both, at the discretion of the court; and any person who shall willfully make a false statement of any material fact or thing in a sworn statement as to death or disability for the purpose of procuring payment of a benefit named in a policy or certificate shall be deemed guilty of perjury.
History: L. 1927, ch. 231, 40-417; June 1.
No misrepresentation made in obtaining or securing a policy of insurance on the life or lives of any person or persons, citizens of this state, shall be deemed material or render the policy void unless the matter misrepresented shall have actually contributed to the contingency or event on which the policy is to become due and payable.
History: L. 1927, ch. 231, 40-418; June 1.
In suits brought upon life policies heretofore or hereafter issued, no defense based upon misrepresentation in obtaining or securing the same shall be valid unless the defendant, at or before the trial, shall deposit in court for the benefit of the plaintiff the premiums received on such policies.
History: L. 1927, ch. 231, 40-419; June 1.
Upon the cancellation of any individual term life insurance policy by the owner thereof, the insurance company shall not refuse to refund unearned premiums for the remainder of the term for which premiums were paid. The amount of unearned premiums to be refunded shall equal the difference between the total premium paid and the amount derived by multiplying ⅓ of the quarterly rate by the number of months the policy was in effect. For the purposes of this section, "term life insurance" means a life insurance policy that provides a benefit only if the insured dies within a period stated in the policy and is issued for level, increasing or decreasing amounts for a stated period or to a stated age.
History: L. 1991, ch. 131, § 1; July 1.
No life insurance company authorized to transact the business of insurance in this state shall issue or deliver in this state any policy of life insurance other than industrial insurance, annuities and pure endowments with or without return of premiums or of premiums and interest unless the same shall contain in substance the following provisions:
(1) A provision that all premiums after the first shall be payable in advance, either at the home office of the company or to an agent of the company, and that the insured is entitled to a grace period of not less than 30 days within which time the payment of any premium after the first may be made, during which period of grace the policy shall continue in full force. In case the policy becomes a claim during the grace period, the amount of any overdue premium and any remaining unpaid installments of the annual premium for the policy year of death may be deducted in any settlement under the policy.
(2) A provision that, except as otherwise expressly provided by law, the policy together with the application, if a copy thereof be endorsed upon or attached to the policy, shall constitute the entire contract between the parties and shall be incontestable after it has been in force during the lifetime of the insured for a period of not more than two years from its date, except for nonpayment of premiums and except for violations of the conditions, if any, relating to naval or military service, or to aeronautics and, except also at the option of the company, with respect to provisions relative to benefits in the event of total and permanent disability and provisions which grant additional insurance specifically against death by accident or by accidental means; that all statements made by the insured shall, in the absence of fraud, be deemed representations and not warranties; and that no such statement or statements shall be used in defense of a claim under the policy unless contained in a written application, and unless a copy of such statement or statements be endorsed upon or attached to the policy when issued.
(3) A provision that if it shall be found at any time before final settlement under the policy, that the age of the insured or the age of any other person considered in determining the premium has been misstated, the amount payable under the policy shall be such as the premium would have purchased at the correct age or ages, according to the company's published rate at date of issue.
(4) A provision that the policy shall participate in the surplus of the company, and any policy containing provision for the payment of a dividend at the end of the first or second policy year, and annually thereafter, may also provide that the dividends payable at the end of the first and second policy year shall be paid subject to the payment of the premiums for the next ensuing year; and the insured under any annual dividend policy shall have the right each year to have the dividend arising from such participation paid in cash, and if the policy shall provide other dividend options, it shall further provide which of the options shall be effective if the insured shall not elect any such other option on or before the expiration of the period of grace allowed for the payment of the premium. This provision shall not apply to any form of paid-up insurance, temporary insurance or pure endowment insurance, issued or granted in exchange for lapsed or surrendered policies, or to nonparticipating policies.
(5) Except as provided in K.S.A. 40-420a through 40-420d, inclusive, and amendments thereto, a provision that after the premium shall have been paid for three years, the company at any time, while the policy is in force, will advance, on proper assignment or pledge of the policy and on the sole security thereof, at a specified rate of interest not to exceed 8% per annum, a sum equal to, or at the option of the insured less than, the amount required by K.S.A. 40-429, and amendments thereto, under the conditions specified thereby; and that the company will deduct from such loan value any existing indebtedness on the policy not already deducted in determining such value and any unpaid balance of the premium for the current policy year, and may collect interest in advance on the loan to the end of the current policy year. This provision shall not be required in term insurance, nor shall it apply to temporary insurance or pure endowment insurance, issued or granted in exchange for lapsed or surrendered policies. The policy may further provide that if the interest on the loan is not paid when due, it shall be added to the existing loan, and shall bear interest at the same rate.
(6) A provision for nonforfeiture benefits and cash surrender values in accordance with the requirements of subsection (a) of K.S.A. 40-427, or K.S.A. 40-428, and amendments thereto.
(7) A provision specifying the options to which the policyholder is entitled in the event of default in a premium payment.
(8) A table showing in figures the loan values and the options available under the policy each year upon default in premium payments during at least the first 20 years of the policy, or during the premium-paying period if less than 20 years.
(9) A provision that if in event of default in premium payments the value of the policy shall have been applied to the purchase of other insurance as provided in this section, and if such insurance shall be in force and the original policy shall not have been surrendered to the company and canceled, the policy may be reinstated within three years from such default, upon evidence of insurability satisfactory to the company and payment of arrears of premiums and the payment or reinstatement of any other indebtedness to the company upon its policy, with interest on its premium at the rate of not exceeding 6% per annum payable annually and with interest on the indebtedness at a rate as provided in K.S.A. 40-420a through 40-420d, inclusive, and amendments thereto, and that such reinstated policy shall be contestable only on account of fraud or misrepresentation of material facts pertaining to the reinstatement; for the same period of time after reinstatement as provided in the policy with respect to original issue.
(10) A provision that when a policy shall become a claim by the death of the insured, settlement shall be made upon receipt of due proof of death.
(11) A table showing the amount of installments, if any, in which the policy may provide its proceeds may be payable.
(12) Title on the face and on the back of the policy, briefly describing its form.
(13) A provision with respect to the company's obligation to refund unearned premiums upon cancellation of a term life insurance policy as defined in accordance with the requirements of K.S.A. 40-419a, and amendments thereto, except this provision is required to be printed only in term life insurance policies with an original issue date after the effective date of this act.
Any of the foregoing provisions or portions thereof not applicable to single-premium or nonparticipating or term policies shall to that extent not be incorporated therein; and any such policy may be issued or delivered in this state which in the opinion of the insurance commissioner contains provisions on any one or more of the several foregoing requirements more favorable to the policyholder than hereinbefore required. The provisions of this section shall not apply to policies of reinsurance, or to policies issued or granted in exchange for lapsed or surrendered policies, or to policies of group insurance.
History: L. 1927, ch. 231, 40-420; L. 1939, ch. 209, § 1; L. 1947, ch. 277, § 2; L. 1978, ch. 176, § 1; L. 1982, ch. 203, § 5; L. 1991, ch. 131, § 2; July 1.
The purpose of this act is to permit and set guidelines for life insurers to include in life insurance policies issued after the effective date of this act a provision for periodic adjustment of policy loan interest rates.
History: L. 1982, ch. 203, § 1; July 1.
For purposes of this act the "published monthly average" means:
(a) Moody's corporate bond yield average—monthly average corporates as published by Moody's investors service, inc., or any successor thereto; or
(b) in the event that Moody's corporate bond yield average—monthly average corporates is no longer published, a substantially similar average, established by regulation issued by the commissioner.
History: L. 1982, ch. 203, § 2; July 1.
(a) Policies issued on or after the effective date of this act shall provide for policy loan interest rates as follows:
(i) A provision permitting a maximum interest rate of not more than 8% per annum; or
(ii) a provision permitting an adjustable maximum interest rate established from time to time by the life insurer as permitted by law.
(b) The rate of interest charged on a policy loan made under paragraph (ii) of subsection (a) shall not exceed the higher of the following:
(i) The published monthly average for the calendar month ending two months before the date on which the rate is determined; or
(ii) the rate used to compute the cash surrender values under the policy during the applicable period plus 1% per annum.
(c) If the maximum rate of interest is determined pursuant to paragraph (ii) of subsection (a), the policy shall contain a provision setting forth the frequency at which the rate is to be determined for that policy.
(d) The maximum rate for each policy must be determined at regular intervals at least once every 12 months, but not more frequently than once in any three-month period. At the intervals specified in the policy:
(i) The rate being charged may be increased whenever such increase as determined under subsection (b) would increase that rate by ½% or more per annum;
(ii) the rate being charged must be reduced whenever such reduction as determined under subsection (b) would decrease that rate ½% or more per annum.
(e) The life insurer shall:
(i) Notify the policyholder at the time a cash loan is made of the initial rate of interest on the loan;
(ii) notify the policyholder with respect to premium loans of the initial rate of interest on the loan as soon as it is reasonably practical to do so after making the initial loan. Notice need not be given to the policyholder when a further premium loan is added, except as provided in paragraph (iii) of this subsection;
(iii) send to policyholders with loans reasonable advance notice of any increase in the rate; and
(iv) include in the notices required above the substance of the pertinent provisions of subsections (a) and (c).
(f) The loan value of the policy shall be determined in accordance with the provisions of K.S.A. 40-429 and 40-2611 and K.S.A. 40-420, and amendments thereto, but no policy shall terminate in a policy year as the sole result of change in the interest rate during that policy year, and the life insurer shall maintain coverage during that policy year until the time at which it would otherwise have terminated if there had been no change during that policy year.
(g) The substance of the pertinent provisions of subsections (a) and (c) shall be set forth in the policies to which they apply.
(h) For purposes of this section:
(i) The rate of interest on policy loans permitted under this section includes the interest rate charged on reinstatement of policy loans for the period during and after any lapse of a policy.
(ii) The term "policy loan" includes any premium loan made under a policy to pay one or more premiums that were not paid to the life insurer as they fell due.
(iii) The term "policyholder" includes the owner of the policy or the person designated to pay premiums as shown on the records of the life insurer.
(iv) The term "policy" includes certificates issued by a fraternal benefit society and annuity contracts which provide for policy loans.
(i) No other provision of law shall apply to policy loan interest rates unless made specifically applicable to such rates.
History: L. 1982, ch. 203, § 3; July 1.
The provisions of this act shall not apply to any insurance contract issued before the effective date of this act, unless the policyholder agrees in writing to the applicability of such provisions.
History: L. 1982, ch. 203, § 4; July 1.
From and after the first day of January, 1928, no policy of life insurance, other than industrial insurance, annuities and pure endowments with or without return of premiums or of premiums and interest, shall be issued or delivered in this state or be issued by a life insurance company organized under the laws of this state if it contain any of the following provisions:
(1) A provision by which the policy shall purport to be issued or take effect more than six months before the original application for the insurance was made.
(2) A provision for any mode of settlement at maturity after the expiration of the contestable period of the policy of less value than the amount insured on the face of the policy plus dividend additions, if any, less any indebtedness to the company on or secured by the policy, and less any premium that may by the terms of the policy be deducted. This paragraph shall not apply to any nonforfeiture provision which employs the method provided by subsection 6 of section 40-420 of this code less indebtedness, if any, to purchase automatic paid-up or extended insurance, nor to readjustment because of misstatement of age, nor to any liability in event of violation of the conditions described in paragraph (2) section 40-420.
(3) A provision for forfeiture of the policy for failure to repay any loan on the policy, or to pay interest on such loan, while the total indebtedness on the policy, including interest, is less than the loan value thereof.
(4) A provision to the effect that the agent soliciting the insurance is the agent of the person insured under said policy, or making the acts or representations of such agent binding upon the person so insured under said policy.
(5) A provision to the effect that payment of dividends on any form of participating policies shall be deferred for more than five years.
History: L. 1927, ch. 231, 40-421; L. 1939, ch. 210, § 1; June 30.
As used in this act "industrial life insurance" means either that form of life insurance under which the premiums are payable weekly, or that under which the premiums are payable monthly or oftener if the face amount of insurance provided in the policy is less than one thousand dollars and the words "industrial policy" are printed in prominent type on the face of the policy.
History: L. 1941, ch. 258, § 1; June 30.
From and after the first day of July, 1947, no policy of industrial life insurance shall be delivered or issued for delivery in this state, unless the same shall contain, in substance, the following provisions, and shall be subject to the provisions of this act:
(1) A provision that the insured is entitled to a grace period of four weeks within which the payment of any premium after the first may be made, during which period of grace the policy shall continue in full force, but in case the policy becomes a claim during said grace period before the overdue premiums are paid, the amount of overdue premiums may be deducted in any settlement under the policy.
(2) A provision that all premiums shall be payable in advance, either at the office of the company or to a duly authorized agent of the company.
(3) A provision that, except as otherwise expressly provided by law, the policy together with the application, if a copy thereof be endorsed thereupon or attached to the policy, shall constitute the entire contract between the parties.
(4) A provision that the policy shall be incontestable after it has been in force during the lifetime of the insured for a period of not more than two years from its date, except for nonpayment of premiums and except for violations of conditions, if any, relating to naval or military service in time of war or to aeronautics and, except also at the option of the company, with respect to provisions relative to benefits in the event of total and permanent disability and provisions which grant additional insurance specifically against death by accident or accidental means.
(5) A provision that if it shall be found at any time before final settlement under the policy, that the age of the insured or the age of any other person considered in determining the premium has been misstated, the amount payable under the policy shall be such as the premium would have purchased at the correct age or ages, according to the company's published rate at date of issue.
(6) If a participating policy, a provision indicating the conditions under which the company shall annually ascertain and apportion any divisible surplus accruing on the policy.
(7) A provision for nonforfeiture benefits (which may be a stipulated form of insurance) in accordance with the requirements of subsection (b) of K.S.A. 40-427 or 40-428.
(8) If more than one option is provided, a provision as to which of such options shall apply in the event of the insured's failure to notify the company of his selection of an option.
(9) A provision for cash surrender values in accordance with the requirements of subsection (b) of K.S.A. 40-427 or 40-428.
(10) A table showing in figures the nonforfeiture options available under the policy every year upon default in payment of premiums during at least the first twenty years of the policy, or during the premium-paying period if less than twenty years, and a provision that the company will furnish upon request an extension of such table beyond the years shown in the policy.
(11) A provision that if in event of default in premium payments the value of the policy shall have been applied to the purchase of other insurance as provided in this section, and if such insurance shall be in force and the original policy shall not have been surrendered to the company and canceled, the policy may be reinstated within two years from such default, upon evidence of insurability satisfactory to the company and payment of arrears of premiums and the payment or reinstatement of any other indebtedness to the company upon said policy, with interest on said premiums and indebtedness at a rate of not exceeding six percentum per annum payable annually, and that such reinstated policy may be contestable on account of fraud or misrepresentations of material facts pertaining to the reinstatement only for the same period of time after reinstatement as provided in the policy with respect to original issue.
(12) A provision that when a policy shall become a claim by the death of the insured, settlement shall be made upon receipt of due proof of death.
(13) A title on the face and on the back of the policy, briefly describing its form.
Any of the foregoing provisions or portions thereof, not applicable to single-premium or nonparticipating or term policies, shall to that extent not be incorporated therein. The provisions of this section shall not apply to policies issued or granted in exchange for lapsed or surrendered policies: Provided, That any stipulated form of insurance provided for under subsection (7) of this section, may be surrendered for a cash surrender value, in an amount and under the conditions specified in subsection (b) of K.S.A. 40-427 or 40-428 (the standard nonforfeiture law).
History: L. 1941, ch. 258, § 2; L. 1947, ch. 277, § 6; July 1.
Upon proper written request, a named beneficiary shall be designated in, or be endorsed on a policy of industrial life insurance, to receive the benefits thereof on the death of the insured, and there shall be reserved the power to change the beneficiary at any time upon proper written request to the company at its home office, accompanied by the policy for endorsement of the change thereon by the company. The company shall have the right to refuse to designate a beneficiary if evidence satisfactory to the company of such beneficiary's insurable interest in the life of the insured is not furnished on request.
The policy may provide in substance that any payment thereunder may be made or any nonforfeiture benefit may be granted to the insured or to the insured's estate or to any relative by blood or connection by marriage of the insured, or, to the extent of such portion of any payment under the policy as may reasonably appear to the company to be due to such person, to any other person equitably entitled thereto by reason of having incurred expense occasioned by the maintenance or illness or burial of the insured. If the policy shall be in force at the death of the insured, the proceeds thereof shall be payable to the named beneficiary if living, but unless proof of claim in the manner and form required by the policy, accompanied by delivery of the policy for surrender, has been made by such beneficiary within fifteen days after the death of the insured, then upon the expiration of said fifteen days, or if the beneficiary is the estate of the insured, or is a minor, or is not legally qualified to give a valid release or dies before the insured, the company may pay to any person permitted by the policy.
History: L. 1941, ch. 258, § 3; June 30.
The cash surrender value and the value of any stipulated form of insurance granted under subsections (7) and (9) of K.S.A. 40-423, shall be equal provided that the amount of paid-up insurance may be taken to either the next lower or next higher dollar and the period of extended insurance may be taken to either the beginning or end of the week in which such extended insurance would otherwise expire.
History: L. 1941, ch. 258, § 4; L. 1947, ch. 277, § 7; July 1.
Any policy of industrial life insurance may be delivered or issued for delivery in this state which in the opinion of the insurance commissioner contains provisions on any one or more of the several foregoing requirements more favorable to policyholders than provided by this act.
History: L. 1941, ch. 258, § 5; June 30.
(a) This subsection shall apply only to policies of life insurance (other than industrial life insurance) issued prior to the operative date of K.S.A. 40-428 (the standard nonforfeiture law).
The nonforfeiture benefits referred to in subsection (6) of K.S.A. 40-420, shall be available to the insured in event of default in premium payments, after premiums shall have been paid for three years, and shall be a stipulated form of insurance, effective from the due date of the defaulted premium, the net value of which shall be at least equal to the reserve at the date of default on the policy and on dividend additions thereto, if any, exclusive of the reserve on account of return premium insurance and on total and permanent disability and additional accidental death benefits (the policy to specify the mortality table and rate of interest adopted for computing such reserves), less a percentage (not more than two and one-half) of the amount insured by the policy and of existing dividend additions thereto, if any, and less any existing indebtedness to the company on or secured by the policy: Provided, That the policy may be surrendered to the company at its home office within one month of the due date of defaulted premium for a specific cash value at least equal to the sum which would otherwise be available for the purchase of insurance as aforesaid: Provided further, That the company may defer payment for not more than six months after the application therefor is made. This subsection shall not apply to term insurance of twenty years or less. The policy may also specify that in event of default in a premium payment before the options become available the reserve on any dividend additions then in force may at the option of the company be paid in cash or applied as a net premium to the purchase of paid-up term insurance for any amount not in excess of the face of the original policy.
(b) This subsection shall apply only to policies of industrial life insurance issued prior to the operative date of K.S.A. 40-428 (the standard nonforfeiture law).
The nonforfeiture benefits referred to in section (7) of K.S.A. 40-423, shall be available in event of default in premium payments after premiums shall have been paid for five full years and shall be a stipulated form of insurance effective from the due date of the defaulted premium, the net value of which shall not be less than the reserve on the policy at the end of the last completed quarter of the policy year for which premiums have been paid, and all dividend additions thereto, if any, exclusive of any reserve on total and permanent disability and additional accidental death benefits (the policy to specify the mortality table, rate of interest, and method of valuation adopted for computing such reserve), less a maximum percentage (not more than two and one-half percentum) of the amount insured by the policy and of existing dividend additions thereto, if any, and less any existing indebtedness to the company on or secured by the policy. The policy shall also specify said percentage, or other rule of calculation so as to permit determination of the values, to be specified for each year for which required values are not included in the policy. The cash surrender value referred to in subsection (9) of K.S.A. 40-423, shall be available upon surrender of the policy to the company at its home office within the period of grace after the due date of the defaulted premium and shall be equal to the net value of the stipulated form of insurance otherwise available: Provided, That the company may defer payment for not more than six months after the application therefor is made. After premiums have been paid for five full years the cash surrender value at any time of any stipulated form of insurance shall be the full reserve at the date of surrender.
History: L. 1947, ch. 277, § 3; July 1.
(a) The term "operative date of the valuation manual" means the January 1 of the first calendar year that the valuation manual as defined in K.S.A. 40-409, and amendments thereto, is effective.
(1) In the case of policies issued on or after the operative date of this section, as defined in subsection (d-1), (d-2), (d-3) or (i), no policy of life insurance, except as stated in subsection (h) shall be delivered or issued for delivery in this state unless it shall contain in substance the following provisions, or corresponding provisions which in the opinion of the commissioner of insurance are at least as favorable to the defaulting or surrendering policyholder as are the minimum requirements hereinafter specified and are essentially in compliance with subsection (g).
(A) In the event of default in any premium payment, the company will grant, upon proper request not later than 60 days after the due date of the premium in default, a paid-up nonforfeiture benefit on a plan stipulated in the policy, effective as of such due date, of such amount as may be hereinafter specified.
In lieu of such stipulated paid-up nonforfeiture benefit, the company may substitute, upon proper request not later than 60 days after the due date of the premium in default, an actuarially equivalent alternative paid-up nonforfeiture benefit which provides a greater amount or longer period of death benefits or, if applicable, a greater amount or earlier payment of endowment benefits.
(B) Upon surrender of the policy within 60 days after the due date of any premium payment in default after premiums have been paid for at least three full years in the case of ordinary insurance or five full years in the case of industrial insurance, the company will pay, in lieu of any paid-up nonforfeiture benefit, a cash surrender value of such amount as may be hereinafter specified.
(C) A specified paid-up nonforfeiture benefit shall become effective as specified in the policy unless the person entitled to make such election elects another available option not later than 60 days after the due date of the premium in default.
(D) If the policy shall have become paid-up by completion of all premium payments or if it is continued under any paid-up nonforfeiture benefit which became effective on or after the third policy anniversary in the case of ordinary insurance or the fifth policy anniversary in the case of industrial insurance, the company will pay, upon surrender of the policy within 30 days after any policy anniversary, a cash surrender value of such amount as may be hereinafter specified.
(E) In the case of policies which cause on a basis guaranteed in the policy unscheduled changes in benefits or premiums, or which provide an option for changes in benefits or premiums other than a change to a new policy, a statement of the mortality table, interest rate, and method used in calculating cash surrender values and the paid-up nonforfeiture benefits available under the policy. In the case of all other policies, a statement of the mortality table and interest rate used in calculating the cash surrender values and the paid-up nonforfeiture benefits available under the policy, together with a table showing the cash surrender value, if any, and paid-up nonforfeiture benefit, if any, available under the policy on each policy anniversary either during the first 20 policy years or during the term of the policy, whichever is shorter, such values and benefits to be calculated upon the assumption that there are no dividends or paid-up additions credited to the policy and that there is no indebtedness to the company on the policy.
(F) A statement that the cash surrender values and the paid-up nonforfeiture benefits available under the policy are not less than the minimum values and benefits required by or pursuant to any statute of the state in which the policy is delivered; and an explanation of the manner in which the cash surrender values and the paid-up nonforfeiture benefits are altered by the existence of any paid-up additions credited to the policy or any indebtedness to the company on the policy; if a detailed statement of the method of computation of the values and benefits shown in the policy is not stated therein, a statement that such method of computation has been filed with the insurance supervisory official of the state in which the policy is delivered; and, a statement of the method to be used in calculating the cash surrender value and paid-up nonforfeiture benefit available under the policy on any policy anniversary beyond the last anniversary for which such values and benefits are consecutively shown in the policy.
Any of the foregoing provisions or portions thereof not applicable by reason of the plan of insurance may, to the extent inapplicable, be omitted from the policy with the consent of the insurance commissioner.
The company shall reserve the right to defer the payment of any cash surrender value for a period of six months after demand therefor with surrender of the policy. During such period of deferment, any interest or dividends that would accrue in the absence of a surrender of the policy shall continue to accrue until such surrender value is paid.
(b) Any cash surrender value available under the policy in the event of default in a premium payment due on any policy anniversary, whether or not required by subsection (a), shall be an amount not less than the excess, if any, of the present value, on such anniversary, of the future guaranteed benefits which would have been provided for by the policy, including any existing paid-up additions, if there had been no default, over the sum of: (1) The then present value of the adjusted premiums as defined in subsections (d), (d-1), (d-2) and (d-3), corresponding to premiums which would have fallen due on and after such anniversary; and (2) the amount of any indebtedness to the company on the policy.
For any policy issued on or after the operative date of subsection (d-3) as defined therein, which provides supplemental life insurance or annuity benefits at the option of the insured and for an identifiable additional premium by rider or supplemental policy provision, the cash surrender value referred to in the first paragraph of this subsection shall be an amount not less than the sum of the cash surrender value as defined in such paragraph for an otherwise similar policy issued at the same age without such rider or supplemental policy provision and the cash surrender value as defined in such paragraph for a policy which provides only the benefits otherwise provided by such rider or supplemental policy provision.
For any family policy issued on or after the operative date of subsection (d-3) as defined therein, which defines a primary insured and provides term insurance on the life of the spouse of the primary insured expiring before the spouse's age 71, the cash surrender value referred to in the first paragraph of this subsection shall be an amount not less than the sum of the cash surrender value as defined in such paragraph for an otherwise similar policy issued at the same age without such term insurance on the life of the spouse and the cash surrender value as defined in such paragraph for a policy which provides only the benefits otherwise provided by such term insurance on the life of the spouse.
Any cash surrender value available within 30 days after any policy anniversary under any policy paid-up by completion of all premium payments or any policy continued under any paid-up nonforfeiture benefit, whether or not required by subsection (a), shall be an amount not less than the present value, on such anniversary, of the future guaranteed benefits provided for by the policy, including any existing paid-up additions, decreased by any indebtedness to the company on the policy.
(c) Any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment due on any policy anniversary shall be such that its present value as of such anniversary shall be at least equal to the cash surrender value then provided for by the policy, or, if none is provided for, that cash surrender value which would have been required by this section in the absence of the condition that premiums shall have been paid for at least a specified period.
(d) This subsection (d) shall not apply to policies issued on and after the operative date of subsection (d-3), as defined therein. Except as provided in the third paragraph of this subsection, the adjusted premiums for any policy shall be calculated on an annual basis and shall be such uniform percentage of the respective premiums specified in the policy for each policy year, excluding amounts stated in the policy as extra premiums to cover impairments or special hazards, that the present value, at the date of issue of the policy, of all such adjusted premiums shall be equal to the sum of: (1) The then present value of the future guaranteed benefits provided for by the policy; (2) two percent of the amount of insurance, if the insurance be uniform in amount, or of the equivalent uniform amount, as hereinafter defined, if the amount of insurance varies with duration of the policy; (3) forty percent of the adjusted premium for the first policy year; (4) twenty-five percent of either the adjusted premium for the first policy year or the adjusted premium for a whole life policy of the same uniform or equivalent uniform amount with uniform premiums for the whole life issued at the same age for the same amount of insurance, whichever is less. In applying the percentages specified in (3) and (4) above, no adjusted premium shall be deemed to exceed 4% of the amount of insurance or uniform amount equivalent thereto. The date of issue of a policy for the purpose of this subsection shall be the date as of which the rated age of the insured is determined.
In the case of a policy providing an amount of insurance varying with duration of the policy, the equivalent uniform amount thereof for the purpose of this subsection shall be deemed to be the uniform amount of insurance provided by an otherwise similar policy, containing the same endowment benefit or benefits, if any, issued at the same age and for the same term, the amount of which does not vary with duration and the benefits under which have the same present value at the date of issue as the benefits under the policy. In the case of a policy issued at an age less than 10 years the equivalent uniform amount of insurance may be based upon the amount of insurance after age 10.
The adjusted premiums for any policy providing term insurance benefits by rider or supplemental policy provision shall be equal to: (a) The adjusted premiums for an otherwise similar policy issued at the same age without such term insurance benefits, increased, during the period for which premiums for such term insurance benefits are payable, by (b) the adjusted premiums for such term insurance, the foregoing items (a) and (b) being calculated separately and as specified in the first two paragraphs of this subsection except that, for the purposes of (2), (3) and (4) of the first such paragraph, the amount of insurance or equivalent uniform amount of insurance used in the calculation of the adjusted premiums referred to in (b) shall be equal to the excess of the corresponding amount determined for the entire policy over the amount used in the calculation of the adjusted premiums in (a).
Except as otherwise provided in subsections (d-1) and (d-2), all adjusted premiums and present values referred to in this section shall for all policies of ordinary insurance be calculated on the basis of the commissioners' 1941 standard ordinary mortality table. For any category of ordinary insurance issued on female risks, adjusted premiums and present values may be calculated, according to an age not more than three years younger than the actual age of the insured. Such calculations for all policies of industrial insurance shall be made on the basis of the 1941 standard industrial mortality table. All calculations shall be made on the basis of the rate of interest, not exceeding 3½% per annum, specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits. In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than 130% of the rates of mortality according to such applicable table. If the rate of mortality used exceeds 100% the rate shall be stated in the policy. For insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based on such other table of mortality as may be specified by the company and approved by the commissioner of insurance.
(d-1) This subsection (d-1) shall not apply to ordinary policies issued on or after the operative date of subsection (d-3), as defined therein. In the case of ordinary policies issued on or after the operative date of this subsection (d-1) as defined herein, all adjusted premiums, as defined in subsection (d), and present values referred to in this section shall be calculated on the basis of the commissioners' 1958 standard ordinary mortality table and the rate of interest specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits. Such rate of interest shall not exceed 3½% per annum, except that a rate of interest not exceeding 4% per annum may be used for policies issued on or after July 1, 1973, and prior to July 1, 1978, and a rate of interest not exceeding 5½% per annum may be used for policies issued on or after July 1, 1978, except that for any single premium whole life or endowment insurance policy a rate of interest not exceeding 6½% per annum may be used. For any category of ordinary insurance issued on female risks, adjusted premiums and present values may be calculated according to an age not more than six years younger than the actual age of the insured. In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the commissioners' 1958 extended term insurance table. For insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based on such other table of mortality as may be specified by the company and approved by the commissioner.
After the effective date of this subsection (d-1), any company may file with the commissioner a written notice of its election to comply with the provisions of this subsection after a specified date. After the filing of such notice, then upon such specified date, which shall be the operative date of this subsection for such company, this subsection shall become operative with respect to the ordinary policies thereafter issued by such company. Any company, having filed such notice of election to comply with this subsection, and desiring to withdraw from such election as to future policies may file with the commissioner of insurance a written notice of such withdrawal after a specified date, and of its intention to value all its future policies in accordance with the provisions of law applicable to the basis used prior to such election and to provide nonforfeiture benefits and cash surrender values in future policies as required for the basis used prior to such election.
(d-2) This subsection (d-2) shall not apply to industrial policies issued on or after the operative date of subsection (d-3), as defined therein. In the case of industrial policies issued on or after the operative date of this subsection (d-2) as defined herein, all adjusted premiums and present values referred to in this section shall be calculated on the basis of the commissioners' 1961 standard industrial mortality table and the rate of interest specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits. Such rate of interest shall not exceed 3½% per annum, except that a rate of interest not exceeding 4% per annum may be used for policies issued on or after July 1, 1973, and prior to July 1, 1978, and a rate of interest not exceeding 5½% per annum may be used for policies issued on or after July 1, 1978, except that for any single premium whole life or endowment insurance policy a rate of interest not exceeding 6½% per annum may be used. In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the commissioners' 1961 industrial extended term insurance table. For insurance issued on a substandard basis, the calculations of such adjusted premiums and present values may be based on such other table of mortality as may be specified by the company and approved by the commissioner.
After the effective date of this subsection (d-2), any company may file with the commissioner a written notice of its election to comply with the provisions of this subsection after a specified date. After the filing of such notice, then upon such specified date, which shall be the operative date of this subsection for such company, this subsection shall become operative with respect to the industrial policies thereafter issued by such company. Any company having filed such notice of election to comply with this subsection, and desiring to withdraw from such election as to future policies may file with the commissioner of insurance a written notice of such withdrawal after a specified date, and of its intention to value all its future policies in accordance with provisions of law applicable to the basis used prior to such elections and to provide nonforfeiture benefits and cash surrender values in future policies as required for the basis used prior to such election.
(d-3) (1) This subsection shall apply to all policies issued on or after the operative date of this subsection (d-3), as defined herein. Except as provided in the seventh paragraph of this subsection, the adjusted premiums for any policy shall be calculated on an annual basis and shall be such uniform percentage of the respective premiums specified in the policy for each policy year, excluding amounts payable as extra premiums to cover impairments or special hazards and also excluding any uniform annual contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash surrender values and paid-up nonforfeiture benefits, that the present value, at the date of issue of the policy, of all adjusted premiums shall be equal to the sum of: (A) The then present value of the future guaranteed benefits provided for by the policy; (B) one percent of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at the beginning of each of the first 10 policy years; and (C) one hundred twenty-five percent of the nonforfeiture net level premium as hereinafter defined. In applying the percentage specified in (C) above, no nonforfeiture net level premium shall be deemed to exceed 4% of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at the beginning of each of the first 10 policy years. The date of issue of a policy for the purpose of this subsection shall be the date as of which the rated age of the insured is determined.
(2) The nonforfeiture net level premium shall be equal to the present value, at the date of issue of the policy, of the guaranteed benefits provided for by the policy divided by the present value, at the date of issue of the policy, of an annuity of one per annum payable on the date of issue of the policy and on each anniversary of such policy on which a premium falls due.
(3) In the case of policies which cause on a basis guaranteed in the policy unscheduled changes in benefits or premiums, or which provide an option for changes in benefits or premiums other than a change to a new policy, the adjusted premiums and present values shall initially be calculated on the assumption that future benefits and premiums do not change from those stipulated at the date of issue of the policy. At the time of any such change in the benefits or premiums the future adjusted premiums, nonforfeiture net level premiums and present values shall be recalculated on the assumption that future benefits and premiums do not change from those stipulated by the policy immediately after the change.
(4) Except as otherwise provided in the seventh paragraph of this subsection, the recalculated future adjusted premiums for any such policy shall be such uniform percentage of the respective future premiums specified in the policy for each policy year, excluding amounts payable as extra premiums to cover impairments and special hazards, and also excluding any uniform annual contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash surrender values and paid-up nonforfeiture benefits, that the present value, at the time of change to the newly defined benefits or premiums, of all such future adjusted premiums shall be equal to the excess of: (A) The sum of: (i) The then present value of the then future guaranteed benefits provided for by the policy; and (ii) the additional expense allowance, if any, over (B) the then cash surrender value, if any, or present value of any paid-up nonforfeiture benefit under the policy.
(5) The additional expense allowance, at the time of the change to the newly defined benefits or premiums, shall be the sum of: (A) One percent of the excess, if positive, of the average amount of insurance at the beginning of each of the first 10 policy years subsequent to the change over the average amount of insurance prior to the change at the beginning of each of the first 10 policy years subsequent to the time of the most recent previous change, or, if there has been no previous change, the date of issue of the policy; and (B) one hundred twenty-five percent of the increase, if positive, in the nonforfeiture net level premium.
(6) The recalculated nonforfeiture net level premium shall be equal to the result obtained by dividing (A) by (B) where (A) equals the sum of: (i) The nonforfeiture net level premium applicable prior to the change times the present value of an annuity of one per annum payable on each anniversary of the policy on or subsequent to the date of the change on which a premium would have fallen due had the change not occurred; and (ii) the present value of the increase in future guaranteed benefits provided for by the policy; and
(B) equals the present value of an annuity of one per annum payable on each anniversary of the policy on or subsequent to the date of change on which a premium falls due.
(7) Notwithstanding any other provisions of this subsection to the contrary, in the case of a policy issued on a substandard basis which provides reduced graded amounts of insurance so that, in each policy year, such policy has the same tabular mortality cost as an otherwise similar policy issued on the standard basis which provides higher uniform amounts of insurance, adjusted premiums and present values for such substandard policy may be calculated as if it were issued to provide such higher uniform amounts of insurance on the standard basis.
(8) All adjusted premiums and present values referred to in this section shall for all policies of ordinary insurance be calculated on the basis of: (A) The commissioners' 1980 standard ordinary mortality table; or (B) at the election of the company for any one or more specified plans of life insurance, the commissioners' 1980 standard ordinary mortality table with ten-year select mortality factors; shall for all policies of industrial insurance be calculated on the basis of the commissioners' 1961 standard industrial mortality table; and shall for all policies issued in a particular calendar year be calculated on the basis of a rate of interest not exceeding the nonforfeiture interest rate as defined in this subsection for policies issued in that calendar year. Except:
(i) At the option of the company, calculations for all policies issued in a particular calendar year may be made on the basis of a rate of interest not exceeding the nonforfeiture interest rate, as defined in this subsection, for policies issued in the immediately preceding calendar year.
(ii) Under any paid-up nonforfeiture benefit, including any paid-up dividend additions, any cash surrender value available, whether or not required by subsection (a), shall be calculated on the basis of the mortality table and rate of interest used in determining the amount of such paid-up nonforfeiture benefit and paid-up dividend additions, if any.
(iii) A company may calculate the amount of any guaranteed paid-up nonforfeiture benefit including any paid-up additions under the policy on the basis of an interest rate no lower than that specified in the policy for calculating cash surrender values.
(iv) In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the commissioners' 1980 extended term insurance table for policies of ordinary insurance and not more than the commissioners' 1961 industrial extended term insurance table for policies of industrial insurance.
(v) For insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based on appropriate modifications of the aforementioned tables.
(vi) For policies issued prior to the operative date of the valuation manual, any ordinary mortality tables, adopted after 1980 by the national association of insurance commissioners, that are approved by rules and regulations promulgated by the commissioner for use in determining the minimum nonforfeiture standard may be substituted for the commissioners' 1980 standard ordinary mortality table with or without ten-year select mortality factors or for the commissioners' 1980 extended term insurance table.
For policies issued on or after the operative date of the valuation manual, the valuation manual shall provide the commissioners' standard mortality table for use in determining the minimum nonforfeiture standard that may be substituted for the commissioners' 1980 standard ordinary mortality table with or without ten-year select mortality factors or for the commissioners' 1980 extended term insurance table. If the commissioner approves by rules and regulations any commissioners' standard ordinary mortality table adopted by the national association of insurance commissioners for use in determining the minimum nonforfeiture standard for policies issued on or after the operative date of the valuation manual, then that minimum nonforfeiture standard supersedes the minimum nonforfeiture standard provided by the valuation manual.
(G) For policies issued prior to the operative date of the valuation manual, any industrial mortality tables, adopted after 1980 by the national association of insurance commissioners, that are approved by rules and regulations promulgated by the commissioner for use in determining the minimum nonforfeiture standard may be substituted for the commissioners' 1961 standard industrial mortality table or the commissioners' 1961 industrial extended term insurance table.
For policies issued on or after the operative date of the valuation manual, the valuation manual shall provide the commissioners' standard mortality table for use in determining the minimum nonforfeiture standard that may be substituted for the commissioners' 1961 standard industrial mortality table or the commissioners' 1961 industrial extended term insurance table. If the commissioner approves by rules and regulations any commissioners' standard industrial mortality table adopted by the national association of insurance commissioners for use in determining the minimum nonforfeiture standard for policies issued on or after the operative date of the valuation manual, then that minimum nonforfeiture standard supersedes the minimum nonforfeiture standard provided by the valuation manual.
(9) The nonforfeiture interest rate is defined below:
(A) For policies issued prior to the operative date of the valuation manual, the nonforfeiture interest rate per annum for any policy issued in a particular calendar year shall be equal to 125% of the calendar year statutory valuation interest rate for such policy as defined in the standard valuation law, rounded to the nearer ¼%, except that, the nonforfeiture interest rate shall not be less than 4%.
(B) For policies issued on or after the operative date of the valuation manual, the nonforfeiture interest rate per annum for any policy issued in a particular calendar year shall be provided by the valuation manual.
(10) Notwithstanding any other provision of this code to the contrary, any refiling of nonforfeiture values or their methods of computation for any previously approved policy form which involves only a change in the interest rate or mortality table used to compute nonforfeiture values shall not require refiling of any other provisions of that policy form.
(11) After the effective date of subsection (d-3), any company may file with the commissioner a written notice of its election to comply with the provisions of this subsection after a specified date before January 1, 1989, which shall be the operative date of this subsection for such company. If a company makes no such election, the operative date of this subsection for such company shall be January 1, 1989.
(e) In the case of any plan of life insurance which provides for future premium determination, the amounts of which are to be determined by the insurance company based on then estimates of future experience, or in the case of any plan of life insurance which is of such a nature that minimum values cannot be determined by the methods described in subsections (a), (b), (c), (d), (d-1), (d-2) or (d-3) herein, then:
(1) The commissioner must be satisfied that the benefits provided under the plan are substantially as favorable to policyholders and insureds as the minimum benefits otherwise required by subsections (a), (b), (c), (d), (d-1), (d-2) or (d-3) herein;
(2) the commissioner must be satisfied that the benefits and the pattern of premiums of that plan are not such as to mislead prospective policyholders or insureds;
(3) the cash surrender values and paid-up nonforfeiture benefits provided by such plan must not be less than the minimum values and benefits required for the plan computed by a method consistent with the principles of this standard nonforfeiture law, as determined by regulations promulgated by the commissioner.
(f) Any cash surrender value and any paid-up nonforfeiture benefit, available under any such policy in the event of default in the payment of any premium due at any time other than on the policy anniversary, shall be calculated with allowance for the lapse of time and the payment of fractional premiums beyond the beginning of the policy year in which the default occurs. All values referred to in subsections (b), (c), (d), (d-1), (d-2) and (d-3) may be calculated upon the assumption that any death benefit is payable at the end of the policy year of death. The net value of any paid-up additions, other than paid-up term additions, shall be not less than the amounts used to provide such additions. Notwithstanding the provisions of subsection (b), additional benefits payable: (1) In the event of death or dismemberment by accident or accidental means; (2) in the event of total and permanent disability; (3) as reversionary annuity or deferred reversionary annuity benefits; (4) as term insurance benefits provided by a rider or supplemental policy provision to which, if issued as a separate policy, this section would not apply; (5) as term insurance on the life of a child or on the lives of children provided in a policy on the life of a parent of a child, if such term insurance expires before the child's age is 26, is uniform in amount after the child's age is one, and has not become paid-up by reason of the death of a parent of the child; and (6) as other policy benefits additional to life insurance and endowment benefits, and premiums for all such additional benefits, shall be disregarded in ascertaining cash surrender values and nonforfeiture benefits required by this section, and no such additional benefits shall be required to be included in any paid-up nonforfeiture benefits.
(g) This subsection, in addition to all other applicable subsections of this section, shall apply to all policies issued on or after January 1, 1986. Any cash surrender value available under the policy in the event of default in a premium payment due on any policy anniversary shall be in an amount which does not differ by more than .2% of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at the beginning of each of the first 10 policy years, from the sum of: (1) The greater of zero and the basic cash value hereinafter specified; and (2) the present value of any existing paid-up additions less the amount of any indebtedness to the company under the policy.
The basic cash value shall be equal to the present value, on such anniversary, of the future guaranteed benefits which would have been provided for by the policy, excluding any existing paid-up additions and before deduction of any indebtedness to the company, if there had been no default, less the then present value of the nonforfeiture factors, as hereinafter defined, corresponding to premiums which would have fallen due on and after such anniversary. The effects on the basic cash value of supplemental life insurance or annuity benefits or of family coverage, as described in subsection (b) or (d), whichever is applicable, shall be the same as are the effects specified in subsection (b) or (d), whichever is applicable on the cash surrender values defined in that subsection.
The nonforfeiture factor for each policy year shall be an amount equal to a percentage of the adjusted premium for the policy year, as defined in subsection (d) or (d-3), whichever is applicable. Except as is required by the next succeeding sentence of this paragraph, such percentage:
(a) Must be the same percentage for each policy year between the second policy anniversary and the later of: (1) The fifth policy anniversary; and (2) the first policy anniversary at which there is available under the policy a cash surrender value in an amount, before including any paid-up additions and before deducting any indebtedness, of at least .2% of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at the beginning of each of the first 10 policy years; and
(b) must be such that no percentage after the later of the two policy anniversaries specified in the preceding item (a) may apply to fewer than five consecutive policy years.
No basic cash value may be less than the value which would be obtained if the adjusted premiums for the policy, as defined in subsection (d) or (d-3), whichever is applicable, were substituted for the nonforfeiture factors in the calculation of the basic cash value.
All adjusted premiums and present values referred to in this subsection shall for a particular policy be calculated on the same mortality and interest bases as are used in demonstrating the policy's compliance with the other sections of this act. The cash surrender values referred to in this subsection shall include any endowment benefits provided for by the policy.
Any cash surrender value available other than in the event of default in a premium payment due on a policy anniversary, and the amount of any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment shall be determined in manners consistent with the manners specified for determining the analogous minimum amounts in subsections (a), (b), (c), (d-3), and (f). The amounts of any cash surrender values and of any paid-up nonforfeiture benefits granted in connection with additional benefits such as those listed as items (1) through (6) in subsection (f) shall conform with the principles of this subsection (g).
(h) This section shall not apply to any of the following: (1) Reinsurance; (2) group insurance; (3) pure endowment; (4) annuity or reversionary annuity contract; (5) term policy of uniform amount, which provides no guaranteed nonforfeiture or endowment benefits, or renewal thereof, of 20 years or less expiring before age 71, for which uniform premiums are payable during the entire term of the policy; (6) term policy of decreasing amount, which provides no guaranteed nonforfeiture or endowment benefits, on which each adjusted premium calculated as specified in subsections (d), (d-1), (d-2) and (d-3), is less than the adjusted premium so calculated, on a term policy of uniform amount, or renewal thereof, which provides no guaranteed nonforfeiture or endowment benefits, issued at the same age and for the same initial amount of insurance and for a term of 20 years or less expiring before age 71, for which uniform premiums are payable during the entire term of the policy; (7) policy, which provides no guaranteed nonforfeiture or endowment benefits, for which no cash surrender value, if any, or present value of any paid-up nonforfeiture benefit, at the beginning of any policy year, calculated as specified in subsections (b), (c), (d), (d-1), (d-2) and (d-3), exceeds 2½% of the amount of insurance at the beginning of the same policy year; nor (8) policy which shall be delivered outside this state through an agent or other representative of the company issuing the policy.
For purposes of determining the applicability of this section, the age at expiry for a joint term life insurance policy shall be the age at expiry of the oldest life.
(i) After the effective date of this act, any company may file with the commissioner of insurance a written notice of its election to comply with the provisions of this section other than as provided in subsections (d-1), (d-2), (d-3), (e) and (g) after a specified date. After the filing of such notice, then upon such specified date, which shall be the operative date for such company, such provisions shall become operative with respect to all policies thereafter issued by such company.
(j) Any company, having filed written notices as provided in the preceding subsection (i), and desiring to withdraw from such election as to future policies may file with the commissioner of insurance a written notice of such withdrawal after a specified date, and of its intention to value all its future policies in accordance with the provisions of K.S.A. 40-409(b), and amendments thereto, and to provide nonforfeiture benefits and cash surrender values in future policies in accordance with K.S.A. 40-427. After the filing of such withdrawal notice, then upon such specified date, K.S.A. 40-409(b), and amendments thereto, and K.S.A. 40-427 shall become operative with respect to all policies thereafter issued by such company in this state.
History: L. 1947, ch. 277, § 4; L. 1957, ch. 280, § 2; L. 1959, ch. 213, § 2; L. 1965, ch. 302, § 2; L. 1973, ch. 193, § 2; L. 1978, ch. 175, § 2; L. 1982, ch. 202, § 2; L. 2008, ch. 134, § 1; L. 2015, ch. 10, § 2; July 1.
History: L. 1978, ch. 175, § 4; L. 2002, ch. 158, § 20; Repealed, L. 2004, ch. 18, § 14; July 1, 2006.
(a) In the case of those policies issued prior to the operative date of K.S.A. 40-428 (the standard nonforfeiture law) the loan value referred to in subsection (5) of K.S.A. 40-420, shall be the reserve at the end of the current policy year on the policy and on the dividend additions thereto, if any, exclusive of the reserve on account of return premium insurance and of total and permanent disability and additional accidental death benefits, less a sum not more than two and one-half percentum of the amount insured by the policy and of any dividend additions thereto (the policy to specify the mortality table and rate of interest adopted for computing such reserve). Such policies may further provide that such loan may be deferred for not exceeding six months after the application therefor is made.
(b) In the case of policies issued on or after the operative date of K.S.A. 40-428 (the standard nonforfeiture law) the loan value referred to in subsection (5) of K.S.A. 40-420, shall be the cash surrender value at the end of the current policy year as required by K.S.A. 40-428. The company shall reserve the right to defer such loan, except when made to pay premiums, for six months after application therefor is made.
History: L. 1947, ch. 277, § 5; July 1.
History: L. 1947, ch. 277, § 8; Repealed, L. 1963, ch. 262, § 1; June 30.
For the purpose of this act the due date for the payment of premiums shall be construed to mean the date specified in the policy when any premium will be due and payable without grace, and the premiums shall be deemed to be in default if not paid on or before said date, but this shall not be deemed to preclude the right to pay the premium during the grace period.
History: L. 1947, ch. 277, § 9; July 1.
If any clause, sentence, section, provision, or part of this act shall be adjudged to be unconstitutional or invalid for any reason by any court of competent jurisdiction, such judgment shall not invalidate, impair, or affect the remainder of this act, which shall remain in full force and effect.
History: L. 1947, ch. 277, § 10; July 1.
No policy of group life insurance shall be delivered in this state unless it conforms to one of the following descriptions:
(1) A policy issued by an insurance company organized under the laws of the state of Kansas on its employees and agents, which agents for the purpose of this act only shall be deemed employees, the beneficiaries under such policies to be persons designated by each insured, or a policy issued to an employer, or to the trustees of a fund established by an employer, which employer or trustees shall be deemed the policyholder, to insure employees of the employer for the benefit of persons other than the employer, both subject to the following requirements:
(a) The employees eligible for insurance under the policy shall be all of the employees of the employer, or all of any class or classes thereof determined by conditions pertaining to their employment. The policy may provide that the term "employees" shall include the employees of one or more subsidiary corporations, and the employees, individual proprietors, and partners of one or more affiliated corporations, proprietors or partnerships if the business of the employer and of such affiliated corporations, proprietors or partnerships is under common control through stock ownership, contract or otherwise. The policy may provide that the term "employees" shall include the individual proprietor or partners if the employer is an individual proprietor or a partnership. The policy may provide that the term "employees" shall include retired employees. No director of a corporate employer shall be eligible for insurance under the policy unless such person is otherwise eligible as a bona fide employee of the corporation by performing services other than the usual duties of a director. No individual proprietor or partner shall be eligible for insurance under the policy unless the proprietor or partner is actively engaged in and devotes a substantial part of their time to the conduct of the business of the proprietor or partnership. A policy issued to insure the employees of a public body may provide that the term "employees" shall include elected or appointed officials.
(b) The premium for the policy may be paid by the policyholder, either wholly from the employer's funds or funds contributed by the employer, or partly from such funds and partly from funds contributed by the insured employees or entirely by the employees at their option. A policy on which no part of the premium is to be derived from funds contributed by the insured employees shall insure all eligible employees, or all except any as to whom evidence of individual insurability is not satisfactory to the insurer or except those who reject the coverage in writing.
(c) The amounts of insurance under the policy shall be based upon some plan, precluding individual selection either by the employees or by the employer or trustees.
(2) A policy issued to a creditor, who shall be deemed the policyholder, to insure debtors of the creditor, subject to the following requirements:
(a) The debtors eligible for insurance under the policy shall be all of the debtors of the creditor whose indebtedness is repayable in installments, or all of any class or classes thereof determined by conditions pertaining to the indebtedness or to the purchase giving rise to the indebtedness.
(b) The premium for the policy shall be paid by the policyholder, either from the creditor's funds or from charges collected from the insured debtors, or from both. A policy on which part or all of the premium is to be derived from the collection from the insured debtors of identifiable charges not required of uninsured debtors shall not include, in the class or classes of debtors eligible for insurance, debtors under obligations outstanding at its date of issue without evidence of individual insurability unless at least 75% of the then eligible debtors elect to pay the required charges. A policy on which no part of the premium is to be derived from the collection of such identifiable charges shall insure all eligible debtors, or all except any as to whom evidence of individual insurability is not satisfactory to the insurer.
(c) The policy may be issued only if the group of eligible debtors is then receiving new entrants at the rate of at least 100 persons yearly, or may reasonably be expected to receive at least 100 new entrants during the first policy year, and only if the policy reserves to the insurer the right to require evidence of individual insurability if less than 75% of the new entrants become insured.
(d) The amount of insurance on the life of any debtor shall at no time exceed the amount owed by that debtor which is repayable in installments to the creditor.
(e) The insurance shall be payable to the policyholder. Such payment shall reduce or extinguish the unpaid indebtedness of the debtor to the extent of such payment.
(3) A policy issued to a labor union, which shall be deemed the policyholder, to insure members of such union for the benefit of persons other than the union or any of its officials, representatives or agents, subject to the following requirements:
(a) The members eligible for insurance under the policy shall be all of the members of the union, or all of any class or classes thereof determined by conditions pertaining to their employment, or to membership in the union, or both.
(b) The premium for the policy may be paid by the policyholder, either wholly from the union's funds, or partly from such funds and partly from funds contributed by the insured members specifically for their insurance or entirely by the insured members at their option. A policy on which no part of the premium is to be derived from funds contributed by the insured members specifically for their insurance shall insure all eligible members, or all except any as to whom evidence of individual insurability is not satisfactory to the insurer or except those who reject coverage in writing.
(c) The amounts of insurance under the policy shall be based upon some plan precluding individual selection either by the members or by the union.
(4) A policy issued to the trustees of a fund established in this state by two or more employers if a majority of the employees to be insured of each employer are located within the state, or to the trustees of a fund established by one or more labor unions, or by one or more employers and one or more labor unions, which trustees shall be deemed the policyholder, to insure employees of the employers or members of the unions for the benefit of persons other than the employers or the unions, subject to the following requirements:
(a) The persons eligible for insurance shall be all of the employees of the employers or all of the members of the unions, or all of any class or classes thereof determined by conditions pertaining to their employment, or to membership in the unions, or to both. The policy may provide that the term "employees" shall include retired employees and the individual proprietor or partners if any employer is an individual proprietor or a partnership. No director of a corporate employer shall be eligible for insurance under the policy unless such person is otherwise eligible as a bona fide employee of the corporation by performing services other than the usual duties of a director. No individual proprietor or partner shall be eligible for insurance under the policy unless the proprietor or partner is actively engaged in and devotes a substantial part of their time to the conduct of the business of the proprietor or partnership. The policy may provide that the term "employees" shall include the trustees or their employees, or both, if their duties are principally connected with such trusteeship.
(b) The premium for the policy may be paid by the trustees either wholly from funds contributed by the employer or employers of the insured persons, or by the union or unions, or by both, or partly from such funds and partly from funds contributed by the insured employees or wholly from funds contributed by the employees or members at their option. The policy shall insure all eligible persons, or all except any as to whom evidence of individual insurability is not satisfactory to the insurer or except those who reject coverage in writing.
(c) The amounts of insurance under the policy shall be based upon some plan precluding individual selection either by the insured persons or by the policyholder, employers, or union.
(5) A policy issued to an association which has been organized and is maintained for purposes other than that of obtaining insurance, insuring at least 25 members, employees, or employees of members of the association for the benefit of persons other than the association or its officers. The term "employees" as used herein shall be deemed to include retired employees. The premiums for the policies shall be paid by the policyholder, either wholly from association funds, or funds contributed by the members of such association or by employees of such members or any combination thereof. The amounts of insurance under the policy shall be based upon some plan precluding individual selection either by the insured person or by the association or by the member.
(6) Any policy issued pursuant to this section may be extended to insure the employees against loss due to the death of their spouses, their children, their grandchildren, their spouse's children, their spouse's grandchildren, their parents, their spouse's parents, or any class or classes thereof, subject to the following requirements:
(a) The premium for the insurance may be paid by the policyholder, either from the employer's funds or from funds contributed by the insured employees, or from both. If no part of the premium is to be derived from funds contributed by the employees, all eligible employees, excluding any as to whose family members' evidence of insurability is not satisfactory to the insurer, shall be insured with respect to their spouses, their children, their grandchildren, their spouse's children, their spouse's grandchildren, their parents, * their spouse's parents.
(b) Upon termination of the insurance with respect to the spouse of an employee by reason of the employee's termination of employment or death, the spouse insured pursuant to this section shall have the same conversion rights as to the insurance on such spouse's life as is provided for the employee under K.S.A.
40-434, and amendments thereto.
(c) Notwithstanding the provisions of K.S.A.
40-434, and amendments thereto, only one certificate need be issued for delivery to an insured person if a statement concerning any dependent's coverage is included in such certificate.
(7) A policy may be issued to any other group which the commissioner of insurance finds is the proper subject of a group life insurance policy or contract. Any such group shall be subject to any appropriate conditions or provisions relating thereto which the commissioner may establish or require, consistent with the provisions of this act, and such conditions and provisions shall be included in the policy or contract.
History: L. 1951, ch. 301, § 1; L. 1955, ch. 241, § 1; L. 1957, ch. 281, § 1; L. 1965, ch. 308, § 1; L. 1967, ch. 260, § 1; L. 1969, ch. 233, § 1; L. 1972, ch. 181, § 1; L. 1975, ch. 244, § 1; L. 1977, ch. 159, § 1; L. 1980, ch. 134, § 1; L. 1987, ch. 163, § 1; L. 1988, ch. 153, § 1; L. 1989, ch. 136, § 1; L. 1993, ch. 190, § 3; L. 1994, ch. 67, § 1; L. 1997, ch. 50, § 1; L. 2004, ch. 128, § 16; L. 2006, ch. 122, § 3; L. 2008, ch. 134, § 6; L. 2011, ch. 111, § 1; July 1.
Any policy of group life insurance issued under the authority granted in K.S.A. 40-433 subsection (1) may, at the option of the insurer, contain a provision granting to any employee insured under the policy the inalienable right to irrevocably or revocably assign all rights, privileges, benefits, or other incidents of ownership conferred upon the employee by the policy by filing such assignment with the insurer and the policyholder.
History: L. 1969, ch. 234, § 2; July 1.
No policy of group life insurance shall be delivered in this state unless it contains in substance the following provisions, or provisions which in the opinion of the commissioner are more favorable to the persons insured, or at least as favorable to the persons insured and more favorable to the policyholder: Provided, however, (a) That provisions 6 to 10 inclusive, shall not apply to policies issued to a creditor to insure debtors of such creditor; (b) that the standard provisions required for individual life insurance policies shall not apply to group life insurance policies; and (c) that if the group life insurance policy is on a plan of insurance other than the term plan, it shall contain a nonforfeiture provision or provisions, which in the opinion of the commissioner is or are equitable to the insured persons and to the policyholder, but nothing herein shall be construed to require that group life insurance policies contain the same nonforfeiture provisions as are required for individual life insurance policies:
(1) A provision that the policyholder is entitled to a grace period of thirty-one (31) days for the payment of any premium due except the first, during which grace period the death benefit coverage shall continue in force, unless the policyholder shall have given the insurer written notice of discontinuance in advance of the date of discontinuance and in accordance with the terms of the policy. The policy may provide that the policyholder shall be liable to the insurer for the payment of a pro rata premium for the time the policy was in force during such grace period.
(2) A provision that the validity of the policy shall not be contested, except for nonpayment of premiums, after it has been in force for two (2) years from its date of issue; and that no statement made by any person insured under the policy relating to his insurability shall be used in contesting the validity of the insurance with respect to which such statement was made after such insurance has been in force prior to the contest for a period of two (2) years during such person's lifetime nor unless it is contained in a written instrument signed by him.
(3) A provision that a copy of the application, if any, of the policyholder shall be attached to the policy when issued, that all statements made by the policyholder or by the persons insured shall be deemed representations and not warranties, and that no statement made by any person insured shall be used in any contest unless a copy of the instrument containing the statement is or has been furnished to such person or to his beneficiary.
(4) A provision setting forth the conditions, if any, under which the insurer reserves the right to require a person eligible for insurance to furnish evidence of individual insurability satisfactory to the insurer as a condition to part or all of his coverage.
(5) A provision specifying an equitable adjustment of premiums or of benefits or of both to be made in the event the age of a person insured has been misstated, such provision to contain a clear statement of the method of adjustment to be used.
(6) A provision that any sum becoming due by reason of the death of the person insured shall be payable to the beneficiary designated by the person insured, subject to the provisions of the policy in the event there is no designated beneficiary as to all or any part of such sum living at the death of the person insured, and subject to any right reserved by the insurer in the policy and set forth in the certificate to pay at its option a part of such sum not exceeding two hundred fifty dollars ($250) to any person appearing to the insurer to be equitably entitled thereto by reason of having incurred funeral or other expenses incident to the last illness or death of the person insured.
(7) A provision that the insurer will issue to the policyholder for delivery to each person insured an individual certificate setting forth a statement as to the insurance protection to which he is entitled, to whom the insurance benefits are payable, and the rights and conditions set forth in (8), (9) and (10) following.
(8) A provision that if the insurance, or any portion of it, on a person covered under the policy ceases because of termination of employment or of membership in the class or classes eligible for coverage under the policy, such person shall be entitled to have issued to him by the insurer, without evidence of insurability, an individual policy of life insurance without disability or other supplementary benefits: Provided, Application for the individual policy shall be made, and the first premium paid to the insurer, within thirty-one (31) days after such termination: And provided further, That, (a) the individual policy shall, at the option of such person, be on any one of the forms except term insurance, then customarily issued by the insurer at the age and for the amount applied for; (b) the individual policy shall be in an amount not in excess of the amount of life insurance which ceases because of such termination less, in the case of a person whose membership in the class or classes eligible for coverage terminates but who continues in employment in another class, the amount of any life insurance for which such person is or becomes eligible under any other group policy within thirty-one (31) days after such termination: Provided, That any amount of insurance which shall have matured on or before the date of such termination as an endowment payable to the person insured, whether in one sum or in installments or in the form of an annuity, shall not, for the purposes of this provision, be included in the amount which is considered to cease because of such termination; and (c) the premium on the individual policy shall be at the insurer's then customary rate applicable to the form and amount of the individual policy, to the class of risk to which such person then belongs, and to his age attained on the effective date of the individual policy.
(9) A provision that if the group policy terminates or is amended so as to terminate the insurance of any class of insured persons, every person insured thereunder at the date of such termination whose insurance terminates and who has been so insured for at least five (5) years prior to such termination date shall be entitled to have issued to him by the insurer an individual policy of life insurance, subject to the same conditions and limitations as are provided by (8) above, except that the group policy may provide that the amount of such individual policy shall not exceed the smaller of (a) the amount of the person's life insurance protection ceasing because of the termination or amendment of the group policy, less the amount of any life insurance for which he is or becomes eligible under any group policy issued or reinstated by the same or another insurer within thirty-one (31) days after such termination, and (b) two thousand dollars ($2,000).
(10) A provision that if a person insured under the group policy dies during the period within which he would have been entitled to have an individual policy issued to him in accordance with (8) or (9) above and before such an individual policy shall have become effective, the amount of life insurance which he would have been entitled to have issued to him under such individual policy shall be payable as a claim under the group policy, whether or not application for the individual policy or the payment of the first premium therefor has been made.
(11) In the case of a policy issued to a creditor to insure debtors of such creditor, a provision that the insurer will furnish to the policyholder for delivery to each debtor insured under the policy a form which shall contain the name and home office address of the insurer; the name or names of the debtor; the premium paid or the premium payable and method of computation thereof, or other amount of payment, if any is required of the debtor; a statement specifying when the debtor's insurance becomes effective and when and under what conditions it shall terminate, or in lieu thereof, the month, day and year the insurance begins and terminates; any exceptions, limitations, or restrictions; and a statement that the life of the debtor is insured under the policy and that any death benefit paid thereunder by reason of his death shall be applied first to reduce or extinguish the indebtedness.
History: L. 1951, ch. 301, § 2; L. 1969, ch. 234, § 1; July 1.
If any individual insured under a group life insurance policy delivered in this state becomes entitled under the terms of such policy to have an individual policy of life insurance issued to such insured without evidence of insurability, subject to making application and payment of the first premium within the period specified in such policy, and if such individual is not given notice of the existence of such right at least 15 days prior to the expiration date of such period, then, in such event the individual shall have an additional period within which to exercise such right, but, except as provided in subsection (10) of K.S.A. 40-434, and amendments thereto, nothing contained in this section shall be construed to continue any insurance beyond the period provided in such policy. The additional period shall expire 15 days next after the individual is given such notice but in no event shall such additional period extend beyond 60 days next after the expiration date of the period provided in such policy. Written notice presented to the individual or mailed by the policyholder to the last known address of the individual or mailed by the insurer to the last known address of the individual as furnished by the policyholder shall constitute notice for the purpose of this section.
History: L. 1951, ch. 301, § 3; L. 1994, ch. 17, § 1; March 17.
(a) Any domestic life insurance company may after adoption of a resolution by its board of directors, establish one or more separate accounts, and may allocate to such separate account or accounts any amounts, including without limitation proceeds applied under optional modes of settlement or under dividend options, paid to the company which are to be applied under the terms of an individual or group life or annuity contract, funding agreement or guaranteed investment contract, issued in connection therewith to provide benefits payable in fixed or in variable amounts, or in both, and such contracts may provide other benefits.
(b) The amounts allocated to each such account and accumulations thereon may be invested and reinvested in any class of investments which may be authorized in the contracts without regard to any requirements or limitations prescribed by the laws of this state governing the investments of life insurance companies. To the extent that the company's reserve liability with regard to (1) benefits guaranteed as to amount and duration, and (2) funds guaranteed as to principal amount or stated rate of interest is maintained in any separate account, a portion of the assets of such separate account at least equal to such reserve liability shall be invested in accordance with the laws of this state governing the investments of life insurance companies. The investments in such separate account or accounts shall not be taken into account in applying the investment limitations applicable to other investments of the company.
(c) The income, if any, and gains and losses, realized or unrealized, on each account shall be credited to or charged against the amounts allocated to the account in accordance with the contracts, without regard to other income, gains or losses of the company.
(d) Assets allocated to a separate account shall be valued at their market value on the date of valuation, or if there is no readily available market, then in accordance with the terms of the contracts. The portion of the assets of such separate account at least equal to the company's reserve liability with regard to the guaranteed benefits and funds referred to in subsection (b) hereof, if any, shall be valued in accordance with the rules otherwise applicable to the company's assets.
(e) Amounts allocated to a separate account in the exercise of the power granted by this act shall be owned by the company, and the company shall not be, nor hold itself out to be, a trustee with respect to such amounts. If and to the extent so provided under the applicable contracts, that portion of the assets of any such separate account equal to the reserves and other contract liabilities with respect to such account shall not be chargeable with liability arising out of any other business the company may conduct.
(f) The company shall maintain in each such separate account assets with a value at least equal to the reserves and other contract liabilities with respect to such account, except as may otherwise be approved by the commissioner of insurance. No sale, exchange or other transfer of assets may be made by a company between any of its separate accounts or between any other investment account and one or more of its separate accounts unless, in case of a transfer into a separate account, such transfer is made solely to establish the account or to support the operation of the contracts with respect to the separate account to which the transfer is made, and unless such transfer, whether into or from a separate account, is made (1) by a transfer of cash, or (2) by a transfer of securities having a readily determinable market value, provided that such transfer of securities is approved by the commissioner. The commissioner may approve other transfers among such accounts if, in his opinion, such transfers would not be inequitable.
(g) If any contract provides for payment of benefits in variable amounts, it shall contain a statement of the essential features of the procedure to be followed by the company in determining the dollar amount of such variable benefits. Any such contract, including a group contract, and any certificate issued thereunder shall state that such dollar amount may decrease or increase and shall contain on its first page a statement that the benefits thereunder are on a variable basis.
(h) A foreign or alien life insurance company authorized to do business in this state may be authorized to issue or deliver contracts in this state providing for payments which vary directly according to investment experience only if authorized to issue such contracts under the laws of its domicile.
(i) No domestic life insurance company shall be authorized to issue such contracts, and no foreign or alien life insurance company shall be authorized to issue or deliver such contracts in this state, until such company has satisfied the commissioner that its condition and methods of operation in connection with the issuance of such contracts will not be such as to render its operation hazardous to the public or to its policyholders in this state. In determining the qualification of a company to issue or deliver such contracts in this state, the commissioner shall consider, among other things, the history and financial condition of the company; the character, responsibility, and general fitness of the officers and directors of the company; and in the case of a foreign or alien company, whether the regulation provided by the laws of its domicile provides a degree of protection to policyholders and the public substantially equal to that provided by this section and the rules and regulations issued by the commissioner pursuant thereto. The state of entry of an alien company shall be deemed its place of domicile for this purpose.
(j) Every life insurance company which issues or delivers such contracts in this state shall file with the commissioner, in addition to the annual statement required by K.S.A. 40-225, and amendments thereto, such other periodic or special reports as the commissioner may prescribe.
(k) Any domestic life insurance company which establishes one or more separate accounts pursuant to this section, may amend its charter or bylaws to provide for special voting rights and procedures for the owners of contracts under such separate account relating to investment policy, investment advisory services and selection of independent public accountants, in relation to the administration of the assets in any such separate account and such other matters as the company deems necessary in the management of the assets in any such separate account. This provision shall not in any way affect existing laws pertaining to the voting rights of the company's policyholders.
(l) The commissioner shall have the sole and exclusive jurisdiction and authority to regulate the issuance and sale of such contracts and to promulgate such reasonable rules and regulations as may be necessary to carry out the purposes and provisions of this act, and such contracts, the companies which issue them, and the agents or other persons who sell them, shall not be subject to the provisions of article 12 of chapter 17 of the Kansas Statutes Annotated, and amendments thereto, nor to the jurisdiction of the securities commissioner of this state.
History: L. 1967, ch. 259, § 1; L. 1968, ch. 382, § 1; L. 1972, ch. 182, § 1; L. 2005, ch. 42, § 2; July 1.
Except for subsections (1), (4), (5), (6), (7), (8), (9) and (11) of K.S.A. 40-420; subsections (1), (2) and (3) of K.S.A. 40-421; K.S.A. 40-427, 40-428, 40-428a, 40-429 and subsection (1) of K.S.A. 40-434, and except as otherwise provided in this act, all pertinent provisions of the insurance laws of this state shall apply to separate accounts and contracts relating thereto. Any individual variable life insurance or annuity contract, delivered or issued for delivery in this state shall contain grace, reinstatement and nonforfeiture provisions appropriate to such a contract. Any group variable life insurance contract, delivered or issued for delivery in this state, shall contain a grace provision appropriate to such a contract. The reserve liability for variable contracts shall be established in accordance with actuarial procedures that recognize the variable nature of the benefits provided and any mortality guarantees.
History: L. 1967, ch. 259, § 2; L. 1968, ch. 382, § 2; L. 1972, ch. 182, § 2; L. 1978, ch. 175, § 3; July 1.
If any provision of this act or application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of the act which can be given effect without the invalid provision or application, and to this end the provisions of this act are declared to be severable.
History: L. 1967, ch. 259, § 3; July 1.
No provision in K.S.A. 40-434 and 40-435 or any other law shall be construed as prohibiting a person whose life is insured under a policy of group life or accident and health insurance or the policyowner of an individual life or accident and health policy from making an assignment of all or any part of his rights and privileges under such policy including specifically, but not by way of limitation, any right to designate a beneficiary or beneficiaries thereunder and any right to have an individual policy issued to him in accordance with subsections (8), (9) or (10) of K.S.A. 40-434 and 40-435. Subject to the terms of the policy relating to assignment of such rights and privileges thereunder, such an assignment by an insured or the policyowner, made either before or after the effective date of this section, is valid for the purpose of vesting in the assignee, in accordance with any provisions included therein as to the time at which it is to be effective, all of such rights and privileges so assigned, but without prejudice to the insurer on account of any payment it may make or individual policy it may issue in accordance with subsections (8), (9) or (10) of K.S.A. 40-434 and 40-435 prior to receipt of notice of the assignment.
History: L. 1969, ch. 239, § 1; July 1.
This act acknowledges, declares and codifies the existing right of assignment of interests under individual and group life and accident and health insurance policies.
History: L. 1969, ch. 239, § 2; July 1.
A policy of life insurance may designate as beneficiary a trustee or trustees named or to be named by will, if the designation is made in accordance with the provisions of the policy and the requirements of the insurance company. Immediately after the proving of the will the proceeds of such insurance shall be paid to the trustee or trustees named therein to be held and disposed of under the terms of the will as they exist at the death of the testator, but if no qualified trustee makes claim to the proceeds from the insurance company within one (1) year after the death of the insured, or if satisfactory evidence is furnished the insurance company within such one-year period showing that no trustee can qualify to receive the proceeds, payment shall be made by the insurance company to those thereafter entitled. The proceeds of the insurance as collected by the trustee or trustees shall not be subject to debts of the insured to any greater extent than if such proceeds were payable to any other named beneficiary other than the estate of the insured. Nothing in this section shall be construed as invalidating previous life insurance policy beneficiary designations naming trustees of trusts established by will.
History: L. 1970, ch. 178, § 1; L. 2010, ch. 44, § 18; July 1.
No individual policy of life insurance shall be issued or delivered to any person in this state nor shall any application, rider or endorsement be used in connection therewith, until a copy of the form thereof has been filed with the commissioner of insurance.
History: L. 1971, ch. 155, § 1; July 1.
No such policy shall be issued, nor shall any application, rider or endorsement be used in connection therewith, until such policy, application, rider or endorsement has been approved by the commissioner or until thirty (30) days after the filing of any such form, whichever first occurs.
History: L. 1971, ch. 155, § 2; July 1.
The commissioner may, within 30 days after the filing of any such form, disapprove such form if it contains a provision or provisions which are unjust, unfair, inequitable, misleading, deceptive or encourage misrepresentation of such policy. If the commissioner notifies the insurer who has filed any such form that it does not comply with the provisions of this section or K.S.A. 40-420 and 40-421, and amendments thereto, it shall be unlawful thereafter for such insurer to issue such form or use it in connection with any policy. In such notice, the commissioner shall specify the reasons for disapproval and state that a hearing will be granted within 20 days after request in writing by the insurer. Hearings under this section shall be conducted in accordance with the provisions of the Kansas administrative procedure act.
History: L. 1971, ch. 155, § 3; L. 1988, ch. 356, § 77; July 1, 1989.
The commissioner may at any time, after a hearing conducted in accordance with the provisions of the Kansas administrative procedure act, of which not less than 20 days written notice shall have been given to the insurer, withdraw approval of any such form on any of the grounds stated in this act. It shall be unlawful for the insurer to issue such form or use it in connection with any policy after the effective date of such withdrawal of approval.
History: L. 1971, ch. 155, § 4; L. 1988, ch. 356, § 78; July 1, 1989.
History: L. 1971, ch. 155, § 5; Repealed, L. 1986, ch. 318, § 146; July 1.
(a) Notwithstanding any other provision of law, each insurer admitted to transact life insurance in the state of Kansas which fails or refuses to pay the proceeds of, or payments under, any policy of life insurance issued by it within 10 days after the date of receipt of due proof of death in the manner and form requested by the policy, shall pay interest on any moneys payable and unpaid after the expiration of such 10-day period at an annual rate of not less than the current rate of interest on death proceeds left on deposit with the insurer plus 1% computed from the date of said receipt.
(b) Nothing in this section shall be construed to allow any insurer admitted to transact life insurance in this state to withhold payment of money payable under a life insurance policy to any beneficiary for a period longer than reasonably necessary to transmit such payment.
(c) In any case in which interest on the proceeds of, or payments under, any policy of life insurance becomes payable pursuant to subsection (a), the insurer shall notify the named beneficiary or beneficiaries at their last known address that interest will be paid on the proceeds of, or payments under, such policy from the date of receipt of due proof of death of the named insured. Such notice shall specify the rate of interest to be paid.
(d) This section shall not require the payment of interest in any case in which the beneficiary elects in writing delivered to the insurer to receive the proceeds of, or payments under, the policy by any means other than a lump sum payment thereof.
(e) The commissioner of insurance may adopt such rules and regulations necessary to provide for the enforcement and administration of this act.
History: L. 1977, ch. 155, § 1; L. 1987, ch. 164, § 1; July 1.
(a) Any life insurance company that was originally incorporated under the laws of this state on March 28, 1907, may, with the approval of the commissioner of insurance, transfer its domicile to any other state in which it is admitted to transact the business of insurance. Every such transferring insurer shall notify the commissioner of insurance of the details of the proposed transfer and shall file promptly any resulting amendments to its articles of incorporation or bylaws. The commissioner of insurance may require additional information, hold hearings, and take such other action as may be necessary to evaluate the proposed transfer. The commissioner of insurance shall approve any such proposed transfer and issue written evidence thereof in the form required by the state to which the transfer shall be made, unless it is determined that such transfer is not in the interest of the policyholders of this state. Upon such transfer the company shall cease to be a domestic insurer and shall be admitted to transact the business of insurance in this state if qualified as a foreign insurer. Upon such transfer the transferring company shall no longer be required to deposit securities pursuant to K.S.A. 40-401, 40-404 or any other provision of chapter 40 of the Kansas Statutes Annotated, and amendments thereto; however, the commissioner of insurance shall retain an amount of securities equal to the legal reserves on all policies owned by residents of this state in force at the time of such transfer, and the transferring company shall periodically deposit with the commissioner of insurance additional securities so that at all times the amount on deposit is at least equal to the legal reserves of such policies.
(b) Upon approving any such transfer, the commissioner of insurance shall file with the secretary of state, in accordance with subsections (c) and (d) of K.S.A. 17-6003, and amendments thereto, a certificate stating that the commissioner of insurance has approved transfer of the company's domicile to another state and the state to which the company will transfer its domicile. One hundred and eighty days after the filing of such certificate, or on such earlier date as may be communicated in writing by the president and secretary of the transferring company to the secretary of state, the secretary of state shall issue a certificate that the company has transferred its domicile to the state designated by the commissioner of insurance, and thereupon the existence of the corporation as a domestic corporation shall terminate, if the certificate of the secretary of state shall be recorded in the office of the register of deeds of the county in which the corporation maintained its registered office in this state in compliance with the requirements of subsection (d) of K.S.A. 17-6003, and amendments thereto.
(c) At the discretion of the commissioner of insurance, the certificate of authority, agents' appointments and certificates, rates, forms and other documents required as a precedent to the holding of a Kansas certificate of authority, which are in existence at the time any insurer transfers its domicile to any other state pursuant to subsections (a) and (b), shall continue in full force and effect upon such transfer if such insurer remains duly qualified to transact the business of insurance in this state. All in force policies of any transferring insurer shall remain in full force and effect and shall be endorsed as necessary to display the new name and location of the company.
(d) The transferring company shall not be treated as discontinuing its business for purposes of K.S.A. 40-248 or any other provision of chapter 40 of the Kansas Statutes Annotated, and amendments thereto. The transferring company shall not be treated as uniting, merging or consolidating with any other company for purposes of K.S.A. 40-309 or any other provision of chapter 40 of the Kansas Statutes Annotated, and amendments thereto. The transfer shall not be treated as a merger or acquisition of control for purposes of K.S.A. 40-3304 or any other provision of chapter 40 of the Kansas Statutes Annotated and amendments thereto.
(e) The commissioner of insurance of this state may promulgate rules and regulations to carry out the purposes of this act.
History: L. 1990, ch. 155, § 1; July 1.
Whenever any creditor substitutes or replaces a policy of life insurance covering debtors of a creditor in exchange for charges collected from the insured debtors, the insurance company issuing the replacement or substitute policy shall not be entitled to contest the payment of benefits in the event of the debtor's death to any greater extent than the replaced life insurance would have been contestable by the insurer providing the replaced coverage had a replacement not occurred. This prohibition shall not apply to any amount of insurance provided by the replacement policy which exceeds the amount of insurance provided by the replaced policy.
History: L. 1990, ch. 156, § 1; July 1.
(a) A person of competent legal capacity may insure such person's own life and, either at the time the contract of insurance is entered into or thereafter, name any person as the beneficiary thereof irrespective of whether the person named has an insurable interest in the life of the insured. However, except as provided in this section, no person shall procure or cause to be procured any insurance policy upon the life of another person unless the benefits under such policy are payable to the personal representative of the person insured, or to a person having, at the time such contract of insurance was entered into, an insurable interest in the person insured.
(b) A charitable, benevolent, educational and religious institution qualified under section 501(c) of the internal revenue code shall be deemed to have an insurable interest in the life of an individual insured who has executed a written consent to the assignment of the insurance contract to such institution if such institutional assignee is named as the irrevocable beneficiary thereof.
(c) If the beneficiary, assignee or other payee under any contract made in violation of this section receives from the insurer any benefits thereunder accruing upon the death of the person insured, the personal representative of the insured may maintain an action to recover such benefits from the person so receiving the benefits.
(d) Life insurance contracts may be entered into in which the person paying the consideration has no insurable interest in the life of the person insured if a charitable, benevolent, educational or religious institution qualified under section 501(c) of the internal revenue code is irrevocably designated as the beneficiary. In making such contracts the person paying the premium shall make and sign the application therefor as owner. The application must also be signed by the person whose life is to be insured. Such a contract shall be valid and binding among the parties thereto notwithstanding the absence otherwise of an insurable interest in the life of the person insured.
(e) The provisions of this section shall apply to all insurance contracts in force on and after the effective date of this act and to the procurement, assignment and designation of beneficiaries thereof whenever made.
History: L. 1991, ch. 123, § 1; April 25.
(a) When an application for an individual life insurance policy and an initial premium therefor has been received by an insurance company or agent acting on behalf of such company, the coverage for which application is made shall, subject to the limitations in subsection (b), be deemed to be temporarily in effect until the insurance company or agent has, in the event of an adverse underwriting decision, as defined in K.S.A. 40-2,111, and amendments thereto, notified in writing the applicant of such adverse underwriting decision and returned any unearned premium in accordance with K.S.A. 40-2,112, and amendments thereto.
(b) When an application for an individual life insurance policy and an initial premium therefor has been received, the receipt for the premium shall be in writing and may:
(1) Exclude coverage if the proposed insured commits suicide;
(2) void coverage if the application contains material misrepresentation or is fraudulently completed;
(3) limit the coverage otherwise provided by subsection (a) by specifying for each proposed insured the amount and type of temporary coverage granted; and
(4) void coverage if a check or draft received in payment of the premium is not honored for payment when presented.
(c) When an application for an individual life insurance policy and an initial premium therefor has been received, the receipt for the premium shall be in writing and provide for a refund of any unearned premium pursuant to K.S.A. 40-2,112, and amendments thereto.
History: L. 1992, ch. 236, § 1; July 1.
(a) An employer, or a trust which is sponsored by an employer for the benefit of its employees, shall have an insurable interest in each of the lives of the employer's employees, directors or retired employees. Notwithstanding the provisions of K.S.A. 40-433, and amendments thereto, the employer or trust may insure such employees', directors' or retired employees' lives for such employer's or trust's benefit on an individual or group basis with the consent of the insured.
(b) The consent requirement of subsection (a) shall be deemed to be satisfied if: (1) The employee, director or retired employee is provided with a written notice that the employer or trust intends to obtain life insurance coverage with respect to such person's life; and (2) the employee, director or retired employee fails to provide written notification to the employer or trust, within 30 days from the date that the notice was transmitted, that such person does not consent to the employer obtaining life insurance coverage on such person's life. It shall be unlawful for the employer or trust to retaliate against any person for refusing to consent to the issuance of life insurance on such person's life.
(c) The extent of the employer's or trust's insurable interest in nonmanagement and retired employees shall be limited to an amount commensurate with the aggregate projected liabilities to such employees under all employee welfare benefit plans, as defined in 29 U.S.C. § 1002(1), calculated in accordance with generally accepted actuarial principles.
(d) For purposes of this section, "employer", means any individual, sole proprietorship, partnership, limited liability company, corporation or any other entity that is legally doing business in this state; the term shall also include all entities or persons which are controlled by or affiliated with any of the foregoing. The determination of whether any entity or person is controlled by or affiliated with another shall be made by applying the principles set forth in subsections (b) or (c) of section 414 of the internal revenue code of 1986, as in effect on January l, 1993, except that all references therein to "80%" shall be changed to 51%.
(e) This section shall not be interpreted to define all instances in which an insurable interest exists.
(f) The provisions of this section shall apply to all insurance contracts in force on or after the effective date of this section.
History: L. 1993, ch. 190, § 1; April 22.
(a) Determination of the existence and extent of the insurable interest under any life insurance policy shall be made at the time the contract of insurance becomes effective but need not exist at the time the loss occurs. In the case of life insurance policies issued or renewed for a specific term, an insurable interest shall not exist for any policy term with respect to any person previously insured by the policy who has, in writing, requested the insurer to terminate or nonrenew the insurance applicable to such person's life.
(b) Notwithstanding the provisions of subsection (a), an employer's or a trust's insurable interest in any employee, director or previous employee cannot be terminated by such employee, director or previous employee with respect to employee benefit plans described in 29 U.S.C. § 1002(3).
History: L. 1993, ch. 190, § 2; April 22.
For purposes of this act: (a) "Annuity issuer" means an insurer that has issued a contract to fund periodic payments under a structured settlement.
(b) "Dependents" include a payee's spouse and minor children and all other persons for whom the payee is legally obligated to provide support, including alimony.
(c) "Discounted present value" means the present value of future payments determined by discounting such payments to the present using the most recently published applicable federal rate for determining the present value of an annuity, as issued by the United States internal revenue service.
(d) "Gross advance amount" means the sum payable to the payee or for the payee's account as consideration for a transfer of structured settlement payment rights before any reductions for transfer expenses or other deductions to be made from such consideration.
(e) "Independent professional advice" means advice of an attorney, certified public accountant, actuary or other licensed professional adviser.
(f) "Interested parties" means, with respect to any structured settlement, the payee, any beneficiary irrevocably designated under the annuity contract to receive payments following the payee's death, the annuity issuer, the structured settlement obligor and any other party that has continuing rights or obligations under such structured settlement.
(g) "Net advance amount" means the gross advance amount less the aggregate amount of the actual and estimated transfer expenses required to be disclosed under subsection (e) of K.S.A. 40-462, and amendments thereto.
(h) "Payee" means an individual who receives tax free payments under a structured settlement and proposes to make a transfer of payment rights thereunder.
(i) "Periodic payments" include both recurring payments and scheduled future lump sum payments.
(j) "Qualified assignment agreement" means an agreement providing for a qualified assignment within the meaning of section 130 of the United States internal revenue code.
(k) "Responsible administrative authority" means, with respect to a structured settlement, any government authority vested by law with exclusive jurisdiction over the settled claim resolved by such structured settlement.
(l) "Settled claim" means the original tort claim resolved by a structured settlement.
(m) "Structured settlement" means an arrangement for periodic payment of damages for personal injuries or sickness established by settlement or judgment in resolution of a tort claim.
(n) "Structured settlement agreement" means the agreement, judgment, stipulation or release embodying the terms of a structured settlement.
(o) "Structured settlement obligor" means, with respect to any structured settlement, the party that has the continuing obligation to make periodic payments to the payee under a structured settlement agreement or a qualified assignment agreement.
(p) "Structured settlement payment rights" means rights to receive periodic payments under a structured settlement, whether from the structured settlement obligor or the annuity issuer, where:
(1) The payee is domiciled in this state or the domicile or principal place of business of the structured settlement obligor or the annuity issuer is located in this state;
(2) the structured settlement agreement was approved by a court or responsible administrative authority in this state; or
(3) the structured settlement agreement is expressly governed by the laws of this state.
(q) "Terms of the structured settlement" include the terms of the structured settlement agreement, the annuity contract, any qualified assignment agreement and any order or other approval of any court or responsible administrative authority or other government authority that authorized or approved such structured settlement.
(r) "Transfer" means any sale, assignment, pledge, hypothecation or other alienation or encumbrance of structured settlement payment rights made by a payee for consideration. Transfer does not include the creation or perfection of a security interest in structured settlement payment rights under a blanket security agreement entered into with an insured depository institution, in the absence of any action to redirect the structured settlement payments to such insured depository institution, or an agent or successor in interest thereof, or otherwise to enforce such blanket security interest against the structured settlement payment rights.
(s) "Transfer agreement" means the agreement providing for a transfer of structured settlement payment rights.
(t) "Transfer expenses" means all expenses of a transfer that are required under the transfer agreement to be paid by the payee or deducted from the gross advance amount, including, without limitation, court filing fees, attorneys fees, escrow fees, lien recordation fees, judgment and lien search fees, finders' fees, commissions and other payments to a broker or other intermediary. Transfer expenses do not include any preexisting obligations of the payee payable for the payee's account from the proceeds of a transfer.
(u) "Transferee" means a party acquiring or proposing to acquire structured settlement payment rights through a transfer.
History: L. 2005, ch. 57, § 1; July 1.
The transferee shall provide to the payee a separate disclosure statement not less than three days prior to the date on which a payee signs a transfer agreement. Such disclosure statement shall set forth in bold type no smaller than 14 points:
(a) The amounts and due dates of the structured settlement payments to be transferred.
(b) The aggregate amount of such payments.
(c) The discounted present value of the payments to be transferred, which shall be identified as the calculation of current value of the transferred structured settlement payments under federal standards for valuing annuities, and the amount of the applicable federal rate used in calculating such discounted present value.
(d) The gross advance amount.
(e) An itemized listing of all applicable transfer expenses, other than attorneys' fees and related disbursements payable in connection with the transferee's application for approval of the transfer, and the transferee's best estimate of the amount of any such fees and disbursements.
(f) The net advance amount.
(g) The amount of any penalties or liquidated damages payable by the payee in the event of any breach of the transfer agreement by the payee.
(h) A statement that the payee has the right to cancel the transfer agreement, without penalty or further obligation, not later than the third business day after the date the agreement is signed by the payee.
History: L. 2005, ch. 57, § 2; July 1.
(a) No direct or indirect transfer of structured settlement payment rights shall be effective and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to any transferee of structured settlement payment rights unless the transfer has been approved in advance in a final court order or order of a responsible administrative authority based on express findings by such court or responsible administrative authority that the:
(1) Transfer is in the best interest of the payee, taking into account the welfare and support of the payee's dependents;
(2) payee has been advised in writing by the transferee to seek independent professional advice regarding the transfer and has either received such advice or knowingly waived such advice in writing; and
(3) transfer does not contravene any applicable statute or the order of any court or other government authority.
History: L. 2005, ch. 57, § 3; July 1.
Following a transfer of structured settlement payment rights under this act: (a) The structured settlement obligor and the annuity issuer shall be discharged and released from any and all liability for the transferred payments as to all parties except the transferee.
(b) The transferee shall be liable to the structured settlement obligor and the annuity issuer:
(1) If the transfer contravenes the terms of the structured settlement, for any taxes incurred by such parties as a consequence of the transfer; and
(2) for any other liabilities or costs, including reasonable costs and attorneys' fees, arising from compliance by such parties with the order of the court or responsible administrative authority or arising as a consequence of the transferee's failure to comply with this act.
(c) Neither the annuity issuer nor the structured settlement obligor may be required to divide any periodic payment between the payee and any transferee or assignee or between two or more transferees or assignees.
(d) Any further transfer of structured settlement payment rights by the payee may be made only after compliance with all of the requirements of this act.
History: L. 2005, ch. 57, § 4; July 1.
(a) An application for approval of a transfer of structured settlement payment rights shall be made by the transferee and may be brought in:
(1) The county in which the payee resides;
(2) the county in which the structured settlement obligor or the annuity issuer maintains its principal place of business; or
(3) any court or before any responsible administrative authority which approved the structured settlement agreement.
(b) The transferee shall file with the court or responsible administrative authority and serve on all interested parties a notice of the proposed transfer and the application for its authorization not less than 20 days prior to the scheduled hearing on any application for approval of a transfer of structured settlement payment rights under K.S.A. 40-463, and amendments thereto. Such notice shall include:
(1) A copy of the transferee's application;
(2) a copy of the transfer agreement;
(3) a copy of the disclosure statement required under K.S.A. 40-462, and amendments thereto;
(4) a listing of each of the payee's dependents, together with each dependent's age;
(5) notification that any interested party is entitled to support, oppose or otherwise respond to the transferee's application, either in person or by counsel, by submitting written comments to the court or responsible administrative authority or by participating in the hearing; and
(6) notification of the time and place of the hearing and notification of the manner in which and the time, which shall not be less than 15 days after service of the transferee's notice, by which written responses to the application must be filed in order to be considered by the court or responsible administrative authority.
History: L. 2005, ch. 57, § 5; July 1.
(a) The provisions of this act may not be waived by any payee.
(b) Any transfer agreement entered into by a payee who resides in this state on or after the effective date of this act shall provide that disputes under such transfer agreement, including any claim that the payee has breached the agreement, shall be determined in and under the laws of this state. No such transfer agreement shall authorize the transferee or any other party to confess judgment or consent to entry of judgment against the payee.
(c) No transfer of structured settlement payment rights shall extend to any payments that are life-contingent unless, prior to the date on which the payee signs the transfer agreement, the transferee has established and has agreed to maintain procedures reasonably satisfactory to the annuity issuer and the structured settlement obligor for:
(1) Periodically confirming the payee's survival; and
(2) giving the annuity issuer and the structured settlement obligor prompt written notice in the event of the payee's death.
(d) No payee who proposes to make a transfer of structured settlement payment rights shall incur any penalty, forfeit any application fee or other payment, or otherwise incur any liability to the proposed transferee or any assignee based on any failure of such transfer to satisfy the conditions of this act.
(e) No provision of this act shall be construed to authorize any transfer of structured settlement payment rights in contravention of any law or to imply the validity of any transfer under a transfer agreement entered into prior to the effective date of this act.
(f) Compliance with the requirements of K.S.A. 40-462, and amendments thereto, and fulfillment of the conditions of K.S.A. 40-463, and amendments thereto, shall be solely the responsibility of the transferee in any transfer of structured settlement payment rights. Neither the structured settlement obligor nor the annuity issuer shall bear any responsibility for, or any liability arising from, non-compliance with such requirements or failure to fulfill such conditions.
History: L. 2005, ch. 57, § 6; July 1.
(a) K.S.A. 40-461 through 40-467, and amendments thereto, shall be known as and may be cited as the structured settlement protection act.
(b) No provision of this act shall apply to any settlement of any claim for or award of workers compensation.
History: L. 2005, ch. 57, § 7; July 1.
(a) K.S.A. 40-4,101 through 40-4,113, and amendments thereto, shall be known as the standard nonforfeiture law for individual deferred annuities.
(b) For the purposes of this act, the term "commissioner" shall mean the commissioner of insurance.
History: L. 2004, ch. 18, § 1; July 1.
This act shall not apply to any reinsurance, group annuity purchased under a retirement plan or plan of deferred compensation established or maintained by an employer, including a partnership or sole proprietorship, or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under Section 408 of the federal internal revenue code, premium deposit fund, variable annuity, investment annuity, immediate annuity, any deferred annuity contract after annuity payments have commenced or reversionary annuity, nor to any contract which shall be delivered outside this state through an agent or other representative of the company issuing the contract.
History: L. 2004, ch. 18, § 2; July 1.
(a) Except as stated in K.S.A. 40-4,102, and amendments thereto, in the case of any annuity contract issued on or after the operative date of this act as defined in K.S.A. 40-4,113, and amendments thereto, no annuity contract, shall be delivered or issued for delivery in this state unless such annuity contract contains in substance the following provisions, or corresponding provisions which in the opinion of the commissioner are at least as favorable to the holder of such annuity contract, upon cessation of payment of considerations under the annuity contract:
(1) That upon cessation of payment of considerations under an annuity contract, or upon the written request of the owner of an annuity contract, the company shall grant a paid-up annuity benefit on a plan stipulated in the contract of such value as is specified in K.S.A. 40-4,105, 40-4,106, 40-4,107, 40-4,108 and 40-4,110, and amendments thereto;
(2) if an annuity contract provides for a lump sum settlement at maturity, or at any other time, that upon surrender of such annuity contract at or prior to the commencement of any annuity payments, the company shall pay in lieu of a paid-up annuity benefit a cash surrender benefit of such amount as is specified in K.S.A. 40-4,105, 40-4,106, 40-4,108 and 40-4,110, and amendments thereto. The company may reserve the right to defer the payment of the cash surrender benefit for a period not to exceed six months after demand therefor with surrender of the annuity contract after making a written request to and receiving written approval from the commissioner. The request shall address the necessity and equitability to all policyholders of the deferral;
(3) a statement of the mortality table, if any, and interest rates used in calculating any minimum paid-up annuity, cash surrender or death benefits that are guaranteed under the annuity contract, together with sufficient information to determine the amounts of the benefits; and
(4) a statement that any paid-up annuity, cash surrender or death benefits that may be available under the annuity contract are not less than the minimum benefits required by any statute of the state in which the annuity contract is delivered and an explanation of the manner in which the benefits are altered by the existence of any additional amounts credited by the company to the annuity contract, any indebtedness to the company on the annuity contract or any prior withdrawals from or partial surrenders of the annuity contract.
(b) Notwithstanding the requirements of this section, a deferred annuity contract may provide that if no considerations have been received under a contract for a period of two full years and the portion of the paid-up annuity benefit at maturity on the plan stipulated in the annuity contract arising from prior consideration paid would be less than $20 monthly, the company may, at its option, terminate the annuity contract by payment in cash of the then present value of the portion of the paid-up annuity benefit, calculated on the basis on the mortality table, if any, and interest rate specified in the annuity contract for determining the paid-up annuity benefit, and by this payment shall be relieved of any further obligation under the annuity contract.
History: L. 2004, ch. 18, § 3; July 1.
The minimum values as specified in K.S.A. 40-4,105, 40-4,106, 40-4,107, 40-4,108 and 40-4,110, and amendments thereto, of any paid-up annuity, cash surrender or death benefits available under an annuity contract shall be based upon minimum nonforfeiture amounts as defined in this section.
(a) (1) The minimum nonforfeiture amount at any time at or prior to the commencement of any annuity payments shall be equal to an accumulation up to such time at rates of interest as indicated in subsection (b) of the net considerations, as hereinafter defined, paid prior to such time, decreased by the sum of subparagraphs (A) through (D):
(A) Any prior withdrawals from or partial surrenders of the contract accumulated at rates of interest as indicated in subsection (b).
(B) An annual contract charge of $50, accumulated at rates of interest as indicated in subsection (b).
(C) Any premium tax paid by the company for the contract, accumulated at rates of interest as indicated in subsection (b).
(D) The amount of any indebtedness to the company on the contract, including interest due and accrued.
(2) The net considerations for a given contract year used to define the minimum nonforfeiture amount shall be an amount equal to 87.5% of the gross considerations credited to the annuity contract during that contract year.
(b) The interest rate used in determining minimum nonforfeiture amounts shall be an annual rate of interest determined as the lesser of three percent per annum and the following, which shall be specified in the annuity contract if the interest rate will be reset:
(1) The five-year constant maturity treasury rate reported by the federal reserve as of a date, or average over a period, rounded to the nearest
1/20th
of one percent, specified in the contract no longer than 15 months prior to the annuity contract's issue date or redetermination date of subsection (b)(4);
(2) reduced by 125 basis points;
(3) where the resulting interest rate is not less than 15 basis points or 0.15%; and
(4) the interest rate shall apply for an initial period and may be redetermined for additional periods. The redetermination date, basis and period, if any, shall be stated in the annuity contract. The basis is the date or average over a specified period that produces the value of the five-year constant maturity treasury rate to be used at each redetermination date.
(c) During the period or term that an annuity contract provides substantive participation in an equity indexed benefit, such annuity contract may increase the reduction described in subsection (b)(2) by up to an additional 100 basis points to reflect the value of the equity index benefit. The present value at the issue date of such annuity contract, and at each redetermination date thereafter, of the additional reduction shall not exceed the market value of the benefit. The commissioner may require a demonstration that the present value of the additional reduction does not exceed the market value of the benefit. Lacking such a demonstration that is acceptable to the commissioner, the commissioner may disallow or limit the additional reduction.
(d) The commissioner may adopt rules and regulations to implement the provisions of subsection (c) and to provide for further adjustments to the calculation of minimum nonforfeiture amounts for annuity contracts that provide substantive participation in an equity index benefit and for such other annuity contracts that the commissioner determines adjustments are justified.
History: L. 2004, ch. 18, § 4; L. 2021, ch. 108, § 6; July 1.
Any paid-up annuity benefit available under an annuity contract shall be such that its present value on the date annuity payments are to commence is at least equal to the minimum nonforfeiture amount on that date. Present value shall be computed using the mortality table, if any, and the interest rates specified in the annuity contract for determining the minimum paid-up annuity benefits guaranteed in such annuity contract.
History: L. 2004, ch. 18, § 5; July 1.
For annuity contracts that provide cash surrender benefits, the cash surrender benefits available prior to maturity shall not be less than the present value as of the date of surrender of that portion of the maturity value of the paid-up annuity benefit that would be provided under the contract at maturity arising from considerations paid prior to the time of cash surrender reduced by the amount appropriate to reflect any prior withdrawals from or partial surrenders of the contract, such present value being calculated on the basis of an interest rate not more than one percent higher than the interest rate specified in the contract for accumulating the net considerations to determine maturity value, decreased by the amount of any indebtedness to the company on the contract, including interest due and accrued, and increased by any existing additional amounts credited by the company to the annuity contract. In no event shall any cash surrender benefit be less than the minimum nonforfeiture amount at that time. The death benefit under such annuity contracts shall at least equal to the cash surrender benefit.
History: L. 2004, ch. 18, § 6; July 1.
For annuity contracts that do not provide cash surrender benefits, the present value of any paid-up annuity benefit available as a nonforfeiture option at any time prior to maturity shall not be less than the present value of that portion of the maturity value of the paid-up annuity benefit provided under the annuity contract arising from considerations paid prior to the time the annuity contract is surrendered in exchange for, or changed to, a deferred paid-up annuity, such present value being calculated for the period prior to the maturity date on the basis of the interest rate specified in the annuity contract for accumulating the net considerations to determine maturity value, and increased by any additional amounts credited by the company to the annuity contract. For annuity contracts that do not provide any death benefits prior to the commencement of any annuity payments, present values shall be calculated on the basis of such interest rate and the mortality table specified in the contract for determining the maturity value of the paid-up annuity benefit. However, in no event shall the present value of a paid-up annuity benefit be less than the minimum nonforfeiture amount at that time.
History: L. 2004, ch. 18, § 7; July 1.
For the purpose of determining the benefits calculated under K.S.A. 40-4,106 and 40-4,107, and amendments thereto, in the case of annuity contracts under which an election may be made to have annuity payments commence at optional maturity dates, the maturity date shall be deemed to be the latest date for which election shall be permitted by the annuity contract, but shall not be deemed to be later than the anniversary of such annuity contract next following the annuitant's 70th birthday or the 10th anniversary of such annuity contract, whichever is later.
History: L. 2004, ch. 18, § 8; July 1.
Any annuity contract that does not provide cash surrender benefits or does not provide death benefits at least equal to the minimum nonforfeiture amount prior to the commencement of any annuity payments shall include a statement in a prominent place in such contract that such benefits are not provided.
History: L. 2004, ch. 18, § 9; July 1.
Any paid-up annuity, cash surrender or death benefits available at any time, other than on the contract anniversary under any annuity contract with fixed scheduled considerations, shall be calculated with allowance for the lapse of time and the payment of any scheduled considerations beyond the beginning of the contract year in which cessation of payment of considerations under the annuity contract occurs.
History: L. 2004, ch. 18, § 10; July 1.
For any annuity contract which provides, within the same contract by rider or supplemental contract provision, both annuity benefits and life insurance benefits that are in excess of the greater of cash surrender benefits or a return of the gross considerations with interest, the minimum nonforfeiture benefits shall be equal to the sum of the minimum nonforfeiture benefits for the annuity portion and the minimum nonforfeiture benefits, if any, for the life insurance portion computed as if each portion were a separate contract. Notwithstanding the provisions of K.S.A. 40-4,105, 40-4,106, 40-4,107, 40-4,108 and 40-4,110, and amendments thereto, additional benefits payable in the event of total and permanent disability, as reversionary annuity or deferred reversionary annuity benefits, or as other policy benefits additional to life insurance, endowment and annuity benefits, and considerations for all such additional benefits, shall be disregarded in ascertaining the minimum nonforfeiture amounts, paid-up annuity, cash surrender and death benefits that may be required by this act. The inclusion of such benefits shall not be required in any paid-up benefits, unless the additional benefits separately would require minimum nonforfeiture amounts, paid-up annuity, cash surrender and death benefits.
History: L. 2004, ch. 18, § 11; July 1.
The commissioner may adopt rules and regulations reasonably necessary to implement the provisions of this act.
History: L. 2004, ch. 18, § 12; July 1.
(a) After the effective date of this act, a company may elect to apply its provisions to annuity contracts on a contract form-by-contract form basis before the second anniversary of the effective date of this act.
(b) In all other instances, this act shall become operative with respect to all annuity contracts issued by the company on or after the second anniversary of this act.
History: L. 2004, ch. 18, § 13; July 1.
On and after July 1, 2019, the provisions of K.S.A. 40-4,201 through 40-4,203, and amendments thereto, shall be known and may be cited as the unclaimed life insurance benefits act.
History: L. 2019, ch. 54, § 1; May 9.
As used in the unclaimed life insurance benefits act:
(a) "Contract" means an annuity contract. The term "contract" shall not include an annuity used to fund an employment-based retirement plan or program where: (1) The insurer does not perform the record-keeping services; or (2) the insurer is not committed by terms of the annuity contract to pay death benefits to the beneficiaries of specific plan participants.
(b) "Death master file" means the United States social security administration's death master file or any other database or service that is at least as comprehensive as the United States social security administration's death master file for determining that a person has reportedly died.
(c) "Death master file match" means a search of the death master file that results in a match of the social security number or the name and date of birth of an insured, annuity owner or retained asset account holder.
(d) "Knowledge of death" means: (1) Receipt of an original or valid copy of a certified death certificate; or (2) a death master file match validated by the insurer in accordance with K.S.A. 40-4,203(a), and amendments thereto.
(e) "Policy" means any policy or certificate of life insurance that provides a death benefit. The term "policy" shall not include: (1) Any policy or certificate of life insurance that provides a death benefit under an employee benefit plan: (A) Subject to the employee retirement income security act of 1974 (29 U.S.C. § 1002); or (B) under any federal employee benefit program; (2) any policy or certificate of life insurance that is used to fund a preneed funeral contract or prearrangement; (3) any policy or certificate of credit life or accidental death insurance; or (4) any policy issued to a group master policyholder for which the insurer does not provide record keeping services.
(f) "Record keeping services" means those circumstances under which the insurer has agreed with a group policy or contract customer to be responsible for obtaining, maintaining and administering in its own or its agents' systems information about each individual insured under an insured's group insurance contract, or a line of coverage thereunder, at least the following information: (1) Social security number or name and date of birth; (2) beneficiary designation information; (3) coverage eligibility; (4) benefit amount; and (5) premium payment status.
(g) "Retained asset account" means any mechanism whereby the settlement of proceeds payable under a policy or contract is accomplished by the insurer or an entity acting on behalf of the insurer depositing the proceeds into an account with check or draft writing privileges, where those proceeds are retained by the insurer or its agent, pursuant to a supplementary contract not involving annuity benefits other than death benefits.
(h) The provisions of this section shall take effect on and after July 1, 2019.
History: L. 2019, ch. 54, § 2; May 9.
(a) An insurer shall perform a comparison of its insureds' in-force policies, contracts, and retained asset accounts against a death master file, on at least a semi-annual basis, by using the full death master file once and thereafter using the death master file update files for future comparisons to identify potential matches of its insureds. For those potential matches identified as a result of a death master file match, the insurer shall:
(1) Within 90 days of a death master file match:
(A) Complete a good faith effort that shall be documented by the insurer to confirm the death of the insured or retained asset account holder against other available records and information;
(B) determined whether benefits are due in accordance with the applicable policy or contract. If benefits are due in accordance with the applicable policy or contract:
(i) Use good faith efforts that shall all be documented by the insurer to locate the beneficiary or beneficiaries; and
(ii) provide the appropriate claim forms or instructions to the beneficiary or beneficiaries to make a claim including the need to provide an official death certificate, if applicable under the policy contract.
(2) With respect to group life insurance, insurers shall confirm the possible death of an insured when the insurers maintain at least the following information of those covered under a policy or certificate: (A) Social security number or name and date of birth; (B) beneficiary designation information; (C) coverage eligibility; (D) benefit amount; and (E) premium payment status.
(3) Every insurer shall implement procedures to account for:
(A) Common nicknames, initials used in lieu of a first or middle name, use of a middle name, compound first and middle names and interchanged first and middle names;
(B) compound last names, maiden or married names, and hyphens, blank spaces or apostrophes in last names;
(C) transposition of the month and date portions of the date of birth; and
(D) incomplete social security numbers.
(4) To the extent permitted by law, the insurer may disclose minimum, necessary personal information about the insured or beneficiary to a person who the insurer reasonably believes may be able to assist the insurer locate the beneficiary or a person otherwise entitled to payment of the claims proceeds.
(b) An insurer or its service provider shall not charge any beneficiary or other authorized representative for any fees or costs associated with a death master file search or verification of a death master file match conducted pursuant to this section.
(c) The benefits from a policy, contract or a retained asset account, plus any applicable accrued contractual interest shall first be payable to the designated beneficiaries or owners, and in the event the beneficiaries or owners can not be found, shall escheat to the state as unclaimed property pursuant to K.S.A. 58-3936, and amendments thereto. Interest payable under K.S.A. 40-447, and amendments thereto, shall not be payable as unclaimed property.
(d) An insurer shall notify the state treasurer upon the expiration of the statutory time period for escheat that:
(1) A policy or contract beneficiary or retained asset account holder has not submitted a claim with the insurer; and
(2) the insurer has complied with subsection (a) and has been unable, after good faith efforts, documented by the insurer, to contact the retained asset account holder, beneficiary or beneficiaries.
(e) Upon such notice, an insurer shall immediately submit the unclaimed policy or contract benefits or unclaimed retained asset accounts, plus any applicable accrued interest, to the state treasurer in accordance with the unclaimed property act.
(f) Failure to meet any requirement of this section with such frequency as to constitute a general business practice shall be considered an unfair or deceptive act or practice under K.S.A. 40-2404, and amendments thereto, and subject to the penalties contained under K.S.A. 40-2401 et seq., and amendments thereto. Nothing herein shall be construed to create or imply a private cause of action for a violation of this section.
(g) The provisions of this section shall take effect on and after July 1, 2019.
History: L. 2019, ch. 54, § 3; May 9.
Mutual life insurance companies may be organized as provided in section 40-401 of this code for the purposes therein specified.
History: L. 1927, ch. 231, 40-501; June 1.
(a) The affairs of any mutual life insurance company now existing or hereafter organized under the laws of this state shall be managed by a board of not more than 25 nor less than five directors. Any vacancy in the board shall be filled by the remaining members until the next annual meeting of the policyholders, at which time a successor shall be elected to fill the unexpired term.
(b) The director shall be elected by ballot, and each person who is a policyholder shall be entitled to one vote. Policyholders may vote by proxy, signed by the person legally entitled to vote the same. Each policyholder shall have the right to cast as many votes in the aggregate as shall equal the number of directors to be regularly elected, and each policyholder, in person or by proxy, may cast the whole number of votes for one candidate or may divide such policyholder's votes among two or more candidates. A majority of the number of directors shall constitute a quorum for the transaction of business.
(c) Every mutual life insurance company, now existing or hereafter organized under the laws of this state, shall have such officers with such titles and duties as shall be stated in the bylaws or in a resolution of the board of directors which is not inconsistent with the bylaws.
(d) Officers shall be chosen in such manner and shall hold their offices for such terms as are prescribed by the bylaws or determined by the board of directors or other governing body.
History: L. 1927, ch. 231, 40-502; L. 2005, ch. 41, § 3; L. 2007, ch. 30, § 1; July 1.
The board of directors of any mutual life insurance company shall have power to adopt a seal and make such bylaws and amendments thereto, not inconsistent with the constitution and laws of this state, as may be deemed necessary for the regulation and management of its affairs.
History: L. 1927, ch. 231, 40-503; June 1.
Any corporation heretofore organized and existing pursuant to law for the purpose of making insurance on the lives of individuals, may take advantage and have the benefit of this act by filing in the office of the commissioner of insurance a declaration of the company, signed by the president and secretary, giving the name of the corporation, a copy of the bylaws, the form of application adopted by them, and a copy of the policy contract proposed to be issued to individuals, together with a fee not to exceed $100. The commissioner of insurance shall submit all documents to the attorney general for examination, and if found by the attorney general to be in accordance with the law, the attorney general shall certify to and deliver such documents to the commissioner of insurance, who shall retain such documents on file. Upon compliance by such company with the provisions of this code, the commissioner of insurance shall issue a certificate authorizing such company to do business in this state under the provisions of this code. Not later than December 1 of each year, the commissioner shall set and cause to be published in the Kansas register the fee required pursuant to this section for the next calendar year.
History: L. 1927, ch. 231, 40-504; L. 2025, ch. 87, § 11; July 1.
Whenever the directors of any mutual life insurance company organized under the laws of this state shall deem it to the best interest of the policyholders to suspend business, it may secure propositions from other solvent life insurance companies authorized to do business in this state, whether foreign or domestic, and whether companies possessing a capital stock or organized on the mutual plan, to reinsure its policies. That upon securing such proposition or propositions, the same shall be formulated and the substance transmitted by mail to each policyholder, and a regular or special meeting of the policyholders shall be called for the purpose of determining whether said company shall go into liquidation, and also of voting upon said proposition of reinsurance. If at such meeting two thirds of the number of the holders of outstanding policies of such company shall vote, either in person or by proxy, to go into liquidation and to accept any one of said propositions for reinsurance, the board of directors may make a contract in accordance therewith, and upon due execution thereof transfer and turn over to the said reinsuring corporation so much of the assets of such mutual life insurance company as are embraced in said proposal or contract as consideration therefor: Provided, That any dissenting policyholder may withdraw his equitable share of the assets of such company in lieu of accepting such reinsurance contract: Provided, That nothing in this act shall be construed as legalizing any attempted reinsurance or transfer heretofore made by any such company.
History: L. 1927, ch. 231, 40-505; June 1.
Any mutual life insurance company, upon authorization of its board of directors, may issue both participating and nonparticipating insurance and annuities and may determine the right to participate and the extent of participation of any class or classes or policies. Any such classification or determination shall be reasonable and shall not unfairly discriminate as between policyholders within the same such classifications. Life insurers may issue both participating and nonparticipating policies only if the right or absence of right to participate is reasonably related to the premium charged. A separate account shall be established for nonparticipating policies, and adequate provision shall be made so that the interests of participating policyholders are in no way adversely affected by reason of the issuance of such nonparticipating policies. The total number of nonparticipating life insurance and annuity policies issued in any one fiscal year by any mutual life insurance company shall not exceed the total number of participating life insurance and annuity policies issued by that company in the same fiscal year. Mutual life insurance companies issuing such nonparticipating business shall be further subject to such regulation in issuing nonparticipating policies as the insurance commissioner shall consider appropriate. Nonparticipating insurance and annuities is that type of insurance and annuities which is not entitled to receive dividends. Participating insurance and annuities is defined as insurance and annuities on which the owner thereof is entitled to receive dividends as may be apportioned by the board of directors of the company pursuant to K.S.A. 40-420.
History: L. 1972, ch. 181, § 2; July 1.
(a) Every mutual life insurance company formed under authority of K.S.A. 40-501 et seq., and amendments thereto may:
(1) Merge or consolidate with any other domestic mutual life insurance company;
(2) merge or consolidate with any other non-domestic mutual life insurance company if such merger or consolidation is authorized by the laws of the state or territory in which such nondomestic company is organized;
(3) merge or consolidate with a nondomestic nonprofit health services corporation or nonprofit medical and hospital service corporation if such merger or consolidation would be permitted by the state regulatory official or officials having jurisdiction over such nondomestic nonprofit health services corporation or nonprofit medical and hospital service corporation and the surviving or resulting company is a domestic mutual life insurance company; and
(4) by virtue of such merger or consolidation, do the kinds of insurance business in the manner and for the purposes for which a mutual life insurance company may be organized in this state or in the manner and for the purposes for which a nondomestic mutual life insurance company may be licensed or authorized to do business in this state.
(b) When a mutual life insurance company of this state shall be merged or consolidated with a mutual life insurance company organized under the laws of any other state, the commissioner of insurance in an order of approval shall direct that the assets of the domestic company be delivered to the company with which the domestic company is merged or consolidated.
History: L. 1972, ch. 53, § 10; L. 1980, ch. 135, § 2; L. 1996, ch. 25, § 7; L. 1997, ch. 29, § 1; July 1.
As used in this act:
(a) "Merger" means the union of two (2) or more companies into a single company which is one of the companies so uniting.
(b) "Consolidation" means the joining of two (2) or more companies in a manner so that a single new consolidated company results therefrom.
History: L. 1980, ch. 135, § 1; July 1.
(a) The board of directors of each of the mutual insurers proposing to merge or consolidate shall, by resolution adopted by at least a majority of all the members of each board, approve a joint agreement of merger or consolidation, as the case may be, between the insurer parties, setting forth the terms and conditions of the merger or consolidation, the mode of carrying the same into effect and such other provisions as are deemed advisable.
(b) Upon approving such an agreement, each board by resolution shall direct the same be submitted to the commissioner of insurance subject to disapproval as provided in K.S.A. 40-510 and to the approval of the policyholders of the respective insurers as provided in K.S.A. 40-511.
History: L. 1980, ch. 135, § 3; July 1.
(a) No merger or consolidation of a domestic mutual insurer shall be effectuated unless, in advance of a proposed merger or consolidation, the agreement therefor and any other information requested by the commissioner of insurance has been filed with the commissioner and has not been disapproved in writing. If the domestic insurer is not then impaired, the commissioner of insurance shall act with respect to the agreement for merger or consolidation after a hearing thereon conducted in accordance with the provisions of the Kansas administrative procedure act. An agreement shall be effectuated in accordance with its terms unless the commissioner of insurance disapproves the same within 60 days after the date of filing, subject to the commissioner's right to have a reasonable extension of time not to exceed an additional 60 days upon written notice to the insurers involved. The commissioner of insurance may disapprove an agreement, upon one or more of the following grounds, if the agreement:
(1) Is inequitable to the policyholders of any domestic insurer involved;
(2) would materially reduce the financial security of policyholders of the domestic insurer in this state and elsewhere;
(3) would materially tend to lessen competition in this state as to the kinds of insurance involved or would tend to create a monopoly therein; or
(4) is subject to any other reasonable objections.
(b) If the commissioner of insurance disapproves an agreement, notice shall be given to the insurers proposing to merge or consolidate specifying the reasons for disapproval.
History: L. 1980, ch. 135, § 4; L. 1988, ch. 356, § 79; July 1, 1989.
(a) After a proposed agreement of merger or consolidation has been filed with the commissioner of insurance and has not been disapproved in accordance with K.S.A. 40-510, and if the insurer is then unimpaired, such agreement shall be submitted to the domestic insurer's policyholders for approval at a regular or special meeting of the policyholders.
(b) Not less than twenty (20) days before any such meeting, written notices of the meeting and of the proposed merger or consolidation shall be given to each policyholder of each insurer. The notice shall state the day, hour, place and purposes of the meeting and be accompanied by a brief summary of the agreement of merger or consolidation, as the case may be. The notice and summary shall be subject to approval by the commissioner of insurance. Notice and accompanying summary shall be deemed given when enclosed in an envelope addressed to each policyholder at the address last of record with the insurer and deposited postage paid in a depository of the United States post office. In the event of a merger, if at the year end prior to the date of merger the total admitted assets, as reflected by the most recent annual statement filed with the commissioner of insurance of the company that is to survive, are equal to or greater than five (5) times that of the total admitted assets, as reflected by the most recent annual statement filed with the commissioner of insurance, of the company or companies that are not to survive, in lieu of notice by mail, notice, subject to approval by the commissioner, may be given to the policyholders of the larger insurer by publication in a newspaper of general circulation in either of the two (2) largest cities in each state in which the insurers are authorized to transact an insurance business.
(c) Upon receiving the affirmative vote of two-thirds (⅔) of all votes cast by policyholders present or represented by written proxy at each meeting, such agreement shall be deemed to have been approved. Each policyholder of the insurers shall be bound by such vote without right of dissent other than the right to vote against the proposal at the meeting. A dissenting policyholder shall have no right or equity as to assets of the insurer except as expressly provided in the policyholder's policy or policies. Should any such agreement fail to receive the required number of votes, it shall be null and void.
History: L. 1980, ch. 135, § 5; July 1.
If a domestic mutual insurer is impaired in that the insurer's surplus is less than the amount required for authority to transact the kinds of insurance being transacted by the insurer, the commissioner of insurance may approve the agreement of merger or consolidation with a hearing thereon conducted in accordance with the provisions of the Kansas administrative procedure act, and the same may be effectuated without approval of the impaired insurer's policyholders.
History: L. 1980, ch. 135, § 6; L. 1988, ch. 356, § 80; July 1, 1989.
After a proposed agreement of merger or consolidation has been filed with the commissioner of insurance and has not been disapproved and after approval of the policyholders, if required, upon agreement of merger or consolidation the articles of merger or consolidation, as the case may be, shall be executed under the seal of each insurer, shall be verified by a duly authorized officer of each insurer and shall set forth, as applicable:
(a) The name of the surviving or new corporation;
(b) the time and place of the meeting of the directors at which the agreement of merger or consolidation was approved and, except when pursuant to K.S.A. 40-512 the agreement was not submitted to a vote of the policyholders of the insurer, the time and place of the meeting of the policyholders of each insurer at which the agreement of merger or consolidation, as the case may be, was approved, the kind and period of notice given to the policyholders and the total vote by which the agreement was approved;
(c) in the case of a merger into a surviving insurer, any changes desired to be made in the articles of the surviving insurer, or in the case of a consolidation into a new domestic insurer, all of the statements required by law to be set forth in the original articles in the case of the formation of a domestic insurer;
(d) the number, names and addresses of the persons to be the directors of the surviving or new insurer; and
(e) the agreement of merger or consolidation.
History: L. 1980, ch. 135, § 7; July 1.
(a) The commissioner of insurance shall examine the articles of merger or consolidation and if the same are in order shall endorse the approval thereon, and the entire proceedings shall be filed and recorded in the office of the secretary of state, a copy of the same certified by the secretary of state to be filed in the office of the commissioner of insurance. Within fifteen (15) days after said approval by the commissioner of insurance, a certified copy of said articles also shall be filed by the officers of the new or surviving company in the office of the register of deeds in the counties wherein the registered offices and home offices of the merging or consolidating companies were located and in the county wherein the registered office and home office of the surviving or new company shall be located and in the office of the register of deeds of each county in this state in which any of the companies involved shall have real property at the time of merger or consolidation.
(b) The merger or consolidation shall be effective upon the commissioner's endorsing approval, which date of approval shall be the date of consolidation or merger of said companies.
(c) The companies involved shall thereupon be one company under the name adopted in and by said agreement, possessing all the rights, privileges, immunities, powers and franchises theretofore vested in each of them.
(d) The separate existence of all the companies to the agreement of merger or consolidation, except the surviving or new company, shall cease.
(e) All property, real, personal and mixed, and all debts due on whatever account, including assessments payable from members and policyholders and all other choses in action and all and every other interest of, or belonging to or due to, each of the companies merged or consolidated shall be deemed to be transferred to and vested in such surviving or new company without further act or deed. The title to any real estate or any interest therein under the laws of this state vested in any of the companies shall not revert or be in any way impaired by reason of such merger or consolidation.
(f) Such surviving or new company shall be responsible and liable for all of the liabilities and obligations of each of the companies merged or consolidated. Any claim existing or action pending by or against any companies merged or consolidated may be prosecuted to judgment as if such merger or consolidation had not taken place, or such surviving or new company may be substituted in its place. Neither the rights of creditors nor liens upon the property of any such companies shall be impaired by such merger or consolidation, but such liens shall be limited to the property upon which they were liens immediately prior to the time of such merger or consolidation, unless otherwise provided in the agreement of merger or consolidation.
(g) In the case of merger, the articles of incorporation of the surviving company shall be supplanted, amended or superseded to the extent, if any, that any provision or provisions of such articles of incorporation shall be revised in the agreement of merger, and the articles of incorporation shall be deemed to be thereby and to that extent amended.
(h) In the case of a consolidation, the new articles of incorporation shall be deemed to be the articles of incorporation of such new corporation.
(i) The surviving or new company may, for the purpose of complying with the requirements of the law relating to age of a company, elect to be the age of any of the merging or consolidating companies and shall for this purpose be considered as having such age. Such election shall be set forth in the agreement of merger or consolidation.
(j) The surviving or new company shall maintain the reserves and deposits as required by law of other like kinds of companies doing like kinds of insurance business.
(k) The surviving or new company after merger or consolidation shall be subject to the same fees, taxes, or penalties and other requirements of law as other like kinds of companies doing like kinds of insurance business.
History: L. 1980, ch. 135, § 8; July 1.
(a) No director or officer of any company party to a merger or a consolidation, except as fully expressed in the agreement of merger or consolidation, shall receive any fee, commission, other compensation or valuable consideration whatever, directly or indirectly, for in any manner aiding, promoting or assisting in such merger or consolidation.
(b) Any person violating the provisions of this section shall be fined not less than one thousand dollars ($1,000) and not more than five thousand dollars ($5,000) or imprisoned in the county jail for not more than one year, or both, and shall forfeit any office held in the merged or consolidated company.
History: L. 1980, ch. 135, § 9; July 1.
(a) Nothing contained in this act shall be construed to enlarge the charter powers of any insurance company except in conformity with the provisions of the proposed articles of incorporation of the merged or consolidated company as provided in this act, nor to authorize any insurance company to do any kind of insurance business not authorized by its charter or articles of incorporation, nor to authorize any insurance company to do any kind of insurance business in this state not authorized by its license or certificate of authority to do business in this state.
(b) This act shall be part of and supplemental to the insurance code of the state of Kansas.
(c) If any provision of this act or the application of such provision to any person or circumstance shall be held invalid, the remainder of this act and the application of such provision to persons and circumstances other than those as to which it is held invalid shall not be affected thereby.
History: L. 1980, ch. 135, § 10; July 1.
Mutual assessment life associations hereafter organized and admitted under this article, as well as those now transacting business in this state upon the mutual assessment life insurance plan, may insure the lives of their members and provide every insurance applicable thereto or connected therewith, including personal injury, disability, old age, accumulation and annuity benefits, and shall reserve in their policies and articles of incorporation the right to collect additional amounts, assessments or premiums so that the liability of policyholders shall not be limited to fixed, level or stipulated premiums. Any such domestic association shall at all times have and maintain on deposit with the commissioner of insurance pursuant to K.S.A. 40-229a approved securities in the sum of $10,000 as a guaranty fund for the benefit of its policyholders, and such deposit shall be in addition to all other deposits required by this article.
History: L. 1927, ch. 231, 40-601; L. 1996, ch. 25, § 8; July 1.
Five or more persons of lawful age, citizens of this state, may associate themselves together for the purpose of forming a mutual assessment life association. The persons named in the articles of incorporation shall constitute the directors or trustees of the association for the first year, and shall have power to fill all vacancies occurring in the board in the manner provided in the bylaws of the association. Upon complying with the requirements of section 40-216, they may proceed to complete their organization by the election, by ballot, of a president and vice-president from among their number, and a secretary and treasurer, and such other officers as may be necessary for the complete performance of all the business and objects of the association herein provided, to serve for one year, or until their successors are elected and qualified. Such directors and officers shall be elected annually thereafter, at such times as shall be fixed in the bylaws. The directors or trustees shall be elected by the certificate or policyholders at each annual meeting, each certificate or policyholder to be entitled to one vote for every director to be elected. Notice of the annual meeting shall be given by the secretary, by publication in some daily newspaper having general circulation in this state, at least once each week for four consecutive weeks just prior to such meeting. The policies issued by such associations, as well as all other associations now transacting business in this state or hereinafter admitted, which policies shall include a copy of the application and medical examination, shall constitute the entire contract between the association and its members.
History: L. 1927, ch. 231, 40-602; June 1.
All policies or certificates issued by any such association shall state in large type that the association is organized on the mutual assessment life insurance plan.
History: L. 1927, ch. 231, 40-603; June 1.
It shall be unlawful for such association to make insurance on the health of individuals, or to contract the payment to any member or his beneficiaries a sum greater than three thousand dollars, unless such corporation or association shall have a membership sufficient to pay the face value of the certificate or policy in full with one single assessment to make insurance on the life of any person until such person has first been subjected to a medical examination by a regular practicing physician, and found to be insurable, except when insurance is granted against accident or disablement only; to make insurance on the life of any person above sixty years of age; to issue joint life certificates or policies granting insurance on the life of more than one person under one certificate or policy, unless each person insured under such certificate or policy shall be named and assessed individually for their full pro rata share.
History: L. 1927, ch. 231, 40-604; June 1.
From and after January 1, 1928, it shall be unlawful for any association to issue or deliver in this state a policy unless the same shall contain in substance provision that except as otherwise expressly provided by law the policy shall be incontestable after it has been in force during the lifetime of the insured for a period not more than two years from its date, except for nonpayment of premiums and except for violations of the conditions of the policy relating to military and naval service in time of war, and at the option of the company, provisions relative to benefits in the event of total and permanent disability and provisions which grant additional insurance specifically against death by accident may also be excepted; but upon the maturity of any policy or certificate, the secretary of the association shall proceed to make the necessary assessment with which to raise funds to pay the same and upon receipt of such fund shall within thirty days pay the same over to the beneficiary under such maturing certificate or policy.
History: L. 1927, ch. 231, 40-605; June 1.
Any mutual assessment life association may suspend business and reinsure its outstanding certificates or policies as provided by section 40-505 of this code.
History: L. 1927, ch. 231, 40-606; June 1.
Foreign mutual assessment life associations shall be admitted to this state upon complying with the requirements of section 40-209, provided such associations are required by the laws of the states of their domicile to, or they do voluntarily, maintain the reserves, segregate the same and value their policies in accordance with the provisions of section 40-608. Such foreign mutual assessment life associations shall file with the commissioner of insurance, a certificate showing that such association has on deposit with a state official of its home state, approved securities in the sum of at least two hundred thousand dollars, or shall make such deposit with the commissioner of insurance of this state.
History: L. 1927, ch. 231, 40-607; June 1.
On and after January 1, 1928, every assessment life association transacting business under the provisions of this article shall hold and maintain upon every contract of life insurance thereafter issued assets in excess of other liabilities to provide for reserves not less than the minimum reserves prescribed herein. The basis for minimum reserves under this act shall be the American experience table of mortality and interest at four percentum per annum. Contracts may provide for not more than one-year preliminary-term insurance by incorporating therein a clause plainly showing that the first year's insurance under such contracts is term insurance, purchased by the whole or a part of the contribution to be received during the first contract year, and such contracts may be valued on the basis of the mortality table and interest rate above prescribed by the preliminary-term plan modified as follows: If the premium or contribution charged for any contract exceeds that charged for like insurance under twenty-payment life preliminary-term contracts of the same association, the reserve thereon at the end of any year, including the first, shall not be less than the reserve on a twenty-payment life preliminary-term contract issued in the same year and at the same age, together with an amount which shall be equivalent to the accumulation of a level net premium sufficient to provide for a pure endowment at the end of the premium-paying period equal to the difference between the value at the end of such period of such a twenty-payment life preliminary-term contract and the full level net premium reserve at such time of such a contract.
The premium-paying period is the period during which premiums are concurrently payable under such twenty-payment life preliminary-term contract and such other contract. Under any contract providing, in addition to the regular contributions, for the payment concurrently of additional contributions to the extent needed to pay its share of claims and expenses and to maintain the tabular reserves required by this act, or requiring any such additional amount to be charged as an indebtedness not exceeding the tabular reserves on the contract and providing for terminating the contract whenever such charges shall equal the tabular reserves, no liability shall be charged in any valuation for any deficiency in future contributions so long as such payments are actually collected or such charges are actually made. If any contracts are issued on or after January 1, 1928, which do not contain the above provisions, the association shall maintain as to such contracts the reserves as provided in K.S.A. 40-409, and amendments thereto.
The assets representing the reserves on all contracts issued on and after January 1, 1928, and on such other contracts as the association shall designate upon which a reserve at least equal to the minimum reserve prescribed herein has been accumulated, shall be deposited in the form of approved securities in this state as provided in K.S.A. 40-229a or with the proper official or institution of some other state, for the sole and separate use and benefit of such contracts and the insured and beneficiaries thereunder, and no other contracts, insured, beneficiaries or claimants shall have or acquire any right or interest therein; and provisions shall be made for requiring during each calendar year from such contracts as are not included under this section, contributions, which, together with available assets not so held separate, shall be sufficient to provide for the shares of claims, expenses and other current liabilities to be borne by such contracts as are not included herein. No such separation shall be required whenever reserves on all outstanding contracts are maintained in accordance with the provisions of this code. Such association may accumulate, maintain and distribute a surplus or surpluses over and above such reserves and shall do so as the bylaws of the association may provide in conformity with this code.
Nothing herein shall be construed as giving to any individual contract, insured or beneficiary any right or claim to any reserves or surplus or to any part thereof other than in the manner and to the extent provided in the contract or bylaws of the association; nor as making any such reserves, except the reserves required herein, a liability in determining the solvency of the association. Unless an association shall provide otherwise, the actual mortality experienced on all outstanding contracts shall be determined and distributed between all such outstanding contracts in proportion of the cost of insurance on the basis herein provided or such other mortality table approximating the experience of the association as it may provide. Every association may include in contracts issued hereunder, provisions for total and permanent disability benefits, accidental death benefits, and the payment of the benefits in installments or annuities. It shall maintain for all such added benefits, any additional reserves as may be prescribed by the commissioner of insurance, which additional reserves shall be subject to the provisions herein for segregation of reserves.
An association may provide in its contracts for cash surrender and loan values to an amount not exceeding the reserve, or for the equivalent paid-up or extended term insurance based upon a rate of mortality not lower than and a rate of interest not higher than that used in determining the reserve provided herein. Whenever the assets held separately for contracts issued on and after January 1, 1928, and such other contracts designated as provided herein, shall exceed the reserves thereon by not less than five percentum of such reserves, any excess assets derived from mortality savings, savings from expense loadings, and investment gains may be apportioned, distributed and used as provided by the association.
In addition to the annual report required by law, every such association shall report annually to the commissioner of insurance on or before March 1, the valuation of outstanding contracts issued on and after January 1, 1928, or designated as provided herein, and in force on the preceding December 31. The report shall contain a statement of the rate of earning of the mean invested assets, the interest earnings at such rate on the segregated portion of the assets, the interest required to maintain the reserves, the expected or tabular mortality, the actual mortality experienced, and the amount of reserve released by death and lapse, stated separately. Such report shall be certified by the actuary of the association. Such valuation shall be reported in such manner and such other reports shall be made and such information furnished as the commissioner of insurance may require.
History: L. 1927, ch. 231, 40-608; L. 1996, ch. 25, § 9; July 1.
This article shall not apply to any association of religious or secret societies now existing or under the supervision of a grand or supreme lodge, nor to any class of mechanics, express, telegraph or railroad employees formed for the mututal benefit of the members thereof and their families, exclusively.
History: L. 1927, ch. 231, 40-609; June 1.
History: L. 1927, ch. 231, § 40-701; Repealed, L. 1988, ch. 154, § 46; January 1, 1989.
History: L. 1927, ch. 231, § 40-702; Repealed, L. 1988, ch. 154, § 46; January 1, 1989.
History: L. 1927, ch. 231, § 40-703; L. 1947, ch. 272, § 2; L. 1953, ch. 225, § 2; Repealed, L. 1988, ch. 154, § 46; January 1, 1989.
History: L. 1927, ch. 231, § 40-704; L. 1931, ch. 205, § 1; L. 1943, ch. 184, § 1; L. 1972, ch. 183, § 1; Repealed, L. 1988, ch. 154, § 46; January 1, 1989.
History: L. 1927, ch. 231, § 40-705; L. 1976, ch. 214, § 1; Repealed, L. 1988, ch. 154, § 46; January 1, 1989.
History: L. 1927, ch. 231, § 40-706; L. 1929, ch. 198, § 1; Repealed, L. 1943, ch. 184, § 3; June 28.
History: L. 1943, ch. 184, § 2; L. 1957, ch. 282, § 1; L. 1976, ch. 214, § 2; Repealed, L. 1988, ch. 154, § 46; January 1, 1989.
History: L. 1927, ch. 231, § 40-707; Repealed, L. 1988, ch. 154, § 46; January 1, 1989.
History: L. 1927, ch. 231, § 40-708; Repealed, L. 1988, ch. 154, § 46; January 1, 1989.
History: L. 1927, ch. 231, § 40-709; Repealed, L. 1988, ch. 154, § 46; January 1, 1989.
History: L. 1927, ch. 231, § 40-710; Repealed, L. 1988, ch. 154, § 46; January 1, 1989.
History: L. 1927, ch. 231, § 40-711; Repealed, L. 1988, ch. 154, § 46; January 1, 1989.
History: L. 1927, ch. 231, § 40-712; Repealed, L. 1988, ch. 154, § 46; January 1, 1989.
History: L. 1927, ch. 231, § 40-713; Repealed, L. 1988, ch. 154, § 46; January 1, 1989.
History: L. 1927, ch. 231, § 40-714; Repealed, L. 1988, ch. 154, § 46; January 1, 1989.
History: L. 1927, ch. 231, § 40-715; Repealed, L. 1988, ch. 154, § 46; January 1, 1989.
History: L. 1927, ch. 231, § 40-716; Repealed, L. 1988, ch. 154, § 46; January 1, 1989.
History: L. 1927, ch. 231, § 40-717; Repealed, L. 1988, ch. 154, § 46; January 1, 1989.
History: L. 1927, ch. 231, § 40-718; Repealed, L. 1988, ch. 154, § 46; January 1, 1989.
History: L. 1927, ch. 231, §§ 40-719, 40-720; Repealed, L. 1988, ch. 154, § 46; January 1, 1989.
History: L. 1931, ch. 207, § 1; Repealed, L. 1988, ch. 154, § 46; January 1, 1989.
History: L. 1931, ch. 207, § 2; L. 1957, ch. 283, § 1; Repealed, L. 1988, ch. 154, § 46; January 1, 1989.
History: L. 1931, ch. 207, §§ 3, 4; Repealed, L. 1988, ch. 154, § 46; January 1, 1989.
History: L. 1931, ch. 207, § 5; Repealed, L. 1957, ch. 283, § 2; June 29.
History: L. 1959, ch. 216, §§ 1 to 12; Repealed, L. 1988, ch. 154, § 46; January 1, 1989.
Any incorporated society, order or supreme lodge, without capital stock, conducted solely for the benefit of its members and their beneficiaries and not for profit, operated on a lodge system with ritualistic form of work, having a representative form of government, and which provides benefits in accordance with this act, is hereby declared to be a fraternal benefit society.
History: L. 1988, ch. 154, § 1; January 1, 1989.
(a) A society is operating on the lodge system if it has a supreme governing body and subordinate lodges into which members are elected, initiated or admitted in accordance with its laws, rules and ritual. Subordinate lodges shall be required by the laws of the society to hold regular meetings at least once in each month in furtherance of the purposes of the society.
(b) A society may, at its option, organize and operate lodges for children under the minimum age for adult membership. Membership and initiation in local lodges shall not be required of such children, nor shall they have a voice or vote in the management of the society.
History: L. 1988, ch. 154, § 2; January 1, 1989.
A society has a representative form of government when:
(a) It has a supreme governing body constituted in one of the following ways:
(1) Assembly. The supreme governing body is an assembly composed of delegates elected directly by the members or at intermediate assemblies or conventions of members or their representatives, together with other delegates as may be prescribed in the society's laws. A society may provide for election of delegates by mail. The elected delegates shall constitute a majority in number and shall not have less than 2/3 of the votes and not less than the number of votes required to amend the society's laws. The assembly shall be elected and shall meet at least once every four years and shall elect a board of directors to conduct the business of the society between meetings of the assembly. Vacancies on the board of directors between elections may be filled in the manner prescribed by the society's laws.
(2) Direct election. The supreme governing body is a board composed of persons elected by the members, either directly or by their representatives in intermediate assemblies, and any other persons prescribed in the society's laws. A society may provide for election of the board by mail. Each term of a board member shall not exceed four years. Vacancies on the board between elections may be filled in the manner prescribed by the society's laws. Those persons elected to the board shall constitute a majority in number and not less than the number of votes required to amend the society's laws. A person filling the unexpired term of an elected board member shall be considered to be an elected member. The board shall meet at least quarterly to conduct the business of the society.
(b) The officers of the society are elected by the supreme governing body or by the board of directors;
(c) only benefit members are eligible for election to the supreme governing body, the board of directors or any intermediate assembly; and
(d) each voting member shall have one vote. No vote may be cast by proxy.
History: L. 1988, ch. 154, § 3; January 1, 1989.
As used in this act:
(a) "Agent" means an individual as defined in K.S.A. 40-239, and amendments thereto.
(b) "Benefit contract" means the agreement for provision of benefits authorized by subsection (a) of K.S.A. 40-742, as that agreement is described in K.S.A. 40-749.
(c) "Benefit member" means an adult member who is designated by the laws or rules of the society to be a benefit member under a benefit contract.
(d) "Certificate" means the document issued as written evidence of the benefit contract.
(e) "Commissioner" means the commissioner of insurance of this state.
(f) "Premiums" means premiums, rates, dues or other required contributions by whatever name known, which are payable under the certificate.
(g) "Laws" means the society's articles of incorporation, constitution and bylaws, however designated.
(h) "Rules" means all rules, regulations or resolutions adopted by the supreme governing body or board of directors which are intended to have general application to the members of the society.
(i) "Society" means fraternal benefit society, unless otherwise indicated.
(j) "Lodge" means subordinate member units of the society, known as camps, courts, councils, branches or by any other designation.
History: L. 1988, ch. 154, § 4; January 1, 1989.
(a) A society shall operate for the benefit of members and their beneficiaries by:
(1) Providing the following benefits:
(A) Death benefits;
(B) endowment benefits;
(C) annuity benefits;
(D) temporary or permanent disability benefits;
(E) hospital, medical or nursing benefits; and
(F) such other benefits as authorized for life insurers and which are not inconsistent with this article;
(2) operating for one or more social, intellectual, educational, charitable, benevolent, moral, fraternal, patriotic or religious purposes for the benefit of its members, which may also be extended to others.
Such purposes may be carried out directly by the society, or indirectly through subsidiary corporations or affiliated organizations.
(b) A society shall specify in its rules those persons who may be issued, or covered by, the contractual benefits in subsection (a), consistent with providing benefits to members and their dependents. A society may provide benefits on the lives of children under the minimum age for adult membership upon application of an adult person.
(c) Every society shall have the power to adopt laws and rules for the government of the society, the admission of its members, and the management of its affairs. It shall have the power to change, alter, add to or amend such laws and rules and shall have such other powers as are necessary and incidental to carrying into effect the objects and purposes of the society.
History: L. 1988, ch. 154, § 5; January 1, 1989.
(a) A society shall specify in its laws or rules:
(1) Eligibility standards for each and every class of membership, provided that if benefits are provided on the lives of children, the minimum age for adult membership shall be set at not less than age 15 and not greater than age 21;
(2) the process for admission to membership for each membership class; and
(3) the rights and privileges of each membership class, provided that only benefit members shall have the right to vote on the management of the insurance affairs of the society.
(b) A society may also admit social members who shall have no voice or vote in the management of the insurance affairs of the society.
(c) Membership rights in the society are personal to the member and are not assignable.
History: L. 1988, ch. 154, § 6; January 1, 1989.
(a) The principal office of any domestic society shall be located in this state. The meetings of its supreme governing body may be held in any state, district, province or territory wherein such society has at least one subordinate lodge, or in such other location as determined by the supreme governing body, and all business transacted at such meetings shall be as valid in all respects as if such meetings were held in this state. The minutes of the proceedings of the supreme governing body and of the board of directors shall be in the English language.
(b) (1) A society may provide in its laws for an official publication in which any notice, report or statement required by law to be given to members, including notice of election, may be published. Such required reports, notices and statements shall be printed conspicuously in the publication. If the records of a society show that two or more members have the same mailing address, an official publication mailed to one member is deemed to be mailed to all members at the same address unless a member requests a separate copy.
(2) Not later than June 1 of each year, a synopsis of the society's annual statement providing an explanation of the facts concerning the condition of the society thereby disclosed shall be printed and mailed to each benefit member of the society, or, in lieu thereof, such synopsis may be published in the society's official publication.
(c) A society may provide in its laws or rules for grievance or complaint procedures for members.
History: L. 1988, ch. 154, § 7; January 1, 1989.
(a) The officers and members of the supreme governing body or any subordinate body of a society shall not be personally liable for any benefits provided by a society.
(b) Any person may be indemnified and reimbursed by any society for expenses reasonably incurred by, and liabilities imposed upon, such person in connection with or arising out of any action, suit or proceeding, whether civil, criminal, administrative or investigative, or threat thereof, in which the person may be involved by reason of the fact that such person is or was a director, officer, employee or agent of the society or of any firm, corporation or organization which such person served in any capacity at the request of the society. A person shall not be so indemnified or reimbursed (1) in relation to any matter in such action, suit or proceeding as to which such person shall finally be adjudged to be or have been guilty of breach of a duty as a director, officer, employee or agent of the society or (2) in relation to any matter in such action, suit or proceeding, or threat thereof, which has been made the subject of a compromise settlement, unless in either such case the person acted in good faith for a purpose the person reasonably believed to be in or not opposed to the best interests of the society and, in a criminal action or proceeding, in addition, had no reasonable cause to believe that such conduct was unlawful. The determination whether the conduct of such person met the standard required in order to justify indemnification and reimbursement in relation to any matter described in subpoints (1) or (2) of the preceding sentence may only be made by the supreme governing body or board of directors by a majority vote of a quorum consisting of persons who were not parties to such action, suit or proceeding or by a court of competent jurisdiction. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of no contest, as to such person shall not in itself create a conclusive presumption that the person did not meet the standard of conduct required in order to justify indemnification and reimbursement. The foregoing right of indemnification and reimbursement shall not be exclusive of other rights to which such person may be entitled as a matter of law and shall inure to the benefit of such person's heirs, executors and administrators.
(c) A society shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the society, or who is or was serving at the request of the society as a director, officer, employee or agent of any other firm, corporation or organization against any liability asserted against such person and incurred by such person in any such capacity or arising out of such person's status as such, whether or not the society would have the power to indemnify the person against such liability under this section.
History: L. 1988, ch. 154, § 8; January 1, 1989.
The laws of the society may provide that no subordinate body, nor any of its subordinate officers or members, shall have the power or authority to waive any of the provisions of the laws of the society. Such provision shall be binding on the society and every member and beneficiary of a member.
History: L. 1988, ch. 154, § 9; January 1, 1989.
(a) The owner of a benefit contract shall have the right at all times to change the beneficiary or beneficiaries in accordance with the laws or rules of the society unless the owner waives this right by specifically requesting in writing that the beneficiary designation be irrevocable. A society may, through its laws or rules, limit the scope of beneficiary designations and shall provide that no revocable beneficiary shall have or obtain any vested interest in the proceeds of any certificate until the certificate has become due and payable in conformity with the provisions of the benefit contract.
(b) A society may make provision for the payment of funeral benefits to the extent of such portion of any payment under a certificate as might reasonably appear to be due to any person equitably entitled thereto by reason of having incurred expense occasioned by the burial of the member, provided the portion so paid shall not exceed $1,500.
(c) If, at the death of any person insured under a benefit contract, there is no lawful beneficiary to whom the proceeds shall be payable, the amount of such benefit, except to the extent that funeral benefits may be paid as hereinbefore provided, shall be payable to the estate of the deceased insured the same as other property not exempt, provided that if the owner of the certificate is other than the insured, such proceeds shall be payable to such owner.
History: L. 1988, ch. 154, § 10; January 1, 1989.
No money or other benefit, charity, relief or aid to be paid, provided or rendered by any society, shall be liable to attachment, garnishment or other process, or to be seized, taken, appropriated or applied by any legal or equitable process or operation of law to pay any debt or liability of a member or beneficiary, or any other person who may have a right thereunder, either before or after payment by the society.
History: L. 1988, ch. 154, § 11; January 1, 1989.
(a) Every society authorized to do business in this state shall issue to each owner of a benefit contract a certificate specifying the amount of benefits provided thereby. The certificate, together with any riders or endorsements attached thereto, the laws of the society, the application for membership, the application for insurance and declaration of insurability, if any, signed by the applicant, and all amendments thereof, shall constitute the benefit contract, as of the date of issuance, between the society and the owner, and the certificate shall so state. A copy of the application for insurance and declaration of insurability, if any, shall be endorsed upon or attached to the certificate. All statements on the application shall be representations and not warranties. Any waiver of this provision shall be void.
(b) Any changes, additions or amendments to the laws of the society duly made or enacted subsequent to the issuance of the certificate shall bind the owner and the beneficiaries and shall govern and control the benefit contract in all respects the same as though such changes, additions or amendments had been made prior to and were in force at the time of the application for insurance, except that no change, addition or amendment shall destroy or diminish benefits which the society contracted to give the owner as of the date of issuance, except that the consent of a parent, guardian or conservator shall not be required for an application for insurance by a minor.
(c) Any person upon whose life a benefit contract is issued prior to attaining the age of majority shall be bound by the terms of the application and certificate and by all the laws and rules of the society to the same extent as though the age of majority had been attained at the time of application and be subject to requirements as provided in K.S.A. 40-237, and amendments thereto.
(d) A society shall provide in its laws that if its reserves as to all or any class of certificates become impaired, its board of directors or corresponding body may require that there shall be paid by the owner to the society the amount of the owner's equitable proportion of such deficiency as ascertained by its board, and that if the payment is not made either (1) it shall stand as an indebtedness against the certificate and draw interest not to exceed the rate specified for certificate loans under the certificates; or (2) in lieu of, or in combination with (1), the owner may accept a proportionate reduction in benefits under the certificate. The society may specify the manner of the election and which alternative is to be presumed if no election is made.
(e) Copies of any of the documents mentioned in this section, certified by the secretary or corresponding officer of the society, shall be received in evidence of the terms and conditions thereof.
(f) No certificate shall be delivered or issued for delivery in this state unless a copy of the form has been filed with the commissioner of insurance in the manner provided for like policies issued by life insurers in this state. Every life, accident, health or disability insurance certificate and every annuity certificate issued on or after one year from the effective date of this act shall meet the standard contract provision requirements not inconsistent with this act for like policies issued by life insurers in this state, except that a society may provide for a grace period for payment of premiums of one full month in its certificates. The certificate shall also contain a provision stating the amount of premiums which are payable under the certificate and a provision reciting or setting forth the substance of any sections of the society's laws or rules in force at the time of issuance of the certificate which, if violated, will result in the termination or reduction of benefits payable under the certificate. If the laws of the society provide for expulsion or suspension of a member, the certificate shall also contain a provision that any member so expelled or suspended, except for nonpayment of a premium or within the contestable period for material misrepresentation in the application for membership or insurance, shall have the privilege of maintaining the certificate in force by continuing payment of the required premium.
(g) Benefit contracts issued on the lives of persons below the society's minimum age for adult membership may provide for transfer of control of ownership to the insured at an age specified in the certificate. A society may require approval of an application for membership in order to effect this transfer, and may provide in all other respects for the regulation, government and control of such certificates and all rights, obligations and liabilities incident thereto and connected therewith. Ownership rights prior to such transfer shall be specified in the certificate.
(h) A society may specify the terms and conditions on which benefit contracts may be assigned.
History: L. 1988, ch. 154, § 12; January 1, 1989.
(a) For certificates issued prior to one year after the effective date of this act, the value of every paid-up nonforfeiture benefit and the amount of any cash surrender value, loan or other option granted shall comply with the provisions of law applicable immediately prior to the effective date of this act.
(b) For certificates issued on or after one year from the effective date of this act for which reserves are computed on the commissioner's 1941 standard ordinary mortality table, the commissioner's 1941 standard industrial table or the commissioner's 1958 standard ordinary mortality table, or the commissioner's 1980 standard mortality table, or any more recent table made applicable to life insurers, every paid-up nonforfeiture benefit and the amount of any cash surrender value, loan or other option granted shall not be less than the corresponding amount ascertained in accordance with the laws of this state applicable to life insurers issuing policies containing like benefits based upon such tables.
History: L. 1988, ch. 154, § 13; January 1, 1989.
A society shall invest its funds only in such investments as are authorized by the laws of this state for the investment of assets of life insurers and subject to the limitations thereon. Any foreign or alien society permitted or seeking to do business in this state which invests its funds in accordance with the laws of the state, district, territory, country or province in which it is incorporated shall be held to meet the requirements of this section for the investment of funds.
History: L. 1988, ch. 154, § 14; January 1, 1989.
(a) All assets shall be held, invested and disbursed for the use and benefit of the society, and no member or beneficiary shall have or acquire individual rights therein or become entitled to any apportionment on the surrender of any part thereof except as provided in the benefit contract.
(b) A society may create, maintain, invest, disburse and apply any special fund or funds necessary to carry out any purpose permitted by the laws of such society.
(c) A society may, pursuant to resolution of its supreme governing body, establish and operate one or more separate accounts and issue contracts on a variable basis, subject to the provisions of law regulating life insurers establishing such accounts and issuing such contracts. To the extent the society deems it necessary in order to comply with any applicable federal or state laws, or any rules issued thereunder, the society may adopt special procedures for the conduct of the business and affairs of a separate account, may, for persons having beneficial interests therein, provide special voting and other rights, including without limitation special rights and procedures relating to investment policy, investment advisory services, selection of certified public accountants, and selection of a committee to manage the business and affairs of the account, and may issue contracts on a variable basis to which subsections (b) and (d) of K.S.A. 40-749 shall not apply.
History: L. 1988, ch. 154, § 15; January 1, 1989.
Except as herein provided, societies shall be governed by this act and shall be exempt from all other provisions of the insurance laws of this state unless they be expressly designated therein or unless it is specifically made applicable by this act.
History: L. 1988, ch. 154, § 16; January 1, 1989.
(a) Standards of valuation for certificates issued prior to one year after the effective date of this act shall be those provided by the laws applicable immediately prior to the effective date of this act.
(b) The minimum standards of valuation for certificates issued on or after one year from the effective date of this article shall be based on the following tables:
(1) For certificates of life insurance - the commissioner's 1941 standard ordinary mortality table, the commissioner's 1941 standard industrial mortality table, the commissioner's 1958 standard ordinary mortality table, the commissioner's 1980 standard ordinary mortality table or any more recent table made applicable to life insurers;
(2) for annuity and pure endowment certificates, for total and permanent disability benefits, for accidental death benefits and for non-cancellable accident and health benefits - such tables as are authorized for use by life insurers in this state.
All of the above shall be under valuation methods and standards, including interest assumptions, in accordance with the laws of this state applicable to life insurers issuing policies containing like benefits.
(c) The commissioner of insurance may, in the exercise of discretion, accept other standards for valuation if it is found that the reserves produced thereby will not be less in the aggregate than reserves computed in accordance with the minimum valuation standard herein prescribed. The commissioner of insurance may, in the exercise of discretion, vary the standards of mortality applicable to all benefit contracts on substandard lives or other extra hazardous lives by any society authorized to do business in this state.
(d) Any society, with the consent of the commissioner of insurance of the state of domicile of the society and under such conditions, if any, which the commissioner may impose, may establish and maintain reserves on its certificates in excess of the reserves required thereunder, but the contractual rights of any benefit member shall not be affected thereby.
History: L. 1988, ch. 154, § 17; January 1, 1989.
As part of the annual statement herein required, each society shall, on or before the first day of March, file with the commissioner of insurance a valuation of its certificates in force on December 31 last preceding, providing the commissioner of insurance may, in the exercise of discretion for cause shown, extend the time for filing such valuation for not more than two calendar months. Such valuation shall be done in accordance with the standards specified in K.S.A. 40-754. Such valuation and underlying data shall be certified by a qualified actuary or, at the expense of the society, verified by the actuary of the department of insurance of the state of domicile of the society.
History: L. 1988, ch. 154, § 18; L. 1997, ch. 24, § 2; July 1.
Societies which are now authorized to transact business in this state, and all societies hereafter licensed, may continue such business as provided in K.S.A. 40-215, and amendments thereto, upon payment of the fee prescribed in K.S.A. 40-252, and amendments thereto. A duly certified copy or duplicate of such license shall be prima facie evidence that the licensee is a fraternal benefit society within the meaning of this act.
History: L. 1988, ch. 154, § 19; January 1, 1989.
(a) The commissioner of insurance or the commissioner's designee may examine any domestic, foreign or alien society transacting or applying for admission to transact business in this state in the same manner as authorized for examination of domestic, foreign or alien insurers. Requirements of notice and an opportunity to respond before findings are made public as provided in the laws regulating insurers shall also be applicable to the examination of societies.
(b) The expense of each examination and of each valuation, including compensation and actual expense of examiners, shall be paid by the society examined or whose certificates are valued, upon statements furnished by the commissioner of insurance.
History: L. 1988, ch. 154, § 20; January 1, 1989.
No foreign or alien society shall transact business in this state without a license issued by the commissioner of insurance as provided in K.S.A. 40-214, and amendments thereto. Any such society desiring admission to this state shall:
(a) Comply substantially with the requirements and limitations of this act applicable to domestic societies and the applicable provisions of K.S.A. 40-209, and amendments thereto;
(b) file with the commissioner of insurance:
(1) A duly certified copy of its articles of incorporation;
(2) a copy of its bylaws, certified by its secretary or corresponding officer;
(3) a power of attorney to the commissioner of insurance as prescribed in K.S.A. 40-777;
(4) a statement of its business, under oath of its president and secretary or corresponding officers, in a form prescribed by the commissioner of insurance, duly verified by an examination made by the supervising insurance official of its home state or other state, territory, province or country, satisfactory to the commissioner of insurance;
(5) a certificate from the proper official of its home state, territory, province or country that the society is legally incorporated and licensed to transact business therein;
(6) copies of its certificate forms; and
(7) such other information as the commissioner of insurance may deem necessary; and
(c) show that its assets are invested in accordance with the provisions of this act.
History: L. 1988, ch. 154, § 21; January 1, 1989.
(a) When the commissioner of insurance upon investigation finds that a domestic society: (1) Has exceeded its powers; (2) has failed to comply with any provisions of this act; (3) is not fulfilling its contracts in good faith; (4) has a membership of less than 400 after an existence of one year or more; or (5) is conducting business fraudulently or in a manner hazardous to its members, creditors, the public or the business, the commissioner shall notify the society of such deficiency or deficiencies and state in writing the reasons for dissatisfaction. The commissioner shall at once issue a written notice to the society requiring that the deficiency or deficiencies which exist are corrected. After such notice the society shall have a 30-day period in which to comply with the commissioner's request for correction. If the society fails to comply, the commissioner shall notify the society of such findings of noncompliance and require the society to show cause on a date named why it should not be enjoined from carrying on any business until the violation complained of shall have been corrected or why an action in quo warranto should not be commenced against the society.
(b) If on such date the society does not present good and sufficient reasons why it should not be so enjoined or why such action should not be commenced, the commissioner of insurance may present the facts relating thereto to the attorney general who shall, if deeming the circumstances to warrant, commence an action to enjoin the society from transacting business or in quo warranto.
(c) The court shall thereupon notify the officers of the society of a hearing. If after a full hearing it appears that the society should be so enjoined or liquidated or a receiver appointed, the court shall enter the necessary order. No society so enjoined shall have the authority to do business until:
(1) The commissioner of insurance finds that the violation complained of has been corrected;
(2) the costs of such action shall have been paid by the society if the court finds that the society was in default as charged;
(3) the court has dissolved its injunction; and
(4) the commissioner of insurance has reinstated the certificate of authority.
(d) If the court orders the society liquidated, it shall be enjoined from carrying on any further business, whereupon the receiver of the society shall proceed at once to take possession of the books, papers, money and other assets of the society and, under the direction of the court, proceed forthwith to close the affairs of the society and to distribute its funds to those entitled thereto.
(e) No action under this section shall be recognized in any court of this state unless brought by the attorney general upon request of the commissioner of insurance. Whenever a receiver is to be appointed for a domestic society, the court shall appoint the commissioner of insurance as such receiver.
(f) The provisions of this section relating to hearing by the commissioner of insurance, action by the attorney general at the request of the commissioner of insurance, hearing by the court, injunction and receivership shall be applicable to a society which shall voluntarily determine to discontinue business.
History: L. 1988, ch. 154, § 22; January 1, 1989.
(a) When the commissioner of insurance upon investigation finds that a foreign or alien society transacting or applying to transact business in this state: (1) Has exceeded its powers; (2) has failed to comply with any of the provisions of this article; (3) is not fulfilling its contracts in good faith; or (4) is conducting its business fraudulently or in a manner hazardous to its members or creditors or the public, the commissioner shall notify the society of such deficiency or deficiencies and state in writing the reasons for dissatisfaction. The commissioner shall at once issue a written notice to the society requiring that the deficiency or deficiencies which exist be corrected. After such notice the society shall have a 30-day period in which to comply with the commissioner's request for correction. If the society fails to comply, the commissioner shall notify the society of such findings of noncompliance and require the society to show cause on a date named why its license should not be suspended, revoked or refused. If on such date the society does not present good and sufficient reason why its authority to do business in this state should not be suspended, revoked or refused, the commissioner may suspend or refuse the license of the society to do business in this state until satisfactory evidence is furnished to the commissioner that such suspension or refusal should be withdrawn, or the commissioner may revoke the authority of the society to do business in this state.
(b) Nothing contained in this section shall be construed to prevent any such society from continuing in good faith all contracts made in this state during the time such society was legally authorized to transact business herein.
History: L. 1988, ch. 154, § 23; January 1, 1989.
No application or petition for injunction against any domestic, foreign or alien society, or lodge thereof, shall be recognized in any court of this state unless made by the attorney general upon request of the commissioner of insurance.
History: L. 1988, ch. 154, § 24; January 1, 1989.
(a) Except as otherwise provided in this section, agents of societies shall be licensed and certified in accordance with the provisions of the laws regulating the licensing and revocation, suspension or termination of licenses of resident and nonresident agents and shall be subject to the same license, certification and examination fees as apply to agents of insurance companies similarly situated, except that no examination shall be required of a person who is an agent of a society immediately prior to the effective date of this act, but this exception shall apply only for the particular kind of insurance for which such person was acting as agent.
(b) No examination or license shall be required of any regular salaried officer, employee or member of a licensed society who devotes substantially all of their services to activities other than the solicitation of fraternal insurance contracts from the public and who receives for the solicitation of such contracts no commission or other compensation directly dependent upon the amount of business obtained.
(c) Any agent, representative or member of a society who devotes, or intends to devote, less than 50% of their time to the solicitation and procurement of insurance contracts for such society shall be exempt from the requirements of subsection (a). Any person who in the preceding calendar year has solicited and procured life insurance contracts on behalf of any society in a total amount of insurance in excess of $50,000, or, in the case of any other kind or kinds of insurance which the society might write, on the persons of more than 25 individuals and who has received or will receive a commission or other compensation therefor, shall be presumed to be devoting, or intending to devote, 50% of their time to the solicitation or procurement of insurance contracts for such society.
(d) Each society shall maintain a record of its representatives exempted from licensing pursuant to subsection (c) and furnish the names and residence addresses of such persons to the commissioner on or before April 30 of each year. Each society shall furnish such information to the commissioner within 30 days of the employment or termination of employment of any such exempted person subsequent to April 30 of each year.
(e) Each society shall notify the commissioner within 30 days after any person exempted pursuant to subsection (c) ceases to qualify for such exemption. The commissioner shall forthwith send a notice to such person requiring that person to qualify by examination not sooner than 30 days nor later than 90 days from receipt of the notice. Thereafter, such person shall be subject to continuing education requirements for full-time insurance agents writing life, health and accident insurance.
History: L. 1988, ch. 154, § 25; January 1, 1989.
Every society and agent authorized to do business in this state shall be subject to the provisions of article 24 of chapter 40 of the Kansas Statutes Annotated, but nothing in such provisions shall be construed as applying to or affecting the right of any society to determine its eligibility requirements for membership or be construed as applying to or affecting the offering of benefits exclusively to members or persons eligible for membership in the society by a subsidiary corporation or affiliated organization of the society.
History: L. 1988, ch. 154, § 26; January 1, 1989.
A domestic society organized on or after the effective date of this act shall be formed as follows:
(a) Seven or more citizens of the United States, a majority of whom are citizens of this state, who desire to form a fraternal benefit society, may make, sign and acknowledge before some officer competent to take acknowledgment of deeds, articles of incorporation in which shall be stated:
(1) The proposed corporate name of the society, which shall not so closely resemble the name of any society or insurance company as to be misleading or confusing;
(2) the purposes for which it is being formed and the mode in which its corporate powers are to be exercised. Such purposes shall not include more liberal powers than are granted by this act;
(3) the names and residences of the incorporators and the names, residences and official titles of all the officers, trustees, directors or other persons who are to have and exercise the general control of the management of the affairs and funds of the society for the first year or until the ensuing election at which all such officers shall be elected by the supreme governing body, which election shall be held not later than one year from the date of issuance of the permanent certificate of authority.
(b) Such articles of incorporation, duly certified copies of the society's bylaws and rules, copies of all proposed forms of certificates, applications therefor, and circulars to be issued by the society and a bond conditioned upon the return to applicants of the advanced payments if the organization is not completed within one year shall be filed with the commissioner of insurance, who may require such further information as deemed necessary. The bond, with sureties approved by the commissioner of insurance, shall be in such amount, not less than $300,000 nor more than $1,500,000, as required by the commissioner of insurance. All documents filed shall be in the English language. If the purposes of the society conform to the requirements of this act and all provisions of the law have been complied with, the commissioner of insurance shall so certify, retain and file the articles of incorporation and furnish the incorporators a preliminary certificate of authority authorizing the society to solicit members as hereinafter provided.
(c) No preliminary certificate of authority granted under the provisions of this section shall be valid after one year from its date or after such further period, not exceeding one year, as may be authorized by the commissioner of insurance upon cause shown, unless the 500 applicants hereinafter required have been secured and the organization has been completed as herein provided. The articles of incorporation and all other proceedings thereunder shall become null and void in one year from the date of the preliminary certificate of authority, or at the expiration of the extended period, unless the society shall have completed its organization and received a certificate of authority to do business as hereinafter provided.
(d) Upon receipt of a preliminary certificate of authority from the commissioner of insurance, the society may solicit members for the purpose of completing its organization, shall collect from each applicant the amount of not less than one regular monthly premium in accordance with its table of rates, and shall issue to each such applicant a receipt for the amount so collected. No society shall incur any liability other than for the return of such advance premium, nor issue any certificate, nor pay, allow, or offer or promise to pay or allow, any benefit to any person until:
(1) Actual bona fide applications for benefits shall have been secured on not less than 500 applicants, and any necessary evidence of insurability has been furnished to and approved by the society;
(2) at least 10 subordinate lodges have been established into which the 500 applicants have been admitted;
(3) there has been submitted to the commissioner of insurance, under oath of the president or secretary, or corresponding officer of the society, a list of such applicants, giving their names, addresses, date each was admitted, name and number of the subordinate lodge of which each applicant is a member, amount of benefits to be granted and premiums therefor; and
(4) it shall have been shown to the commissioner of insurance, by sworn statement of the treasurer, or corresponding officer of such society, that at least 500 applicants have paid in cash premiums which in the aggregate amount to at least $150,000. Such advance premiums shall be held in trust during the period of organization. If the society has not qualified for a certificate of authority within one year as herein provided, such premiums shall be returned to the applicants.
(e) The commissioner of insurance may make such examination and require such further information as the commissioner deems advisable. Upon presentation of satisfactory evidence that the society has complied with all the provisions of law, the commissioner shall issue to the society a certificate of authority to that effect and that the society is authorized to transact business pursuant to the provisions of this act. The certificate of authority shall be prima facie evidence of the existence of the society at the date of such certificate. The commissioner of insurance shall cause a record of such certificate of authority to be made. A certified copy of such record may be given in evidence with like effect as the original certificate of authority.
(f) Any incorporated society authorized to transact business in this state at the time this act becomes effective shall not be required to reincorporate.
History: L. 1988, ch. 154, § 27; January 1, 1989.
(a) A domestic society may amend its laws in accordance with the provisions thereof by action of its supreme governing body at any regular or special meeting thereof or, if its laws so provide, by referendum. Such referendum may be held in accordance with the provisions of its laws by the vote of the voting members of the society, by the vote of delegates or representatives of voting members or by the vote of local lodges. A society may provide for voting by mail. No amendment submitted for adoption by referendum shall be adopted unless, within six months from the date of submission thereof, a majority of the members voting shall have signified their consent to such amendment by one of the methods herein specified.
(b) No amendment to the laws of any domestic society shall take effect unless approved by the commissioner of insurance. The commissioner shall approve such amendment if it has been duly adopted and is not inconsistent with any requirement of the laws of this state or with the character, objects and purposes of the society. Unless the commissioner shall disapprove an amendment within 30 days after it is filed, such amendment shall be considered approved. The approval or disapproval of the commissioner shall be in writing and mailed to the secretary or corresponding officer of the society at its principal office. If the commissioner disapproves such amendment, the reasons therefor shall be stated in such written notice.
(c) Within 90 days from the approval thereof by the commissioner, all such amendments, or a synopsis thereof, shall be furnished to all members of the society either by mail or by publication in full in the official publication of the society. The affidavit of any officer of the society or of anyone authorized by it to mail any amendments or synopsis thereof, stating facts which show that such amendments or synopsis thereof has been duly addressed and mailed, shall be prima facie evidence that such amendments or synopsis thereof have been furnished the addressee.
(d) Every foreign or alien society authorized to do business in this state shall file with the commissioner of insurance a duly certified copy of all amendments of or additions to its laws within 60 days after the enactment thereof.
(e) Printed copies of the laws as amended, certified by the secretary or corresponding officer of the society, shall be prima facie evidence of the legal adoption thereof.
History: L. 1988, ch. 154, § 28; January 1, 1989.
A society may create, maintain and operate, or may establish organizations to operate, not for profit institutions to further purposes permitted by subsection (a)(2) of K.S.A. 40-742. Such institutions may furnish services free or at a reasonable charge. Any real or personal property owned, held or leased by the society for this purpose shall be reported in every annual statement.
History: L. 1988, ch. 154, § 29; January 1, 1989.
(a) A domestic society may, by a reinsurance agreement, cede any individual risk or risks in whole or in part to an insurer, other than another fraternal benefit society, having the power to make such reinsurance and authorized to do business in this state, or if not so authorized, one which is approved by the commissioner of insurance, but no such society may reinsure substantially all of its insurance in force without the written permission of the commissioner. It may take credit for the reserves on such ceded risks to the extent reinsured, but no credit shall be allowed as an admitted asset or as a deduction from liability to a ceding society for reinsurance made, ceded, renewed or otherwise becoming effective after the effective date of this act unless the reinsurance is payable by the assuming insurer on the basis of the liability of the ceding society under the contract or contracts reinsured without diminution because of the insolvency of the ceding society.
(b) Notwithstanding the limitation in subsection (a), a society may reinsure the risks of another society in a consolidation or merger approved by the commissioner under K.S.A. 40-768.
History: L. 1988, ch. 154, § 30; January 1, 1989.
(a) A domestic society may consolidate or merge with any other society by complying with the provisions of this section. It shall file with the commissioner of insurance:
(1) A certified copy of the written contract containing in full the terms and conditions of the consolidation or merger;
(2) a sworn statement by the president and secretary or corresponding officers of each society showing the financial condition thereof on a date fixed by the commissioner but not earlier than December 31, next preceding the date of the contract;
(3) a certificate of such officers, duly verified by their respective oaths, that the consolidation or merger has been approved by a 2/3 vote of the supreme governing body of each society, such vote being conducted at a regular or special meeting of each such body, or, if the society's laws so permit, by mail; and
(4) evidence that at least 60 days prior to the action of the supreme governing body of each society, the text of the contract has been furnished to all members of each society either by mail or by publication in full in the official publication of each society.
(b) If the commissioner finds that the contract is in conformity with the provisions of this section, that the financial statements are correct and that the consolidation or merger is just and equitable to the members of each society, the commissioner shall approve the contract and issue a certificate to such effect. Upon such approval, the contract shall be in full force and effect unless any society which is a party to the contract is incorporated under the laws of any other state or territory. In such event the consolidation or merger shall not become effective unless and until it has been approved as provided by the laws of such state or territory and a certificate of such approval filed with the commissioner, or, if the laws of such state or territory contain no such provision, then the consolidation or merger shall not become effective unless and until it has been approved by the commissioner of insurance of such state or territory and a certificate of such approval filed with the commissioner of insurance of this state.
(c) Upon the consolidation or merger becoming effective as herein provided, all the rights, franchises and interests of the consolidated or merged societies in and to every species of property, real, personal or mixed, and things in action belonging to such societies shall be vested in the society resulting from or remaining after the consolidation or merger without any other instrument, except that conveyance or real property may be evidenced by proper deeds. The title to any real estate or interest therein, vested under the laws of this state in any of the societies consolidated or merged, shall not revert or be in any way impaired by reason of the consolidation or merger but shall vest absolutely in the society resulting from or remaining after such consolidation or merger.
(d) The affidavit of any officer of the society or of anyone authorized by it to mail any notice or document, stating that such notice or document has been duly addressed and mailed, shall be prima facie evidence that such notice or document has been furnished the addressees.
History: L. 1988, ch. 154, § 31; January 1, 1989.
Any fraternal benefit society incorporated under the laws of the state of Kansas may reorganize and convert itself into a mutual life insurance company or into a stock life insurance company by conforming with the provisions of K.S.A. 40-770 through 40-776. Nothing contained herein shall affect any conversion of a fraternal benefit society carried out under the laws of this state prior to the effective date of this act.
History: L. 1988, ch. 154, § 32; January 1, 1989.
A proposal to make a conversion may be submitted to either a regular or a special meeting of the supreme legislative body of any such fraternal benefit society by action of either the supreme legislative body or by the directors of such society. At least 40 days prior to the meeting of the supreme legislative body which is to consider such proposed conversion, there shall be mailed to each member or policyholder of the society, to the post office address shown by the records of the society, and to each subordinate lodge or branch of the society a written or printed notice of such proposed conversion. Such notice shall be given either personally or by mail to each member or policyholder entitled to vote. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail at the address as it appears on the records of the company. Such notice, whether the meeting is annual, periodic or special, shall state the place, day, hour and purpose of the meeting, and a copy of the plan for such proposed conversion shall be included in or enclosed with such notice. Within 30 days after the delivery of such notice, each subordinate lodge or branch shall in regular or called meeting vote upon the proposal and may give instructions to its representative or delegate to such forthcoming meeting of either district or the supreme legislative body as provided by laws of such society. If any such subordinate lodge, branch or district shall fail to elect delegates to such supreme meeting, any vacancy thus occurring shall be filled as provided by the laws of such society. At such meeting of the supreme governing body of such society, in addition to the duly accredited delegates, any member of such society may attend and be heard on the subject of the proposed conversion. No such society shall convert itself into a mutual or stock life insurance company except upon such terms and conditions as in the opinion of the commissioner of insurance shall fully protect the rights and interests of its members and policyholders, and the plan of such proposed conversion shall be submitted to and approved by the commissioner before it is submitted to the members or policyholders and the subordinate lodges or branches as hereinbefore provided. Any plan for converting any fraternal benefit society into a stock company under the provisions hereof shall offer to each member or policyholder the following three options:
First:
Any member not desiring to participate in the new organization shall be entitled to surrender their policy or certificate and receive thereon its net cash surrender value plus their share of the divisible free surplus, such share being determined by dividing the amount of such divisible free surplus by the proportion that such member's cash value bears to total cash values of all policies and certificates in force, such values being computed as of the end of the year preceding the date of conversion.
Second:
Any member desiring to do so may permit their policy or certificate to be taken over by the new organization without surrendering any rights or being subject to any additional payments or penalties other than those called for in their contract.
Third:
Each member or policyholder in the new organization may retain their insurance as provided in the second option, and in addition, shall be entitled to purchase their proportionate share of the capital stock in the new company, as hereinafter set forth.
Each of these options shall be submitted to the members at the same time. In the event of the failure of any member or policyholder to elect any of such options within 90 days as specified within the plan, such member shall be deemed to have elected the second of such options.
History: L. 1988, ch. 154, § 33; January 1, 1989.
If, pursuant to such notice and convening of the regular or special meeting of the supreme legislative body, there shall be adopted a resolution by delegates representing lodges which comprise not less than 60% of the total membership of the society, authorizing the conversion of the fraternal benefit society into a mutual or stock life insurance company, the directors of such society shall file with the commissioner of insurance and the secretary of state a certificate setting forth the following:
(a) The name of the society, and the new name of the corporation by which it shall thereafter be known. If the new name of the corporation shall change from the former name of the society, it shall not adopt the same name as that of any other society or life insurance company doing business in this state or a name similar to that of any other such society or life insurance company doing business in this state;
(b) the objective of the corporation;
(c) the location of its principal offices, which must be within the state of Kansas, and the names of the principal officers of such corporation, who shall serve until their successors are elected and qualified;
(d) the period, if any, for the duration of the corporation;
(e) the amount of the capital stock authorized, if any, and the number of shares into which it is divided, and the amount of capital stock to be immediately paid in, which shall not be less than $100,000 and generally comply with the laws of the state of Kansas governing the organization of insurance companies; and
(f) any other provisions which the supreme or governing body may choose to insert to protect the membership of the retiring society and insure the business and the conduct of the affairs of the new corporation.
History: L. 1988, ch. 154, § 34; January 1, 1989.
A report of such meeting of the supreme legislative body certified to by the presiding officers under the corporate seal of such society shall also be filed with the commissioner.
History: L. 1988, ch. 154, § 35; January 1, 1989.
If such fraternal benefit society is converting into a stock life insurance company, it shall be the duty of such fraternal benefit society to advise every member or policyholder of the right to subscribe for and purchase the stock of such stock life insurance company and of the amount of such stock for which such member or policyholder is entitled to subscribe and all other terms and conditions. The amount of such capital stock available to each member or policyholder shall be determined as set forth in the plan of proposed conversion. Exercise of such right shall be limited to 90 days after notice. Notice of such right shall be written or printed on a form approved by the commissioner of insurance and shall be given either personally or by mail. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, with postage prepaid, addressed to the member or policyholder at the address as it appears on the records of the society.
No portion of the stock shall be offered for public sale until the membership of the society shall have had preference in the purchase thereof. No one member shall be allowed to subscribe for or purchase more than 25% of the capital stock of the new company if there are other members applying in writing for the purchase of stock whose subscriptions are not filled. If the membership shall not have subscribed for the total capital stock authorized, others who were not members of the society at the time of the conversion may be permitted to subscribe for stock and be allowed equal rights in the ownership thereof with all other stockholders.
History: L. 1988, ch. 154, § 36; January 1, 1989.
When any fraternal benefit society shall have complied with the provisions of this act and the other laws of this state regulating the incorporation of life insurance companies and shall receive from the commissioner of insurance its charter or certificate of authority to transact business as a life insurance company, its reorganization and conversion into such company shall be complete. Such reorganized and converted corporation shall be deemed in law to have all the rights, privileges, powers and authority of any other corporation organized for doing a life insurance business in the state of Kansas and be controlled by the laws applying thereto. Such reorganized and converted corporation shall be obligated to maintain reserves attributable to policies or certificates of insurance issued prior to such conversion on the respective bases provided in such policies or certificates of insurance or in the laws applicable at their respective dates of issue, but in no event on a basis providing lower reserves than the national fraternal congress table of mortality with interest assumed at the rate of 4% per annum.
The new corporation shall be deemed in law to be a continuation of the business of the fraternal benefit society when the reorganization and conversion shall have been accomplished by the formation of a new company or by amendment to its former charter, and such reorganized corporation shall succeed to and become invested with all and singular the rights, privileges, franchises, and all property, real, personal, or mixed of the former society, and all debts due on any account and all other things and choses in action, theretofore belonging to such fraternal benefit society, and all property rights, privileges, franchises, and all other interest shall thereafter be as effectually the property of such organized and converted corporation as they were the property of the former fraternal benefit society, and the title to any real estate by deed or otherwise vested in the former fraternal benefit society shall forthwith vest in such organized converted corporation, and the title thereto shall not in any way be impaired by reason of such change or reincorporation. The commissioner of insurance shall have the power and authority to require such converted company to dispose of or revalue any security, investment or asset regarded as ineligible for the converted company upon reasonable notice and terms to such converted company.
History: L. 1988, ch. 154, § 37; January 1, 1989.
The rights of all members, policyholders and creditors, and the standing of all claims under the former fraternal benefit society shall be preserved unimpaired under the new corporation, and all debts, liabilities and duties of the former fraternal benefit society shall thenceforth attach to the reorganized corporation and may be enforced against it to the same extent as if the debts and liabilities had been incurred or contracted by the new corporation, and all outstanding benefit certificates or policies issued by the fraternal benefit society shall be valid obligations of the new corporation without the issuance of new policies. There shall be filed an instrument appointing the commissioner of insurance and the commissioner's successor or successors in office the true and lawful attorney of such company for service of process, containing the same provisions and having the same effect as the instrument required by K.S.A. 40-777.
History: L. 1988, ch. 154, § 38; January 1, 1989.
Such organized and converted corporation shall be obliged to carry out and perform all of the obligations of every kind and character owing by the former fraternal benefit society to the holders of its policies or beneficial certificates, and the same may be enforced against it to the extent as if the policies and benefit certificates had been issued by it after conversion. Any pending actions at law wherein the former fraternal benefit society was a party shall be unaffected by the conversion thereof and shall be prosecuted by or against such reorganized and converted corporation the same as if the conversion had not taken place.
History: L. 1988, ch. 154, § 39; January 1, 1989.
Every society authorized to do business in this state shall appoint in writing the commissioner of insurance as agent for service of process as provided in K.S.A. 40-218, and amendments thereto. No such service shall require a society to file its answer, pleading or defense in less than 30 days from the date of mailing the copy of the service to a society. Legal process shall not be served upon a society except in the manner herein provided.
History: L. 1988, ch. 154, § 40; January 1, 1989.
All decisions and findings of the commissioner of insurance made under the provisions of this act shall be subject to review by proper proceedings in any court of competent jurisdiction in this state.
History: L. 1988, ch. 154, § 41; January 1, 1989.
(a) A person who knowingly makes any false or fraudulent statement or representation in or with reference to any application for membership or for the purpose of obtaining money from or a benefit in any society shall, upon conviction, be fined not less than $100 nor more than $500, or imprisoned in the county jail not less than 30 days nor more than one year, or both.
(b) Any person who willfully makes a false or fraudulent statement in any verified report or declaration under oath required or authorized by this act, or of any material fact or thing contained in a sworn statement concerning the death or disability of an insured for the purpose of procuring payment of a benefit named in the certificate, shall be guilty of perjury and shall be subject to the penalties therefor prescribed by law.
(c) Any person who solicits membership for, or in any manner assists in procuring membership in, any society not licensed to do business in this state shall, upon conviction, be fined not less than $50 nor more than $200.
(d) Any person guilty of a willful violation of, or neglect or refusal to comply with, the provisions of this act for which a penalty is not otherwise prescribed shall, upon conviction, be subject to a fine not exceeding $200.
History: L. 1988, ch. 154, § 42; January 1, 1989.
(a) Nothing contained in this act shall be construed to affect or apply to societies and organizations exempted by K.S.A. 40-202, and amendments thereto.
(b) The commissioner of insurance may require from any society or association, by examination or otherwise, such information as will enable the commissioner to determine whether such society or association is exempt from the provisions of this act.
History: L. 1988, ch. 154, § 43; January 1, 1989.
The commissioner of insurance may adopt such rules and regulations as are reasonable, necessary and incidental to the enforcement and administration of the provisions of this act.
History: L. 1988, ch. 154, § 44; January 1, 1989.
If any section, paragraph, sentence or phrase of this act shall be declared unconstitutional or void for any reason, such fact shall not in any way affect the remaining sections, paragraphs, sentences or phrases of this act, but the same shall continue in full force and effect.
History: L. 1988, ch. 154, § 45; January 1, 1989.
History: L. 1927, ch. 231, 40-801; L. 1933, ch. 72, § 1 (Special Session); Repealed, L. 1961, ch. 234, § 2; June 30.
History: L. 1927, ch. 231, 40-802, 40-803; Repealed, L. 1961, ch. 234, § 2; June 30.
History: L. 1927, ch. 231, 40-804; Repealed, L. 1961, ch. 234, § 2; June 30.
History: L. 1927, ch. 231, 40-805; L. 1933, ch. 72, § 2; (Special Session); Repealed, L. 1961, ch. 234, § 2; June 30.
Any corporation already organized under the laws of this state and transacting the business of burial insurance on January 1, 1961, may continue the transaction of such business as provided by the laws of this state prior to the effective date of this act, except that such corporation may write burial insurance in an amount not exceeding three thousand dollars ($3,000) on any one life. If and when such a corporation alters its capital structure it must then comply with all of the requirements relating to capital stock life insurance companies organized under other provisions of the insurance code of the state of Kansas.
History: L. 1961, ch. 234, § 1; L. 1979, ch. 140, § 1; July 1.
It shall be lawful for any stock fire insurance company organized under the laws of this state, the United States, or any other country, state or territory, and authorized to transact business in this state, having a paid-up capital of not less than $450,000, a surplus of $300,000 and a deposit equal to the minimum capital stock to make contracts of insurance or to cede or receive reinsurance thereon, for such of the following kinds of business as are specified in its articles of incorporation, namely:
(a) To make insurance upon property or any valuable interest thereon against loss or damage caused by fire, lightning, or other electrical disturbances, earthquake, windstorm, cyclone, tornado, tempest, hail, frost, snow, ice, sleet, weather or climatic condition, including excess or deficiency of moisture, flood, rain, or drought, a rising of the waters of the ocean or its tributaries, bombardment, invasion, insurrection, riot, civil war or commotion, military or usurped power, explosion, other than the explosion of steam boilers, or the breaking of flywheels, against loss or damage from any cause to trees, crops and farm products.
(b) To make insurance against loss or damage to property and against the liability of the insured for loss or damage to the property of others caused by water entering through leaks or openings in buildings or from the breakage or leakage of sprinklers, pumps, water pipes, plumbing and all tanks, apparatus, conduits and containers designated to bring water into buildings or for its storage or utilization therein, or caused by the falling of a tank, tank platform or supports, and against loss or damage from any cause to such sprinklers, pumps, water pipes, plumbing, tanks, apparatus, conduits or containers.
(c) To make insurance upon teams, automobiles and all vehicles, airplanes, seaplanes, dirigibles and other aircraft: (1) Against all loss or damage to the same, their fittings and contents from any cause, including the hazards of burglary, theft or other criminal act, vandalism or malicious mischief. (2) Against loss or damage to property, including legal liability therefor, caused by the operation, maintenance and use of the same.
(d) To make insurance against loss or damage to vessels, craft, aircraft, automobiles and vehicles of every kind, excluding automobiles operating under their own power or while in storage not incidental to transportation, as well as all goods, freights, cargoes, merchandise, effects, disbursements, profits, moneys, bullion, precious stones, securities, choses in action, evidence of debt, valuable papers, bottomry and respondentia interests, and all kinds of property and interests herein in respect to, pertaining to or in connection with any or all risks or perils of navigation, transit or transportation, including war risks, on or under any seas or waters, on land or in the air, or while being assembled, packed, crated, baled, compressed or similarly prepared for shipment or while awaiting the same, or during any delays, storage, transshipment or reshipment incidental thereto; including marine builders' risks and war risks; and from loss or damage to persons or property in connection with or appertaining to marine, inland marine, transit or transportation insurance, including loss or damage to either, arising out of or in connection with the construction, repair, operation, maintenance or use of the subject matter of such primary insurance (but not including life insurance or surety bonds), but except as herein specified shall not mean insurance against loss by reason of bodily injury to the person.
(e) Against loss or damage to property from any casualty, power to insure against which is not prohibited by the laws of this state or exclusively delegated by this code to any other class or kind of company.
(f) And against consequential loss or damage arising from any of the causes above enumerated.
(g) Against loss or damage to horses, cattle, other livestock and domestic animals by accident, theft or death, or against any known or contingent event whatever which may lawfully be the subject of insurance.
And generally to do and perform all other matters and things proper to promote these objects. No insurance company organized under the laws of this state transacting business in this state shall expose itself to loss on any one risk or hazard to an amount exceeding 10% of its paid-up capital and surplus, unless the excess shall be reinsured in some other company duly authorized to transact similar business in this state or as otherwise provided in the insurance code, and no insurance company not organized under the laws of this state and transacting business in this state shall expose itself to loss on any one risk or hazard to an amount exceeding 10% of its paid-up capital and surplus unless the excess shall be reinsured either in some company duly authorized to transact similar business in this state or as provided by the laws of such company's domiciliary state. Any stock company with charter powers so to do and having a paid-up capital stock of at least $900,000 and a surplus of at least $600,000, may in addition to the kinds and classes of business mentioned in this section, transact the kinds and classes of business mentioned in K.S.A. 40-1102, and amendments thereto, including surety bonds and except as herein specified, insurance against loss by reason of bodily injuries as provided for in K.S.A. 40-1102, and amendments thereto, and shall maintain all reserves required by law for the kinds and class of business transacted. Any company executing suretyship obligations shall be subject to the provisions of K.S.A. 40-1107, and amendments thereto. Until May 1, 1989, stock insurers which were authorized to transact business in Kansas after January 1, 1969, but before January 1, 1984, shall be required to have paid-up capital stock, surplus and deposits equal to that which was required by this section prior to the passage of this act. After May 1, 1989, such companies shall comply with the paid-up capital stock, surplus and deposit requirements provided by this act.
Until May 1, 1989, companies doing business in this state on January 1, 1969, shall be required to have a paid-up capital stock, surplus and deposit equal to that required of such companies prior to the passage of this act. On and after May 1, 1989, companies doing business in this state on January 1, 1969, shall be required to have a paid-up capital stock, surplus and deposit equal to that required of all other companies to whom this section applies immediately prior to the passage of this act.
On and after May 1, 1994, companies doing business in this state on January 1, 1969, shall comply with the paid-up capital, surplus and deposit requirements provided by this act.
No provision of this act shall require insurance companies doing business in this state on January 1, 1969, which have subsequently become authorized to transact business in accordance with a different article of chapter 40 of the Kansas Statutes Annotated to comply with the paid-up capital, surplus and deposit requirements of this act until May 1, 1994.
History: L. 1927, ch. 231, 40-901; L. 1951, ch. 294, § 1; L. 1965, ch. 300, § 3; L. 1967, ch. 261, § 1; L. 1969, ch. 237, § 3; L. 1970, ch. 179, § 1; L. 1971, ch. 167, § 1; L. 1972, ch. 184, § 1; L. 1984, ch. 169, § 3; July 1.
Every stock fire insurance company organized under the laws of this state, shall deliver to the commissioner of insurance cash or securities of the kinds in which such a company is permitted to invest its funds under the provisions of this code, in an amount equal to not less than the minimum capital stock required of such a company by the preceding section, and such cash or securities shall be deposited pursuant to K.S.A. 40-229a for the benefit of its policyholders and creditors.
History: L. 1927, ch. 231, 40-902; L. 1969, ch. 237, § 4; L. 1996, ch. 25, § 10; July 1.
Revisor's Note: Later act, see 40-2,110.
History: L. 1927, ch. 231, 40-903; L. 1967, ch. 262, § 1; Repealed, L. 1980, ch. 136, § 2; July 1.
History: L. 1927, ch. 231, 40-904; L. 1967, ch. 263, § 1; Repealed, L. 1980, ch. 136, § 2; July 1.
(a) (1) Whenever any policy of insurance or an increase in the amount of coverage in an existing policy of insurance shall be written to insure any improvements upon real property in this state against loss by fire, tornado, windstorm or lightning, and the property insured shall be wholly destroyed, without criminal fault on the part of the insured or the insured's assigns, the amount of insurance written in such policy shall be taken conclusively to be the true value of the property insured, and the true amount of loss and measure of damages, and the payment of money as a premium for insurance shall be prima facie evidence that the party paying for such insurance is the owner of the property insured.
(2) Improvements on real property shall not be required to be insured for more than the reasonably estimated replacement cost of such improvements. Nothing herein shall prohibit a policy or endorsement to a policy as described in this subsection from containing an inflation guard provision or similar provision. Nothing in this section shall be deemed to create a private cause of action. For the purposes of this paragraph, "improvements on real property" means a fixture, building or other structure attached to real property and intended as a permanent addition to such real property.
(b) The provisions of subsection (a) shall not apply to:
(1) New policies of fire insurance or existing policies of fire insurance where there has been an increase in the amount of coverage of 25% or more, until such policies have been in effect for at least 60 days. If there is a total loss by fire within the sixty-day period and the insurer pays less than the face value of the policy, the insurer shall refund the difference in premium between the amount of insurance purchased and the premium applicable for the amount of the loss actually paid. This paragraph shall not apply to a loss by fire caused by lightning.
(2) Builder's risk policies of insurance covering property in the process of being constructed. The value of the property insured shall be the actual value of the property at the time of the loss.
History: L. 1927, ch. 231, 40-905; L. 1981, ch. 192, § 1; L. 2005, ch. 163, § 9; July 1.
It shall be the duty of every person, corporation, association, partnership, company or individual issuing any policy insuring real property of any description against loss by fire or any of the risks usually insured against in their insurance policies, by itself or its agents, to make careful examination of the premises insured, and to place in such policy a full, complete and correct description of the property or premises insured thereby; and no failure to properly and fully describe such property or premises, nor any erroneous statement in the description of such property or premises, shall be a defense in any action to collect for loss thereon or thereunder when such description shall be sufficient to enable a person of ordinary intelligence to find and fully identify the property or premises upon which said insurance was written and upon which premiums have been paid, and this notwithstanding any provisions contained in the policy.
History: L. 1927, ch. 231, 40-906; June 1.
Any condition or stipulation in an application, policy or contract of fire insurance hereafter made making the policy void in case the insured premises become vacant, shall not prevent recovery on such policy if it shall be shown by the plaintiff that the insured premises had ceased to be vacant and were occupied at the time of the loss.
History: L. 1927, ch. 231, 40-907; June 1.
That in all actions now pending, or hereafter commenced in which judgment is rendered against any insurance company on any policy given to insure any property in this state against loss by fire, tornado, lightning or hail, the court in rendering such judgment shall allow the plaintiff a reasonable sum as an attorney's fee for services in such action including proceeding upon appeal to be recovered and collected as a part of the costs: Provided, however, That when a tender is made by such insurance company before the commencement of the action in which judgment is rendered and the amount recovered is not in excess of such tender no such costs shall be allowed.
History: L. 1927, ch. 231, 40-908; L. 1929, ch. 199, § 1; L. 1967, ch. 257, § 2; July 1.
Revisor's Note: Later act, see 40-246b.
History: L. 1927, ch. 231, 40-909; Repealed, L. 1955, ch. 242, § 4; June 30.
Revisor's Note: Later act, see 40-246c.
History: L. 1927, ch. 231, 40-910; Repealed, L. 1955, ch. 242, § 4; June 30.
History: L. 1927, ch. 231, 40-911; Repealed, L. 1947, ch. 278, § 20; October 1.
History: L. 1927, ch. 231, 40-912; Repealed, L. 1947, ch. 278, § 20; October 1.
History: L. 1927, ch. 231, 40-913; Repealed, L. 1947, ch. 278, § 20; October 1.
History: L. 1927, ch. 231, 40-914 to 40-916; Repealed, L. 1947, ch. 278, § 20; October 1.
History: L. 1927, ch. 231, 40-917; Repealed, L. 1947, ch. 278, § 20; October 1.
History: L. 1927, ch. 231, 40-918; Repealed, L. 1947, ch. 278, § 20; October 1.
History: L. 1927, ch. 231, 40-919; Repealed, L. 1947, ch. 278, § 20; October 1.
History: L. 1927, ch. 231, 40-920; Repealed, L. 1947, ch. 278, § 20; October 1.
History: L. 1927, ch. 231, 40-921; Repealed, L. 1947, ch. 278, § 20; October 1.
History: L. 1927, ch. 231, 40-922; Repealed, L. 1947, ch. 278, § 20; October 1.
History: L. 1927, ch. 231, 40-923; Repealed, L. 1947, ch. 278, § 20; October 1.
In case of destruction or damage of property by fire or tornado where the same is insured against fire or tornado, it shall be the duty of the insuring company or companies, within ten days after receiving notice thereof and upon written request, to furnish to the insured proper blanks upon which to make the required proof of such loss with full directions as to what proof is required, and if any such company fails to comply with this section the failure of the insured to make proper proof of loss prior to the suit shall be no defense to a suit upon the policy, and in all cases the insured shall have a reasonable time in which to make such proof after the blanks and directions are received: Provided, however, That the furnishing of such blanks and directions shall in no wise be construed as an admission of liability by the insuring company or companies.
History: L. 1931, ch. 213, § 1; March 16.
History: L. 1947, ch. 278, § 1; Repealed, L. 1997, ch. 154, § 18; July 1.
History: L. 1947, ch. 278, § 2; L. 1961, ch. 235, § 1; Repealed, L. 1997, ch. 154, § 18; July 1.
History: L. 1947, ch. 278, § 3; L. 1965, ch. 303, § 1; L. 1987, ch. 165, § 1; L. 1988, ch. 155, § 1; Repealed, L. 1997, ch. 154, § 18; July 1.
History: L. 1947, ch. 278, § 4; L. 1978, ch. 177, § 1; L. 1979, ch. 141, § 1; L. 1988, ch. 155, § 2; Repealed, L. 1997, ch. 154, § 18; July 1.
History: L. 1990, ch. 154, § 1; Repealed, L. 1997, ch. 154, § 18; July 1.
History: L. 1947, ch. 278, § 5; L. 1965, ch. 303, § 2; L. 1988, ch. 155, § 3; L. 1990, ch. 165, § 1; Repealed, L. 1997, ch. 154, § 18; July 1.
History: L. 1947, ch. 278, § 5; L. 1965, ch. 303, § 2; L. 1988, ch. 356, § 81; Repealed, L. 1990, ch. 165, § 3; July 1.
History: L. 1947, ch. 278, § 6; L. 1988, ch. 356, § 82; Repealed, L. 1997, ch. 154, § 18; July 1.
History: L. 1947, ch. 278, § 7; L. 1965, ch. 303, § 3; Repealed, L. 1997, ch. 154, § 18; July 1.
History: L. 1947, ch. 278, §§ 8 to 12; L. 1988, ch. 356, §§ 83 to 87; Repealed, L. 1997, ch. 154, § 18; July 1.
History: L. 1947, ch. 278, § 13; L. 1987, ch. 166, § 1; Repealed, L. 1997, ch. 154, § 18; July 1.
No person or organization shall willfully withhold information from, or knowingly give false or misleading information to, the commissioner, any statistical agency designated by the commissioner, any rating organization, or any insurer, which will affect the rates or premiums chargeable under this act. If the commissioner finds that any person or organization has violated this section, the commissioner, after notice and the opportunity for hearing, may impose a penalty of not more than $500 for each such violation. If the commissioner determines that such violation was willful, the commissioner may impose a penalty of not more than $2,000 for each such violation. Such penalties may be in addition to any other penalty provided by law.
History: L. 1947, ch. 278, § 14; L. 1997, ch. 24, § 3; July 1.
History: L. 1947, ch. 278, § 15; L. 1965, ch. 303, § 4; L. 1988, ch. 356, § 88; Repealed, L. 1997, ch. 24, § 7; Repealed, L. 1997, ch. 154, § 18; July 1.
History: L. 1947, ch. 278, § 16; L. 1953, ch. 229, § 1; L. 1965, ch. 303, § 5; L. 1986, ch. 318, § 29; L. 1988, ch. 356, § 89; Repealed, L. 1997, ch. 154, § 18; July 1.
History: L. 1947, ch. 278, §§ 17 to 19; Repealed, L. 1997, ch. 154, § 18; July 1.
History: L. 1969, ch. 236, §§ 1, 2; Repealed, L. 1997, ch. 154, § 18; July 1.
The purpose of this act is to:
(a) Protect policyholders and the public against the adverse effects of excessive, inadequate or unfairly discriminatory rates;
(b) encourage, as the most effective way to produce rates that conform to the standards of paragraph (a), independent action by and reasonable price competition among insurers;
(c) provide formal regulatory controls for use if independent action and price competition fail;
(d) authorize cooperative action among insurers in the rate making process, and to regulate such cooperation in order to prevent practices that tend to bring about monopoly or to lessen or destroy competition;
(e) encourage the most efficient and economic marketing practices; and
(f) regulate the business of insurance in a manner that will preclude application of federal antitrust laws.
History: L. 1997, ch. 154, § 1; July 1.
(a) This act applies to fire and casualty insurance, including fidelity, surety and guarantee bonds, on risks or operations in this state except reinsurance, accident and health insurance, insurance against loss of or damage to, or against liability arising out of the ownership, maintenance or use of any aircraft.
(b) As used herein, the term "fire insurance" shall be construed to apply to and include the classes of insurance described in K.S.A. 40-901. The term "casualty insurance" shall be construed to apply to and include the classes of insurance described in (b), (c), (d), (e), (i), (j), (k), (l) and (m) of K.S.A. 40-1102 and amendments thereto, and paragraphs (b), (d), (e), (f), (g) and (h) of K.S.A. 40-1203, and amendments thereto, and the classes of insurance governed by Article 12a, Chapter 40, Kansas Statutes Annotated.
(c) For title insurance rate filing purposes, only those charges made in connection with the issuance, sale and servicing of title insurance policies or real estate transactions by title insurance companies, agencies and agents on property located in counties having a population of more than 10,000 shall be subject to filing requirements of this act. Charges made for the assumption of risk under title insurance policies which shall be construed as premium for the purposes of K.S.A. 40-252, and amendments thereto, shall include risk premium, underwriting expenses such as searching charges, examination charges, to include any such charges retained by agents of the title insurer, charges for determining insurability and every other charge related to the issuance of the title insurance policy. Services provided by agents which are not related to insurance, such as performance of real estate closings or extension of the abstract of title, may be charged but not included as premium. No provision of this act shall apply to the filing or regulation of title insurance rates other than the requirements imposed by this section.
Every insurance agent, agency or company authorized to transact title insurance in this state shall file with the commissioner every manual of classification, rules and rates, every rating plan, every rate card and every modification of the foregoing which may be used in connection with providing title insurance or other services in connection with real estate transactions on property located in counties having a population of 10,000 or more. No charge may be made by any title insurance agent, agency or company that has not been filed with the commissioner as required by this section. Any service customarily provided by a title insurance agent or affiliated entity that is not included in the rates shall be disclosed when the rates are filed with the commissioner.
(d) This act shall also apply to reciprocal or interinsurance exchanges organized or operating under article 16 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, with respect to the classes of insurance enumerated in this section.
History: L. 1997, ch. 154, § 2; July 1.
Rates shall not be excessive, inadequate or unfairly discriminatory, nor shall an insurer charge any rate which if continued will have or tend to have the effect of destroying competition or creating a monopoly. Rates are presumed not to be excessive if a reasonable degree of market competition exists at the consumer level with respect to the class of business to which they apply. Rates in a noncompetitive market are excessive if they are producing or are likely to produce unreasonably high profits for the insurance provided or if expenses are unreasonably high in relation to services rendered. A competitive market in a type of insurance subject to this act is presumed to exist unless the commissioner after notice of hearing determines and orders that a reasonable degree of competition does not exist in the market. Such order shall expire no later than one year after issuance unless the commissioner renews the rule after a hearing and a finding of the continued lack of a reasonable degree of competition. In determining whether a reasonable degree of market competition exists, the commissioner shall consider all relevant tests, including: (1) The number, market share, and concentration of insurers, as measured by the 1992 horizontal merger guidelines published in the Federal Register September 10, 1992 (57 FR 41552), actively engaged in the class of business; (2) the existence of rate differentials in that class of business; (3) ease of entry into the market; and (4) whether long-run profitability for insurers in that class of business is unreasonably high in relation to its riskiness. If such competition does not exist, rates are excessive if they are likely to produce a long run profit that is unreasonably high in relation to the riskiness of the class of business, or if expenses are unreasonably high in relation to the services rendered.
Rates are inadequate if they are clearly insufficient, together with the investment income attributable to them, to sustain projected losses and expenses in the class of business to which they apply.
One rate is unfairly discriminatory in relation to another in the same class if it clearly fails to reflect equitably the differences in expected losses and expenses. Rates are not unfairly discriminatory because different premiums result for policyholders with like loss exposures but different expense factors or like expense factors but different loss exposures, so long as the rates reflect the differences with reasonable accuracy. Rates are not unfairly discriminatory if they are averaged broadly among persons insured under a group, franchise, mass marketed plan or blanket policy.
History: L. 1997, ch. 154, § 3; July 1.
In determining whether rates are not excessive or inadequate or not unfairly discriminatory:
(a) Due consideration shall be given to:
(1) Past and prospective loss and expense experience within and outside the state;
(2) catastrophe hazards and contingencies;
(3) trends within and outside this state;
(4) loadings for leveling premium rates over time;
(5) dividends, savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members, or subscribers and the investment income of the insurer; and
(6) all other relevant factors within and outside the state, including the judgment of technical personnel.
(b) The expense provisions included in the rates to be used by an insurer may reflect the operating methods of the insurer, or group of insurers, and, so far as it is credible, its own expense experience.
(c) Risks may be classified in any reasonable way for the establishment of rates and minimum premiums, except that no classification may be based on race, color, creed or national origin and classifications in automobile insurance may not be based on physical disability of an insured. Rates thus produced may be modified for individual risks in accordance with rating plans, schedules, individual risk premium modification plans and expense reduction plans that establish reasonable standards for measuring probable variations in experience, hazards, expenses or any combination of those factors.
Such standards shall permit recognition of expected differences in loss or expense characteristics, and shall be designed so that such plans are reasonable and equitable in their application, and are not unfairly discriminatory, violative of public policy or otherwise contrary to the best interests of the people of this state. This section shall not prevent the development of new or innovative rating methods which otherwise comply with this act.
(d) Rates may be modified for individual risks, upon written application of the insured, stating the insured's reasons therefore, filed with and not disapproved by the commissioner within 10 days after filings.
(e) The rates may contain provisions for contingencies and an allowance permitting a reasonable profit. In determining the reasonableness of the profit, consideration shall be given to the investment income attributable to the line of insurance.
(f) The commissioner may by rule exempt any person or class of persons, line of insurance, or any market segment from any or all of the provisions of this chapter, if and to the extent that the commissioner finds their application unnecessary to achieve the purposes of this act.
(g) Once it has been filed, use of any rating plan shall be mandatory and such plan shall be applied uniformly for eligible risks in a manner that is not unfairly discriminatory.
History: L. 1997, ch. 154, § 4; L. 2011, ch. 113, § 4; July 1.
(a) Every insurer shall file with the commissioner, except as to inland marine risks where general custom of the industry is not to use manual rates or rating plans, every manual of classifications, rules and rates, every rating plan, policy form and every modification of any of the foregoing which it proposes to use. Every such filing shall indicate the proposed effective date and the character and extent of the coverage contemplated and shall be accompanied by the information upon which the insurer supports the filings. A filing and any supporting information shall be open to public inspection after it is filed with the commissioner, except that disclosure shall not be required for any information contained in a filing or in any supporting documentation for the filing when such information is either a trade secret or copyrighted. For the purposes of this section, the term "trade secret" means the same as defined in K.S.A. 60-3320, and amendments thereto. An insurer may satisfy its obligations to make such filings by authorizing the commissioner to accept on its behalf the filings made by a licensed rating organization or another insurer. Nothing contained in this act shall be construed to require any insurer to become a member or subscriber of any rating organization.
(b) Certificate of insurance forms must be filed with the commissioner of insurance and approved prior to use. Notwithstanding the "large risk" filing exemption in subsection (i), a certificate of insurance cannot be used to modify, alter or amend the insurance policy it describes. The certificate of insurance shall contain the following or similar language: The certificate of insurance neither affirmatively nor negatively amends, extends or alters the coverage afforded by the policies listed thereon. An industry standard setting organization may be authorized by the commissioner of insurance to file certificate of insurance forms on behalf of authorized insurers.
(c) Any rate filing for the basic coverage required by K.S.A. 40-3401 et seq., and amendments thereto, loss costs filings for workers compensation, and rates for assigned risk plans established by article 21 of chapter 40 of the Kansas Statutes Annotated or rules and regulations established by the commissioner shall require approval by the commissioner before its use by the insurer in this state. As soon as reasonably possible after such filing has been made, the commissioner shall in writing approve or disapprove the same, except that any filing shall be deemed approved unless disapproved within 30 days of receipt of the filing.
(d) Any other rate filing, except personal lines filings, shall become effective on filing or any prospective date selected by the insurer, subject to the commissioner disapproving the same if the rates are determined to be inadequate, excessive, unfairly discriminatory or otherwise fails to meet the requirements of this act. Personal lines rate filings shall be on file for a waiting period of 30 days before becoming effective, subject to the commissioner disapproving the same if the rates are determined to be inadequate, excessive, unfairly discriminatory or otherwise fail to meet requirements of this act. The term "personal lines" shall mean insurance for noncommercial automobile, homeowners, dwelling fire-and-renters insurance policies, as defined by the commissioner by rules and regulations. A filing complies with this act unless it is disapproved by the commissioner within the waiting period or pursuant to subsection (f).
(e) In reviewing any rate filing the commissioner may require the insurer or rating organization to provide, at the insurer's or rating organization's expense, all information necessary to evaluate the reasonableness of the filing, to include payment of the cost of an actuary selected by the commissioner to review any rate filing, if the department of insurance does not have a staff actuary in its employ.
(f) (1) (A) If a filing is not accompanied by the information required by this act, the commissioner shall promptly inform the company or organization making the filing. The filing shall be deemed to be complete when the required information is received by the commissioner or the company or organization certifies to the commissioner the information requested is not maintained by the company or organization and cannot be obtained.
(B) If the commissioner finds a filing does not meet the requirements of this act, the commissioner shall send to the insurer or rating organization that made the filing, written notice of disapproval of the filing, specifying in what respects the filing fails to comply and stating the filing shall not become effective.
(C) If at any time after a filing becomes effective, the commissioner finds a filing does not comply with this act, the commissioner shall after a hearing held on not less than 10 days' written notice to every insurer and rating organization that made the filing issue an order specifying in what respects the filing failed to comply with the act, and stating when, within a reasonable period thereafter, the filing shall be no longer effective. Copies of the order shall be sent to such insurer or rating organization. The order shall not affect any contract or policy made or issued prior to the expiration of the period set forth in the order.
(2) (A) In the event an insurer or organization has no legally effective rate because of an order disapproving rates, the commissioner shall specify an interim rate at the time the order is issued. The interim rate may be modified by the commissioner on the commissioner's own motion or upon motion of an insurer or organization.
(B) The interim rate or any modification thereof shall take effect prospectively in contracts of insurance written or renewed 15 days after the commissioner's decision setting interim rates.
(C) When the rates are finally determined, the commissioner shall order any overcharge in the interim rates to be distributed appropriately, except refunds to policyholders the commissioner determines are de minimis may not be required.
(3) (A) Any person or organization aggrieved with respect to any filing that is in effect may make written application to the commissioner for a hearing thereon, except that the insurer or rating organization that made the filing may not proceed under this subsection. The application shall specify the grounds to be relied on by the applicant.
(B) If the commissioner finds the application is made in good faith, that the applicant would be so aggrieved if the applicant's grounds are established, and that such grounds otherwise justify holding such a hearing, the commissioner shall, within 30 days after receipt of the application, hold a hearing on not less than 10 days' written notice to the applicant and every insurer and rating organization that made such filing.
(C) Every rating organization receiving a notice of hearing or copy of an order under this section, shall promptly notify all its members or subscribers affected by the hearing or order. Notice to a rating organization of a hearing or order shall be deemed notice to its members or subscribers.
(g) No insurer shall make or issue a contract or policy except in accordance with filings which have been filed or approved for such insurer as provided in this act.
(1) On an application for personal motor vehicle insurance where the applicant has applied for collision or comprehensive coverage, the applicant shall be allowed to identify a lienholder listed on the certificate of title for the motor vehicle described in the application.
(2) On an application for property insurance on real property, the applicant shall be allowed to identify a mortgagee listed on a mortgage for the real property described in the application.
(h) The commissioner may adopt rules and regulations to allow suspension or modification of the requirement of filing and approval of rates as to any kind of insurance, subdivision or combination thereof, or as to classes of risks, the rates for which cannot practicably be filed before they are used.
(i) Except for workers compensation and employer's liability line, the following categories of commercial lines risks are considered special risks which are exempt from the filing requirements in this section: (1) Risks that are written on an excess or umbrella basis; (2) commercial risks, or portions thereof, that are not rated according to manuals, rating plans, or schedules including "a" rates; (3) large risks; and (4) special risks designated by the commissioner, including but not limited to risks insured under highly protected risks rating plans, commercial aviation, credit insurance, boiler and machinery, inland marine, fidelity, surety and guarantee bond insurance risks.
(j) For the purposes of this subsection, "large risk" means: (1) An insured that has total insured property values of $5,000,000 or more; (2) an insured that has total annual gross revenues of $10,000,000 or more; or (3) an insured that has in the preceding calendar year a total paid premium of $50,000 or more for property insurance, $50,000 or more for general liability insurance, or $100,000 or more for multiple lines policies.
(k) The exemption for any large risk contained in subsection (i) shall not apply to workers compensation and employer's liability insurance, insurance purchasing groups, and the basic coverage required by K.S.A. 40-3401 et seq., and amendments thereto.
(l) Underwriting files, premium, loss and expense statistics, financial and other records pertaining to special risks written by any insurer shall be maintained by the insurer and shall be subject to examination by the commissioner.
(m) (1) Any entity that purchases a workers compensation policy for the covered employees of more than one employer pursuant to a shared employment relationship with each employer must purchase the workers compensation policy on a separate multiple coordinate policy basis. Such workers compensation policies must be issued pursuant to K.S.A. 44-501 et seq., and amendments thereto, from an insurer holding a certificate of authority to do business in this state and providing workers compensation coverage.
(2) The commissioner of insurance may allow an insurer to issue coverage through a master policy if the commissioner is satisfied that the insurer is able to track and report individual client experience to the advisory organization in an acceptable fashion. All such master policies must be filed with the commissioner for prior approval.
(3) The commissioner of insurance shall be authorized to adopt such rules and regulations as are reasonable and necessary to carry out the purpose and the provisions of this subsection.
History: L. 1997, ch. 154, § 5; L. 1999, ch. 63, § 2; L. 2006, ch. 124, § 1; L. 2007, ch. 150, § 2; L. 2011, ch. 34, § 1; L. 2011, ch. 113, § 2; L. 2023, ch. 41, § 7; July 1.
History: L. 1997, ch. 154, § 5; L. 1999, ch. 63, § 2; L. 2006, ch. 130, § 2; Repealed, L. 2007, ch. 150, § 9; July 1.
(a) Insurers may increase or decrease premiums on a given risk basis without documentation up to 40% based on any factor, except the rate adjustment made pursuant to this section cannot:
(1) Be based upon the race, creed, national origin or religion of the insured.
(2) Apply to insurance covering:
(A) Risks of a personal nature, including insurance for homeowners, tenants, private passenger nonfleet automobiles, mobile homes and other property and casualty insurance for personal, family or household needs;
(B) farms and ranches, including crop insurance;
(C) workers compensation; or
(D) coverage required by K.S.A. 40-3401 et seq., and amendments thereto.
(b) By rules and regulations adopted in accordance with the rules and regulations filing act, the commissioner of insurance may broaden the range of plus or minus 40% for any line or type of insurance subject to K.S.A. 40-955, and amendments thereto, if the commissioner of insurance finds that the:
(1) Utilization of this section by the insurance industry has produced a significant number of rate modifications at or near the upper limit and at the lower limit of the allowable range of modification; and
(2) modifiers at and near the upper and lower limits of the allowable range of modification appear to be predominantly correlated with individual risk factors that relate to expected losses and expenses.
(c) By rules and regulations adopted in accordance with the rules and regulations filing act, the commissioner of insurance may reduce the range of plus or minus 40% for any line or type of insurance subject to K.S.A. 40-955, and amendments thereto, if the commissioner of insurance finds that modifiers at or near the upper or lower limits of the allowable range of modification are not predominantly correlated with individual risk factors that relate to expected losses and expenses, but such reduction shall not reduce the range to less than plus or minus 25%.
(d) Any insurer aggrieved by the commissioner's findings pursuant to this section may appeal the same pursuant to the Kansas administrative procedure act.
History: L. 2006, ch. 130, § 3; July 1.
(a) (1) Any corporation, association, partnership or individual whether located in or out of the state, may apply for license as a rating organization for such kinds of insurance or subdivisions thereof as are specified in its application and shall file:
(A) A copy of its constitution, articles of agreement or association or certificate of incorporation, and its bylaws and rules governing the conduct of its business;
(B) a list of its members and subscribers;
(C) the name and address of a resident of the state upon whom service of process or orders of the commissioner may be served and an irrevocable agreement to accept such service or notices; and
(D) a statement of its qualification as a rating organization.
(2) Every rating organization shall notify the commissioner promptly of every change in its organizational structure, members or subscribers and the person upon whom service or notices may be made.
(3) If the commissioner finds the applicant is qualified, the commissioner shall issue a license specifying the kinds of insurance or subdivisions thereof for which the applicant is authorized to act as a rating organization. Every such application shall be granted or denied in whole or in part by the commissioner within 60 days of the date of its filing. Licenses issued pursuant to this section shall continue in force until May 1 next after their date unless suspended or revoked by the commissioner. The fee for such license shall not exceed $25 annually. Not later than December 1 of each year, the commissioner of insurance shall set and cause to be published in the Kansas register the fee required pursuant to this paragraph for the next calendar year. Licenses issued pursuant to this section may be suspended or revoked by the commissioner, after hearing upon notice, in the event the rating organization ceases to meet the requirements of this section.
(b) Every rating organization shall furnish its rating services without discrimination to its members and subscribers. Subject to rules that have been approved by the commissioner as reasonable, each rating organization shall permit any insurer or group pool, not a member, to be a subscriber to its rating service for any kind of insurance or subdivision thereof for which it is authorized to act as a rating organization. The reasonableness of any rule in its application to subscribers, or the refusal of any rating organization to admit an insurer or group pool as a subscriber, at the request of any subscriber, pool or any insurer shall be reviewed by the commissioner at a hearing.
(c) No rating organization shall adopt any rule, the effect of which would be to prohibit or regulate the payment of dividends, savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members or subscribers.
(d) The commissioner, at least once in five years, shall make or cause to be made an examination of each rating organization licensed in this state. The reasonable costs of such examination shall be paid by the rating organization examined, upon presentation to it of a detailed account of such cost. The officers, managers, agents and employees of such rating organization may be examined under oath and shall exhibit all books, records, accounts, documents or agreements governing its method of operation. The commissioner may waive such examination upon proof such rating organization has, within a reasonably recent period, been examined by the insurance supervisory official of another state, and upon filing with the commissioner a copy of the report of such examination.
(e) Cooperation among rating organizations or among rating organizations and insurers in rate making or in other matters within the scope of this act is hereby authorized, except that the filings resulting from such cooperation are subject to all the provisions of this act that are applicable to filings generally. The commissioner may review such cooperative activities and practices and if, after a hearing, the commissioner finds any such activity or practice is unfair, unreasonable or otherwise inconsistent with this act or other provision of the insurance laws of this state, the commissioner may issue a written order requiring discontinuance of such activities or practices.
(f) Any rating organization may provide for the examination of policies, daily reports, binders and other transaction with its members or subscribers if it makes reasonable rules governing those activities. Such rules shall be approved by the commissioner and shall contain a provision that in the event any insurer does not within 60 days furnish satisfactory evidence to the rating organization of the correction of any error or omissions previously called to its attention by the rating organization, it shall be the duty of the rating organization to notify the commissioner thereof. All information submitted for examination shall be confidential.
(g) Any rating organization may subscribe for or purchase actuarial, technical or other services, and such services shall be available to all members and subscribers without discrimination. Any rating organization may collect, compile and distribute past and current premiums of individual insurers.
History: L. 1997, ch. 154, § 6; L. 2025, ch. 87, § 12; July 1.
(a) Every group, association or other organizations of insurers, whether located within or outside this state, assisting insurers which make their own filings or rating organizations in rate making, by the collection and furnishing of loss or expense statistics, or by the submission of recommendations, but which does not make filings under this act, shall be known as an advisory organization.
(b) Every advisory organization shall file with the commissioner: (1) A copy of its constitution, articles of agreement or association, its certificate of incorporation and its bylaws, rules and regulations governing its activities; (2) a list of its members; (3) the name and address of a resident of this state upon whom notices or orders of the commissioner or process issued at the commissioner's direction may be served, with its written agreement to accept such notices or service; and (4) an agreement the commissioner may examine such advisory organization in accordance with this act.
(c) If, after a hearing, the commissioner finds the furnishing of such information or assistance involves an act or practice which is unfair or unreasonable or otherwise inconsistent with this act or the insurance laws of this state, the commissioner may issue a written order requiring the discontinuance of the act or practice. No insurer or rating organization shall support its filings by statistics or adopt rate making recommendations furnished to it by an advisory organization which has not complied with this section or with an order of the commissioner issued under this section. If the commissioner finds such insurer or rating organization to be in violation of this subsection the commissioner may issue an order requiring the discontinuance of such violation.
History: L. 1997, ch. 154, § 7; July 1.
Every member of or subscriber to a rating organization shall adhere to the filings made on its behalf by such organization, except any such insurer may make independent filings or may deviate from the manual of classifications, rules and rates or rating plans filed by the rating organization for a kind of insurance, or a subdivision thereof, by filing notice of intent to do so with the commissioner. Those deviations shall take effect upon filing such notice, except for those lines which require prior approval of the commissioner, in which case they shall become effective on approval by the commissioner or 30 days after the notice is filed with the commissioner, whichever is sooner.
History: L. 1997, ch. 154, § 8; July 1.
Any member of or subscriber to a rating organization may appeal to the commissioner from the decision of such rating organization in approving or rejecting any proposed change in or addition to the filings of such rating organization and the commissioner, after a hearing, shall issue an order approving the decision of such rating organization or directing it to give further consideration to such proposal, or, if such appeal is from the action or decision of the rating organization in rejecting a proposed addition to its filings, the commissioner may, in the event the commissioner finds such action or decision was unreasonable or unfair, issue an order directing the rating organization to make an addition to its filing, on behalf of its members and subscribers, in a manner consistent with the commissioner's findings, within a reasonable time after the issuance of such order.
History: L. 1997, ch. 154, § 9; July 1.
Every rating organization and every insurer which makes its own rates, within a reasonable time after receiving written request therefor, shall furnish to any insured affected by a rate made by it, or to the authorized representative of such insured, all pertinent information as to such rate. Every rating organization and every insurer which makes its own rates shall provide within this state reasonable means whereby any person aggrieved by the application of its rating system may be heard, in person or by authorized representative, on written request to review the manner in which such rating system has been applied in connection with the insurance afforded such person. If the rating organization or insurer fails to grant or reject such request within 30 days after it is made, the applicant may proceed in the same manner as if such application has been rejected. Any party affected by the action of such rating organization or such insurer on such request, within 30 days after written notice of such action, may appeal to the commissioner, who, after a hearing, may affirm or reverse such action.
History: L. 1997, ch. 154, § 10; July 1.
(a) The commissioner shall develop statistical plans which shall be used by each insurer in the recording and reporting of its loss and expense experience, in order that the experience of all insurers may be made available at least annually in such form and detail as may be necessary to aid the commissioner in determining whether rating systems comply with the standards set forth in this act. Such plans may also provide for the recording and reporting of expense experience items which are specially applicable to this state. In promulgating such plans, the commissioner shall give due consideration to the rating systems on file with the commissioner and, in order that such plans may be as uniform as is practicable among the several states, to the form of the plans used for such rating systems in other states. The commissioner may designate one or more rating organizations or other agencies to assist the commissioner in gathering such experience and making compilations thereof, and such compilations shall be made available, by the commissioner to insurers and rating organizations.
(b) Reasonable plans may be developed by the commissioner for interchange of data necessary for the application of rating plans.
(c) In order to further uniform administration of rate regulatory laws, the commissioner and every insurer and rating organization may exchange information and experience data with insurance supervisory officials, insurers and rating organizations in other states and may consult with them with respect to rate making and the application of rating systems.
(d) The commissioner may make reasonable rules and regulations necessary to effect the purposes of this act.
History: L. 1997, ch. 154, § 11; July 1.
No person or organization shall willfully withhold information from, or knowingly give false or misleading information to the commissioner, any statistical agency designated by the commissioner, any rating organization or any insurer, which will affect the rates or premiums chargeable under this act.
History: L. 1997, ch. 154, § 12; July 1.
The commissioner, if the commissioner finds any person or organization has violated any provision of this act, may impose a penalty of not more than $500 for each violation, but, if the commissioner finds such violation to be willful, may impose a penalty of not more than $2,000 for each such violation. Such penalties may be in addition to any other penalty provided by law. The commissioner may suspend the license of any rating organization or insurer which fails to comply with an order of the commissioner within the time limited by such order, or any extension thereof which the commissioner may grant.
History: L. 1997, ch. 154, § 13; July 1.
Any hearing required or requested under this act shall be conducted in accordance with the Kansas administrative procedure act.
History: L. 1997, ch. 154, § 14; July 1.
The filing of a petition for review of any action of the commissioner under this act, shall act as a stay of any such action, if it provides for a change in any rating system resulting in an increase or decrease in premiums. Any insurer affected by such order may continue to charge rates which obtained prior to the commissioner's order to increase or decrease rates, on condition that the difference in premiums shall be deposited with the commissioner of insurance by the insurer and, on the final determination of the suit, shall be paid by the commissioner to the insurer if the court shall find the insurer entitled to it, or to the holders of policies written by the insurer, after the rate complained of was ordered by the commissioner as the court may deem just and equitable. The court, at its discretion, in lieu of such deposit, may require of the insurer a bond with such sureties and in such sum as the court may approve.
History: L. 1997, ch. 154, § 15; July 1.
(a) No broker or producer shall knowingly charge, demand or receive a premium for any policy of insurance except in accordance with the provisions of this act. No insurer or employee thereof and no broker or producer shall pay, allow, give, offer to pay, or allow to give, directly or indirectly, as an inducement to insurance, or after insurance has been effected, any rebate, discount, abatement, credit or reduction of the premium named in a policy of insurance, or any special favor or advantage in the dividends or other benefits to accrue thereon, or any valuable consideration or inducement whatever, not specified in the policy of insurance, except to the extent provided for in an applicable filing or otherwise permitted by law. No insured named in a policy of insurance, or any employee of such insured shall knowingly receive or accept directly or indirectly, any such rebate, discount, abatement, credit or reduction of premium, or any such special favor or valuable consideration or inducement. Nothing in this section shall be construed as prohibiting the payment of commissions or other compensation to duly licensed agents and brokers, nor as prohibiting any insurer from allowing or returning to its participating policyholder, members or subscribers, dividends, savings or unabsorbed premium deposits.
(b) As used in this section, "insurance" includes suretyship and "policy" includes bond.
History: L. 1997, ch. 154, § 16; L. 2022, ch. 21, § 1; July 1.
If any section, subsection, subdivision, paragraph, sentence or clause of this act is held invalid or unconstitutional, such decision shall not affect the remaining portions of this act.
History: L. 1997, ch. 154, § 17; July 1.
Notwithstanding the requirements of K.S.A. 40-952 and 40-955, and amendments thereto, a filing made by an insurer for personal insurance under this section that provides for an overall statewide rate increase or decrease of no more than 12% in the aggregate for all coverages that are subject to the filing may take effect the date it is filed. The 12% limitation shall not apply on an individual insured basis. No more than one rate filing may be made by an insurer pursuant to the expedited process provided in this section during any period of 12 consecutive months, unless the combination of such rate filing and all other rate filings made by such insurer within the preceding period of 12 consecutive months does not result in an overall statewide increase or decrease of more than 12% in the aggregate for all coverages that are subject to such filing.
History: L. 2008, ch. 144, § 2; July 1.
Any rate filing which falls outside the limitations specified in K.S.A. 40-970, and amendments thereto, shall be subject to K.S.A. 40-952 and 40-955, and amendments thereto, unless such filing is otherwise exempt pursuant to another provision of Chapter 40 of the Kansas Statutes Annotated, and acts amendatory thereof and supplemental thereto.
History: L. 2008, ch. 144, § 3; July 1.
(a) Any filing submitted pursuant to K.S.A. 40-970, and amendments thereto, shall be deemed to comply with state law unless the commissioner determines that the filing is inadequate or unfairly discriminatory. If the commissioner determines that the filing is inadequate or unfairly discriminatory, the commissioner shall issue a written order specifying in detail:
(1) Each provision of Chapter 40 of the Kansas Statutes Annotated, and acts amendatory thereof and supplemental thereto, the insurer has violated;
(2) the reasons the filing is inadequate or unfairly discriminatory; and
(3) stating a reasonable future date on which the filing shall be considered no longer effective.
(b) If the commissioner issues an order pursuant to this section more than 30 days after the date on which the commissioner received the rate filing, the effect of such order shall be prospective only and shall not affect any contract issued or made before the effective date of such order.
History: L. 2008, ch. 144, § 4; July 1.
Within the limitation specified in K.S.A. 40-970, and amendments thereto, no rate increase may be implemented with regard to an individual existing policy, unless such increase is applied at the time of a renewal or conditional renewal of an existing policy and the insurer mails or delivers to the named insured, at the address shown in the policy, a written notice that clearly and conspicuously discloses its intention to change the rate, at least 30 days in advance of the end of the insured's policy period. A notice of renewal or conditional renewal that clearly and conspicuously discloses the renewal premium applicable to the policy shall be deemed to comply with this section.
History: L. 2008, ch. 144, § 5; July 1.
For purposes of K.S.A. 40-970 through 40-975:
(a) "Commissioner" means the commissioner of insurance.
(b) "Personal insurance" shall have the meaning ascribed to it in K.S.A. 40-5103(l), and amendments thereto.
(c) "Unfairly discriminatory" shall have the meaning ascribed to it in K.S.A. 40-953, and amendments thereto. The term "unfairly discriminatory" includes a rate for a risk that is classified in whole or in part on the basis of race, color, creed or national origin.
History: L. 2008, ch. 144, § 6; July 1.
K.S.A. 40-970 through 40-975, and amendments thereto, shall be known and may be cited as the property/casualty flex-rating regulatory improvement act.
History: L. 2008, ch. 144, § 7; July 1.
Any number of persons not less than twenty-five (25), citizens of this state, each of whom shall be a property owner and who shall own collectively property of not less than one hundred thousand dollars ($100,000) in value in one of the classes as hereinafter set forth, which they desire to have insured, may form an incorporated company for the purpose of the mutual insurance of its members against loss or damage by fire, lightning, tornado, hail or explosion, other than the explosion of steam boilers or the breaking of flywheels, and those classes of coverage included in the extended coverage endorsement as provided in K.S.A. 40-1002. The extended coverage endorsement shall be deemed to include the classes of coverage now or hereafter defined by statute or by ruling of the commissioner of insurance: Provided, Explosion, other than the explosion of steam boilers or the breaking of flywheels, insurance and the classes of coverage included in the extended coverage endorsement shall be written only on property included in the first class under the provisions of K.S.A. 40-1002, and any amendments thereto.
History: L. 1927, ch. 231, 40-1001; L. 1943, ch. 185, § 1; L. 1953, ch. 230, § 1; June 30.
Any company licensed pursuant to the provisions of K.S.A. 40-1001, and amendments thereto, and operating under the provisions thereof, may so long as they maintain a minimum reserve fund equal to not less than $10,000 per $1,000,000 of fire insurance in force, and having deposited lawful securities with the insurance commissioner pursuant to K.S.A. 40-229a in an amount of not less than $50,000, be granted authority to issue contracts of insurance covering in addition to those kinds set forth in K.S.A. 40-1001, and amendments thereto, the perils of glass breakage, vandalism including malicious mischief and theft. Such additional authority shall be evidenced by proper resolution of the board of directors and authorized by the affirmative vote of at least two-thirds of the members present in person or by proxy at a special or annual meeting of members. Any company after having taken such action shall certify such action to the commissioner of insurance immediately, together with a statement showing its current financial status and a reserve fund sufficient to warrant such action, and such company shall apply for an amended certificate of authority to include such additional perils.
History: L. 1969, ch. 235, § 1; L. 1996, ch. 25, § 11; July 1.
In companies organized under the provisions of this article, the property to be insured shall be classified as follows:
(1) Dwelling houses, barns, except livery or hotel barns, accompanying outbuildings and their contents, schoolhouses, schoolhouse furniture, churches, church furniture, community, lodge or township halls, and community, lodge or township hall furniture, farm implements, hay, grain other than hail on growing crops, wool and other products, livestock, wagons, carriages, harness, household goods, wearing apparel, provisions, musical instruments, and libraries, being upon farms as farm property, or in dwellings, or in accompanying outbuildings, or in schoolhouses, or in churches, that constitute detached risks in villages and cities and belonging to the members of the company. All risks in cities and villages which shall be fifteen feet or more from any contiguous risk shall be deemed detached within the meaning of this section.
(2) To include all risks on buildings used for merchandising and manufacturing, and the goods, wares, machinery and implements contained therein; and all other property not included in the first class.
The business of each class shall be conducted separately and independently of the other, and in no case shall an assessment be made by the company upon the premium notes of one class to pay the losses or expenses of the other class; and any company doing business under this article may elect to confine their business to either the first or second class, or to embrace both; and whenever any change is made in the character of their business in this respect, it shall be done at a regular meeting of the directors and by the vote of two-thirds of all the directors, which resolution shall be filed with the bylaws in the office of the secretary of state: Provided, That any company, organized under the provisions of this article to write insurance of the first class, having not less than ten million dollars of insurance in force, and having a reserve fund of not less than five thousand dollars for each one million dollars of insurance in force, fire and wind to be counted separately and the reserve to be based upon the sum of both such fire and wind, may write insurance on any risk mentioned and described as "second class." No such company shall hold, without reinsurance, aggregate "second class" risks in one block of more than five percent of its reserve funds: Provided, That any company confining its risks solely to those of "first class" shall at no time carry risks in cities and villages to exceed twenty-five percent of the amount of the total insurance in force: Provided further, That no such business of the "second class" shall be written and placed with the business of the "first class," until the writing of such risks of the second class shall have been approved by an affirmative vote of two-thirds of all the directors in regular session assembled or at a meeting of the board of directors called for that specific purpose.
History: L. 1927, ch. 231, 40-1002; June 1.
No company formed hereafter for the purpose of doing an insurance business under the provisions of this article shall have power to issue policies until applications in good faith have been received for insurance in one class to the amount of at least one hundred thousand dollars, and cash or deposit notes have been received in advance, for the same, nor until such company shall have assets in cash or securities other than deposit notes of at least twenty-five thousand dollars.
History: L. 1927, ch. 231, 40-1003; L. 1943, ch. 186, § 1; June 28.
In companies organized under the provisions of this article, the number of directors shall not be more than 25 or less than five. Unless written balloting is required by the bylaws, directors shall be elected by voice vote. Each person who is a policyholder shall be entitled to one vote. A policyholder may vote by proxy, signed by the person legally entitled to vote such proxy. A majority of the board of directors shall be a quorum for the transaction of business. Vacancies in the board shall be filled by the remaining members until the next annual meeting.
History: L. 1927, ch. 231, 40-1004; L. 2007, ch. 30, § 2; July 1.
The annual meeting shall be held on or before March 1 in each year, on a day fixed by the bylaws of such company, at the principal office of the company, and every person insured shall be entitled to as many votes as there are directors to be elected, and an equal additional number of votes as are provided for in the bylaws of the company which shall provide for a number of votes based on policies in force, or a number of votes based upon insurance in force, or based upon the amount of premiums paid, or any combination thereof. Votes may be cast by proxy or in person, distributing them among the same or a less number of candidates to be elected, or concentrating them upon one (1) candidate, as may be thought fit; and a plurality shall elect, but no member shall hold and use the proxies of more than twenty-five (25) policyholders.
History: L. 1927, ch. 231, 40-1005; L. 1967, ch. 264, § 1; L. 1976, ch. 215, § 1; July 1.
The directors shall elect a president and such other officers with such titles and duties as shall be stated in the bylaws or in a resolution of the board of directors which is not inconsistent with the bylaws. Officers chosen in such manner shall hold their offices for such terms as are prescribed by the bylaws or determined by the board of directors.
History: L. 1927, ch. 231, 40-1006; L. 2007, ch. 30, § 3; July 1.
In companies organized under the provisions of this article, if deposit notes be given, all such notes taken by them in consideration of premiums on their policies shall be assessable and collectible in part or in whole for the purpose of paying any losses which have accrued or may accrue during the continuance of the policy, and to defray expenses as provided in the charter and bylaws of the company; and all such notes shall have inserted on their face the following words, to wit: "It is hereby understood and agreed that this note is not transferable." The directors shall have the right to determine the amount of the deposit note to be given and the part of the premium to be paid in cash, and endorsed thereon; but in no case shall the face of the note be more than five times the amount of the cash payment endorsed thereon. Nor shall the cash payment in any case be less than one annual rate.
History: L. 1927, ch. 231, 40-1007; June 1.
Every person who effects insurance in any company organized under the provisions of this article, and also such person's heirs, executors, administrators and assigns, continuing to be so insured, shall thereby become members of the company during the period of insurance and shall be bound to pay losses and such necessary expenses as accrue in and to the company in proportion to the original amount of such person's deposit note or notes or cash deposit as made for one annual rate. The directors shall annually at or before the annual meeting, levy a sufficient assessment on all deposit notes to liquidate all liabilities of the company existing at the time of the assessment, and they shall make such assessments oftener when necessary. They may also, at or before the annual meeting of each year, estimate the rate of assessment on the deposit notes which the experience of the company indicates will be necessary to provide for the losses and expenses for the ensuing year and make and collect assessments in advance on all deposit notes of the company deemed by the board sufficient to pay such losses and expenses.
In determining the rate of assessments to be made the directors shall not include either the guarantee fund, the reserve fund, or the unused portion of the cash premiums on hand, as funds available for the payment of accrued liabilities, but shall levy such assessments on the notes as may be necessary in order to require the makers thereof to pay their ratable shares of all losses and expenses already accrued and estimated to accrue within the ensuing year. The notices of assessment may be given in such number of different lists throughout the year as the board deems advisable, having regard to the dates of the policies. The sums to be paid on any assessment by each member shall always be in proportion to the original amount of such member's deposit note or notes for one annual rate and shall be paid to the company within thirty (30) days next after notice of such assessment is given in the manner provided in the bylaws. The company shall not be liable to the insured for any loss that may occur during the period from the day on which an assessment on such insured's deposit note is due and the date of the payment thereof. No such company shall borrow money or create a debt, unless for the purpose of necessary office buildings, to continue beyond the period when such assessment may be collected and applied to the payment thereof, and no member shall be assessed for liabilities prior to such member's membership.
History: L. 1927, ch. 231, 40-1008; L. 1976, ch. 215, § 2; July 1.
If any member shall for the space of thirty days after the publication of said notice assessment, and service of such upon such member by mail, postpaid, directed to him at his post office as written in or upon his application for insurance, neglect or refuse to pay the sum assessed upon him, the directors may sue for and recover the whole amount of his deposit note or notes, with cost of suit; but execution shall only issue for assessments and cost as they accrue. If the whole amount of the deposit notes and cash in the possession of the company and belonging thereto shall be insufficient to pay the loss or losses due the members of the company, such members shall receive as payment in full for their respective losses a proportionate share of the whole amount of said notes and cash, but no member shall ever be liable to such company, or to any other person, for more than the whole amount of his deposit note, if written on the assessment plan. Cash policies are not assessable.
History: L. 1927, ch. 231, 40-1009; L. 1931, ch. 206, § 1; May 28.
Suits for the collection of any assessment made upon the deposit note of the insured may be brought in a court of competent jurisdiction in the county in which the insured resides; and the officers and directors of any company so formed who shall willfully refuse or neglect to perform the duties imposed upon them by the provisions of this article shall be liable in their individual capacity to the person sustaining such loss. Suits at law may be brought and maintained against any such company by the members thereof for losses sustained, if payment is withheld after such losses have become due.
History: L. 1927, ch. 231, 40-1010; L. 1973, ch. 134, § 40; July 1, 1974.
All moneys, notes or other property belonging to such company shall be assessed and taxed as provided in the general revenue laws of this state.
History: L. 1927, ch. 231, 40-1011; June 1.
The directors of any company organized under the provisions of this article may make such bylaws, not in conflict with the constitution or laws of this state, as two-thirds of the whole number of directors shall adopt, and any amendments of such bylaws may be adopted in the same manner, by being presented to the secretary and be included in his notice to directors of either a regular or a special meeting of the board of directors. Such bylaws may provide for the compensation of the officers of the company, the manner of making proof of loss, and the adjustment of losses, and may provide that any member of said company failing to pay any assessment legally made on his, her or their deposit note or notes, according to the constitution and bylaws of the said company, may be excluded from all benefit of insurance during all the time in which he, she or they may be so in default; and may provide for all other rules and regulations needful for the transaction of the business of the company.
History: L. 1927, ch. 231, 40-1012; L. 1933, ch. 73, § 1 (Special Session); December 30.
Any such company may classify the property insured therein at the time of issuing policies thereon under different rates, corresponding as nearly as may be to the greater or lesser risk from fire, or lightning, tornado or hail, and loss which may attach to each building or other property insured.
History: L. 1927, ch. 231, 40-1013; June 1.
Companies organized under the provisions of this article may issue policies for a term of not more than five years.
History: L. 1927, ch. 231, 40-1014; June 1.
Any member of such company may withdraw therefrom by surrendering his policy, together with a notice in writing to the secretary of his intention so to do. Return premium, if any, shall be computed on shortrate basis. The company shall have power to cancel and terminate any policy or any part thereof by mailing a notice of such cancellation and the company's check for the unearned pro rata premium thereon to the insured at the last post-office address furnished by the insured to the company or by delivery of such notice and unearned premium to the insured in person.
History: L. 1927, ch. 231, 40-1015; L. 1931, ch. 206, § 2; May 28.
No such company shall expose itself to loss on any one risk or hazard, either by one or more policies, to an amount exceeding ten percent of all its resources at the date of the policy, unless such excess be reinsured, except in organizing the company policies may be issued up to one thousand dollars, and such company may reinsure such portion of its risk as the board of directors deem for the best interest of its policyholders.
History: L. 1927, ch. 231, 40-1016; June 1.
Such companies may issue policies of insurance, signed by the president and secretary, agreeing, in the name of the company, to pay all loss or damage not exceeding the amount insured. The company may issue more than one policy to one person, firm or corporation having separate or detached buildings, if such buildings may be insured under the provisions of this article and the bylaws of the company. Every policy issued other than for a cash premium shall have attached thereto a copy of the note and every policy, whether issued for a cash premium or on the note plan, shall have attached thereto a copy of the application, if one is required to be inserted therein by the bylaws of the company, and a printed copy of such portion of the bylaws and rules and regulations of the company as applies to the risk insured thereunder, and the policy as thus issued shall be and constitute the entire contract between the company and the insured.
History: L. 1927, ch. 231, 40-1017; L. 1931, ch. 206, § 3; May 28.
A reserve fund equal to not less than ten percentum nor more than twenty-five percentum, as the board of directors may determine, of the premiums received on insurance shall be set apart and maintained out of the cash receipts of the company until such reserve fund shall amount to at least four thousand dollars per million dollars of insurance in force, after which the percent of the cash receipts that shall be added to this reserve may be reduced at the discretion of the board of directors. And whenever the cash in the hands of the treasurer of any such company, not included in the reserve fund, is insufficient to pay any loss that may accrue, then such deficiency shall be taken from the reserve fund, but such reserve fund shall not be reduced below one half until an assessment shall be made upon the deposit notes held by the company sufficient to fully reimburse the reserve fund. Any such diminution of the reserve fund shall be held to be a liability to be provided for by assessments on the deposit notes. Such part of the reserve fund of the company as is not needed for immediate use of the company shall be invested by the directors in such securities as are authorized by this code. Any other reserves that have been accumulated by the company may be made a part of this reserve fund.
History: L. 1927, ch. 231, 40-1018; June 1.
It shall be the duty of the president and secretary of each mutual company to prepare annually, under oath, a full, true and complete statement of the condition of said company on the thirty-first day of December, and present the same to the annual meeting immediately following.
History: L. 1927, ch. 231, 40-1019; L. 1976, ch. 215, § 3; July 1.
Any public corporation, quasi-public corporation or private corporation of this state shall have power to be a member of a company organized under the provisions of this article, to execute deposit notes and to vote by any one of its officers at the annual meeting of such company.
History: L. 1927, ch. 231, 40-1020; June 1.
Any insurance company organized under this article having done business not less than two years and having at least one million dollars at risk, and having assets other than deposit notes amounting to not less than twenty-five thousand dollars may, for the better protection of its policyholders, create a guarantee fund, with the privilege of increasing it from time to time.
History: L. 1927, ch. 231, 40-1021; June 1.
Any such insurance company may create such a guarantee fund by setting apart not more than fifty percentum of the excess of this fund over and above the amount of all current liabilities for losses and expenses, and may increase the fund from time to time out of its revenue over and above such liabilities, and such funds shall be invested as provided in section 40-227. The guarantee funds of mutual companies shall be liable for the claims against the company only after all other resources have been exhausted.
History: L. 1927, ch. 231, 40-1022; June 1.
Companies organized under this article having a guarantee fund as provided herein to the amount of twenty-five thousand dollars may issue policies of insurance against loss or damage by fire, lightning, tornado, cyclone and hail on dwelling houses, barns, sheds, outbuildings, hay, grain other than hail on growing crops, wool and other products, cribs and their contents, livestock, wagons, carriages, harness, farm implements, machinery, furniture, household goods, wearing apparel, provisions, musical instruments and libraries, being upon farms as farm property or in dwellings or in accompanying outbuildings that constitute detached risks in towns or villages. A detached dwelling as understood in this section shall be construed to be a dwelling not nearer than five feet to any other building. Such companies having a guarantee fund of one hundred thousand dollars or more may issue policies of insurance on the above-described kinds of property situated in or out of this state. Any mutual insurance company organized and incorporated under the laws of any other state and licensed by the insurance department of that state, having a reserve or fund of one hundred thousand dollars or more, may be licensed by the insurance department of this state upon proper showing and paying the fees specified in this code.
History: L. 1927, ch. 231, 40-1023; June 1.
Any company organized under this article having a guarantee fund of not less than twenty-five thousand dollars may except in payment of the premiums on its policies cash or time notes payable in assessments at such time and place as provided in such note or notes, but the members of such company shall not be liable to the company or any other person to exceed the amount of their premiums or deposit notes and interest due thereon.
History: L. 1927, ch. 231, 40-1024; June 1.
When a company organized under this article shall have created a guarantee fund, the secretary shall notify the commissioner of insurance, who shall immediately examine the securities, notes and standing of said company, and if upon such examination he finds that it has complied with the law, he shall issue it a certificate of authority to do business and issue policies in accordance with this article.
History: L. 1927, ch. 231, 40-1025; June 1.
The directors of a company organized under this article may reinsure its risks, whenever they deem it for the best interest of the company, by first obtaining the consent of the commissioner of insurance, and shall make an assessment to pay for the reinsuring of its risks as above provided; but if the company has a guarantee fund, the deposit notes shall not be assessed to reinsure policies, premiums for which have been paid in cash.
History: L. 1927, ch. 231, 40-1026; June 1.
(a) Any insurance company organized and existing as a mutual fire and tornado insurance company of the state of Kansas, and having a bona fide net surplus of $450,000, and having deposited with the commissioner of insurance lawful securities for the protection of its policyholders or creditors, or both in the amount of $150,000, shall have the authority and right to make and issue contracts of insurance or to cede or accept reinsurance on any portion of any risk for the following kinds of insurance, namely:
(1) To make insurance upon property or any valuable interest therein against loss or damage caused by fire, lightning or other electrical disturbances, earthquake, windstorm, cyclone, tornado, tempest, hail, frost, snow, ice, sleet, weather or climatic condition, including excess or deficiency of moisture, flood, rain, or drought; a rising of the waters of the ocean or its tributaries, bombardment, invasion, insurrection, riot, civil war or commotion, military or usurped power, explosion, other than the explosion of steam boilers, or the breaking of flywheels, against loss or damage from any cause to trees, crops and farm products.
(2) To make insurance against loss or damage to property and against the liability of the insured for loss or damage to the property of others caused by water entering through leaks or openings in buildings or from the breakage or leakage of sprinklers, pumps, water pipes, plumbing and all tanks, apparatus, conduits and containers designated to bring water into buildings or for its storage or utilization therein; or caused by the falling of a tank, tank platform or supports, and against loss or damage from any cause to such sprinklers, pumps, water pipes, plumbing, tanks, apparatus, conduits or containers.
(3) And against consequential loss or damage arising from any of the causes above enumerated. And generally to do and perform all other matters and things proper to promote these objects. It shall be requisite to so acting, for its board of directors to authorize the same by the affirmative vote of at least ⅔ of its membership. Any company having taken action as herein provided shall certify such action to the commissioner of insurance, together with a statement showing its financial status and a net surplus sufficient to warrant such action. Any company operating hereunder shall maintain unearned premium reserves equal to a pro rata amount of the premiums received on all unexpired risks and such unearned premium reserves shall be held and regarded as an absolute liability of the company. For the purpose of this section the unearned premium reserve for policies written on the note plan shall be determined by the amount of cash collected on said notes in excess of the percentage earned on policies written for a cash premium. Until May 1, 1989, such companies which were authorized to transact business in Kansas on January 1, 1984, shall be required to have surplus and deposit equal to that which was required by this section prior to the passage of this act.
(b) Any insurance company organized and existing as a mutual fire and tornado insurance company of the state of Kansas shall have the authority and right to make and issue contracts of insurance in addition to those specified in subsection (a) of this section, which include such amount and kind of insurance against legal liability for injury, damage or loss to the person or property of others, and for medical, hospital, and surgical expense related to such injury, as the commissioner of insurance deems to be reasonably incidental to insurance of real or personal property against fire or other perils under policies covering residential properties involving not more than two families with or without incidental office, professional, private school or studio occupancy by an insured, whether or not the premium or rate charged for certain perils so covered is specified in the policy. Any provision of K.S.A. 40-1016, and amendments thereto, to the contrary notwithstanding: (i) No insurer having a bona fide net surplus of at least $600,000 but less than $1,500,000 authorized as to property insurance only shall, pursuant to this subsection, retain risk as to any one subject of insurance as to hazards other than property insurance hazards in an amount exceeding 3% of its surplus to policyholders; and (ii) no insurer having a bona fide net surplus of less than $600,000 authorized as to property insurance only shall, pursuant to this subsection, retain any risk other than property insurance hazards, and all such companies shall reinsure all such risks as to hazards other than property insurance hazards. Until May 1, 1989, companies which were authorized to transact business in Kansas on January 1, 1984, shall be required to have surplus and deposit equal to that which was required by this section prior to the passage of this act. After May 1, 1989, such companies shall comply with the surplus and deposit requirements provided by this act.
Until May 1, 1989, companies doing business in this state on January 1, 1969, shall be required to have a surplus and deposit equal to that required of such companies prior to the passage of this act. On and after May 1, 1989, companies doing business in this state on January 1, 1969, shall be required to have a surplus and deposit equal to that required of all other companies to whom this section applies immediately prior to the passage of this act.
On and after May 1, 1994, companies doing business in this state on January 1, 1969, shall comply with the surplus and deposit requirements provided by this act.
History: L. 1931, ch. 206, § 4; L. 1937, ch. 253, § 1; L. 1961, ch. 236, § 1; L. 1965, ch. 300, § 9; L. 1969, ch. 237, § 5; L. 1979, ch. 142, § 1; L. 1984, ch. 169, § 4; July 1.
Any mutual fire and tornado insurance company organized and existing under the provisions of sections 40-1001 to 40-1026 inclusive of chapter 231 of the Laws of 1927, and amendments thereof, and having such reserve funds as are required by law to be maintained by such companies may consolidate its business into one class and may thereafter issue all its policies and conduct all of its business and keep all its accounts in a single class: Provided, however, That before such change shall be made in the manner of conducting its business, the board of directors of such company shall by vote of not less than two-thirds of all its members resolve to conduct the business of the company under the provisions of this section.
History: L. 1931, ch. 206, § 5; May 28.
Any mutual fire and tornado insurance company organized under the laws of this state pursuant to K.S.A. 40-1001 et seq., and amendments thereto may accept advances of money and issue certificates of indebtedness thereon subject to the terms and conditions prescribed by K.S.A. 40-1209, and amendments thereto.
History: L. 1992, ch. 35, § 2; April 9.
Unless otherwise provided, the words "insurance company" as used in this article shall be construed to include any corporation having a capital stock as provided by section 40-1103, and organized for one or more of the purposes set out in section 40-1102.
History: L. 1927, ch. 231, 40-1101; June 1.
Any insurance company, other than a life insurance company, organized under the laws of this state or authorized to transact business in this state may make all or any one or more of the kinds of insurance and reinsurance comprised in any one of the following numbered classes, subject to and in accordance with its articles of incorporation and the provisions of this code:
(1) (a) To insure against bodily injury or death by accident and against disablement resulting from sickness and every insurance appertaining thereto;
(b) to insure against the liability of the insured for the death or disability of or damages suffered by an employee or other person, and to insure the obligations accepted by or imposed upon employers under the laws for workmen's compensation;
(c) to insure against loss of or damage to, or destruction of property of the insured, or to the property interests of the insured, and to insure against such loss or damage to the property of others or to the property interests of others, for which loss or damage the insured may be liable;
(d) to become surety or guarantor for any person, copartnership or corporation in any position or place of trust or as custodian of money or property, public or private; to become a surety or guarantor for the performance by any person, copartnership or corporation of any lawful obligation, undertaking, agreement or contract of any kind, except contracts or policies of insurance;
(e) to insure titles to property and against loss by reason of defective titles or encumbrances;
(f) to insure the correctness of searches for all instruments, liens, and charges affecting property;
(g) to insure against loss by reason of the insufficiency of the security conveyed or pledged under mortgage or deed of trust;
(h) to insure the payment of bonds and notes secured by mortgages or deeds of trust, and to buy and sell mortgages or deeds of trust upon real property and interest therein;
(i) to insure against loss or damage which may result from the failure of debtors to pay their obligations to the insured, and including the incidental power to acquire and dispose of debts so insured, and to collect any debts owed to such insurer or to any person so insured by the insurer;
(j) to insure the payment of money for personal services under contracts of hiring;
(k) to make inspections of and issue certificates of inspections upon elevators, boilers, machinery and all mechanical apparatus and appliances appertaining thereto;
(l) to insure against loss of use or occupancy caused by or resulting from any of the risks comprised within this class;
(m) to insure against the cost of legal services; and
(n) to insure against liability, loss or damage from any other risk, hazard, or contingency which may lawfully be the subject of insurance, and specific authority for the transaction of which has not been exclusively delegated to any other class or kind of company. Any company writing insurance against the loss or damage caused by fire, lightning, or by the perils of either marine or inland navigation or transportation, to buildings or other structures erected upon land, to piers, wharves, bulkheads, warehouses, marine vessels, railroad engines, rolling stock or equipment of railroads, or carrying charges for shipments of freight shall have a paid-up capital stock of at least $900,000, a surplus of at least $600,000, and shall have deposited, pursuant to K.S.A. 40-229a, and amendments thereto, for the protection of its policyholders or creditors, or both with the commissioner of insurance securities authorized by K.S.A. 40-227, and amendments thereto, in an amount equal to not less than the minimum capital stock required by such a company, and shall maintain all reserves required by law for the kinds and classes of business transacted. The deposit required by this section for insurance companies not organized under the laws of this state may be deposited as provided herein or with the insurance department of any other state in the United States.
History: L. 1927, ch. 231, 40-1102; L. 1937, ch. 254, § 1; L. 1951, ch. 295, § 1; L. 1965, ch. 300, § 8; L. 1969, ch. 237, § 6; L. 1971, ch. 167, § 2; L. 1972, ch. 184, § 2; L. 1984, ch. 169, § 5; L. 1996, ch. 25, § 12; L. 2015, ch. 45, § 1; July 1.
No insurance company hereafter organized under the laws of this state shall be authorized to commence the transaction of either of the numbered classes of business specified in K.S.A. 40-1102, and amendments thereto, in this state unless it has a capital stock of at least $450,000 and a surplus of at least $300,000, both fully paid in cash, and shall have deposited with the commissioner of insurance pursuant to K.S.A. 40-229a securities authorized by K.S.A. 40-2a01 et seq., and amendments thereto, in an amount equal to not less than the minimum capital stock required of such company for the protection of its policyholders or creditors, or both. Until May 1, 1989, companies which were authorized to transact business in Kansas after January 1, 1969, but before January 1, 1984, shall be required to have paid-up capital stock, surplus and deposits equal to that which was required by this section prior to the passage of this act. After May 1, 1989, such companies shall comply with the paid-up capital stock, surplus and deposit requirements provided by this act.
Until May 1, 1989, companies doing business in this state on January 1, 1969, shall be required to have a paid-up capital stock, surplus and deposit equal to that required of such companies prior to the passage of this act. On and after May 1, 1989, companies doing business in this state on January 1, 1969, shall be required to have a paid-up capital stock, surplus and deposit equal to that required of all other companies to whom this section applies immediately prior to the passage of this act.
No provision of this act shall require any insurance company which was authorized in Kansas prior to January 1, 1984, for only the classes of insurance specified in subsections (e) and (f) of K.S.A. 40-1102, and amendments thereto, to comply with any paid-up capital, surplus and deposit requirements other than the paid-up capital, surplus and deposit requirements which were applicable to the company prior to passage of this act.
History: L. 1927, ch. 231, 40-1103; L. 1965, ch. 300, § 4; L. 1969, ch. 237, § 7; L. 1971, ch. 167, § 3; L. 1972, ch. 184, § 3; L. 1984, ch. 169, § 6; L. 1996, ch. 25, § 13; July 1.
Except as authorized in K.S.A. 40-209, 40-401, and 40-501, and amendments thereto, no insurance company organized under the laws of any other state, district, territory or possession of the United States shall hereafter transact any of the kinds or classes of business specified in K.S.A. 40-1102, and amendments thereto, in this state unless at the time of its application to transact such business in this state it has capital, surplus and deposits equal to that required of a similar domestic insurance company. Until May 1, 1989, companies which were authorized to do business in Kansas after January 1, 1969, but before January 1, 1984, shall be required to have capital stock, surplus and deposits equal to that required by this section prior to the passage of this act. After May 1, 1989, such companies shall comply with the paid-up capital stock, surplus and deposit requirements provided by this act.
Until May 1, 1989, companies doing business in this state on January 1, 1969, shall be required to have a paid-up capital stock, surplus and deposit equal to that required of such companies prior to the passage of this act. On and after May 1, 1989, companies doing business in this state on January 1, 1969, shall be required to have a paid-up capital stock, surplus and deposit equal to that required of all other companies to whom this section applies immediately prior to the passage of this act.
On and after May 1, 1994, companies doing business in this state on January 1, 1969, shall comply with the paid-up capital, surplus and deposit requirements provided by this act.
No insurance company organized under the laws of a country other than the United States shall hereafter be authorized to transact such business in this state unless it shall satisfy the commissioner of insurance of this state that it has on deposit with American trustees, or with the proper officer or officers of a state or states of the United States, or both, satisfactory securities equal in value to the total of the capital and surplus required of a similar domestic insurance company, and that such securities are held in trust for the fulfillment by the company of all its obligations within the United States. Every such foreign insurance company, when applying for admission to transact business in this state, shall file with the commissioner of insurance: (1) A copy of its charter or deed of trust or settlement and bylaws; and (2) a verified detailed statement of all the items, matter and other information in regard to its affairs required by law to be stated in the annual report of a similar domestic insurance company.
No provision of this act shall require insurance companies doing business in this state on January 1, 1969, which have subsequently become authorized to transact business in accordance with a different article of chapter 40 of the Kansas Statutes Annotated to comply with the paid-up capital, surplus and deposit requirements of this act until May 1, 1994.
No provision of this act shall require any insurance company which was authorized in Kansas prior to January 1, 1984, for only the classes of insurance specified in subsections (e) and (f) of K.S.A. 40-1102, and amendments thereto, to comply with any paid-up capital, surplus and deposit requirements other than the paid-up capital, surplus and deposit requirements which were applicable to the company prior to passage of this act.
History: L. 1927, ch. 231, 40-1104; L. 1965, ch. 300, § 5; L. 1969, ch. 237, § 8; L. 1984, ch. 169, § 7; July 1.
Whenever the surplus of any domestic or foreign insurance company authorized to transact any of the kinds or classes of business specified in section 40-1102 of this article shall be less than the minimum surplus required by law, the commissioner of insurance shall revoke the certificate of authority of such corporation to do business, in accordance with the hearing provisions set forth in K.S.A. 40-222.
History: L. 1927, ch. 231, 40-1105; L. 1967, ch. 265, § 1; July 1.
History: L. 1927, ch. 231, 40-1106; Repealed, L. 1945, ch. 215, § 14; January 1, 1946.
No insurance company organized under the laws of this state and transacting business in this state shall, except as otherwise provided in K.S.A. 40-1107a, expose itself to loss on any one risk or hazard to an amount exceeding ten percent (10%) of its paid-up capital and surplus unless the excess shall be reinsured in some other company duly authorized to transact similar business in this state or as otherwise provided in the insurance code and no insurance company not organized under the laws of this state and transacting business in this state shall, except as otherwise provided in K.S.A. 40-1107a, expose itself to loss on any one risk or hazard to an amount exceeding ten percent (10%) of its paid-up capital and surplus unless the excess shall be reinsured either in some company duly authorized to transact similar business in this state or as provided by the laws of such company's domiciliary state.
History: L. 1927, ch. 231, 40-1107; L. 1967, ch. 268, § 1; L. 1971, ch. 168, § 1; July 1.
No title insurance company organized under the laws of this state, engaged exclusively in the business of insuring titles to real estate, shall expose itself to a loss on any one risk or hazard to an amount exceeding fifty percent (50%) of its paid-up capital and surplus, unless the excess shall be reinsured in some company duly authorized to transact similar business in this state or in any other state, provided such a company not authorized to do business in this state meets or exceeds the financial requirements as to capital and surplus of a title insurance company doing business in this state; and no title insurance company not organized under the laws of this state engaged exclusively in the business of insuring titles to real estate, transacting business in this state, shall expose itself to a loss on any one risk or hazard in this state to an amount exceeding fifty percent (50%) of its paid-up capital and surplus, unless the excess shall be reinsured either in some company duly authorized to transact similar business in this state or in any other state, provided such a company not authorized to do business in this state meets or exceeds the financial requirements as to capital and surplus of a title insurance company doing business in this state. Any title insurance company organized under the laws of this state may take credit as an asset or as a deduction from loss and unearned premium reserves on such ceded risks to the extent reinsured.
History: L. 1971, ch. 168, § 2; July 1.
(a) An insurance company transacting surety business shall at all times keep and maintain adequate reserves on its suretyship obligations as follows: (1) An unearned premium reserve of fifty percentum of the current annual premiums upon all outstanding suretyship obligations: Provided, That the commissioner of insurance, in estimating the condition of such an insurance company, may charge it with a premium reserve equal to the unearned portions of the gross premiums charged, computed on each risk, from the date of the issuance of such suretyship obligation; and (2) a loss reserve at least equal to the aggregate estimated amounts due or to become due on account of all losses and claims of which the corporation has received notice: Provided, That such loss reserve shall also include the estimated liability on any notices received by the insurance company of the occurrence of any event which may result in a loss, and the estimated liability of all losses which have occurred but on which no notice has been received.
(b) For the purpose of such reserves, the insurance company shall keep a complete and itemized record showing all losses and claims on which it has received notice, including all notices received by it of the occurrence of any event which may result in a loss; and, in its annual statement to the commissioner of insurance, shall include a schedule showing all losses and claims of which the insurance company has received notice during the year for which the statement is made and which remains unpaid and undisposed of on December thirty-first of such year, and shall also include a schedule showing all the losses and claims of the insurance company unpaid on December thirty-first of the year next preceding, specifying whether the claims have been settled or remain unadjusted, and setting opposite each claim the amount of the reserve carried or maintained against it.
(c) Whenever, in the judgment of the commissioner of insurance, the loss reserves on the suretyship obligations of any insurance company, calculated in accordance with the provisions of this section, are inadequate, he may, in his discretion, require such insurance company to maintain additional reserves.
History: L. 1927, ch. 231, 40-1108; June 1.
Revisor's Note: Later act, see 40-2203.
History: L. 1927, ch. 231, 40-1109; L. 1947, ch. 279, § 1; L. 1949, ch. 281, § 1; Repealed, L. 1951, ch. 296, § 16; June 30.
Revisor's Note: Later act, see chapter 40, article 22.
History: L. 1947, ch. 279, §§ 2, 3; Repealed, L. 1951, ch. 296, § 16; June 30.
In connection with insurance against bodily injury liability, burglary, robbery or theft, whether issued by a stock or mutual company, or other insurer, such stock or mutual company or other insurer may also issue endorsements, or supplemental coverages to cover, irrespective of legal liability of the insured, medical, surgical, hospital, funeral or other expenses sustained by the named insured or other person and incurred as a result of bodily injury, sickness or disease caused by accident, or during the commission of a burglary, robbery or theft which is insured against in the basic policy to which such endorsements or supplemental coverages are added. The endorsement or supplemental coverage may also provide benefits to injured persons and death benefits to dependents, beneficiaries or personal representatives of persons who are killed on account of the bodily injury or death of any person including the named insured, irrespective of legal liability of the insured, if such injury or death is caused by accident or, in the case of an automobile liability policy, if such injury or death is caused by accident and sustained by the insured while in or upon, entering into or alighting from or through being struck by an automobile. The standard provisions as set out in article 22 of chapter 40 of the Kansas Statutes Annotated, or amendments thereto, shall not be required in such endorsements.
History: L. 1941, ch. 260, § 1; L. 1951, ch. 297, § 1; L. 1957, ch. 284, § 1; L. 1968, ch. 273, § 6; July 1.
History: L. 1945, ch. 215, § 1; L. 1949, ch. 282, § 1; L. 1951, ch. 295, § 2; L. 1965, ch. 303, § 6; L. 1988, ch. 156, § 19; L. 1989, ch. 137, § 1; Repealed, L. 1997, ch. 154, § 18; July 1.
History: L. 1989, ch. 137, § 2; Repealed, L. 1997, ch. 154, § 18; July 1.
History: L. 1945, ch. 215, § 2; L. 1987, ch. 165, § 2; L. 1988, ch. 155, § 4; Repealed, L. 1997, ch. 154, § 18; July 1.
(a) Any rates, rating schedules or rating manuals for the liability, personal injury protection and collision coverages of a motor vehicle insurance policy submitted to or filed with the insurance commissioner shall provide for an appropriate reduction in premium charges as to such coverages for a three-year period after the principal operator of the covered vehicle successfully completes a motor vehicle accident avoidance course, of at least four hours in duration, utilizing a nationally recognized driver training curriculum or a curriculum approved by a state or federal agency. The rates, rating schedule or rating manuals required by this subsection shall be submitted to or filed with the commissioner of insurance at the time of the next regular filing with the commissioner after the effective date of this act. Any premium reduction used by an insurer shall be presumed appropriate unless credible data demonstrates otherwise. Only one premium reduction shall be allowed for the principal operator of a covered vehicle.
(b) The premium reduction required by this section shall be effective for the principal operator of a covered vehicle for a three-year period after successful completion of the approved course, except that the insurer may require, as a condition of providing and maintaining the discount, that the principal operator of a covered vehicle not be involved in an accident for which the operator is at fault, nor be convicted of more than one moving violation for a three-year period after course completion.
(c) Individuals who successfully complete the approved course shall be issued a certificate by the organization offering the course that shall be used to qualify for the premium reduction required by this section.
(d) This section shall not apply in the event the approved course is specified by an administrative order of the director of vehicles or by a court order as a result of a moving traffic violation.
(e) Each principal operator of a covered vehicle shall successfully complete an approved course every three years to continue to be eligible for the premium reduction required by this section.
History: L. 1992, ch. 310, § 1; L. 1999, ch. 17, § 1; L. 2019, ch. 16, § 1; July 1.
History: L. 1945, ch. 215, § 3; L. 1978, ch. 177, § 2; L. 1979, ch. 141, § 2; L. 1988, ch. 155, § 5; L. 1990, ch. 165, § 2; L. 1991, ch. 132, § 1; Repealed, L. 1997, ch. 154, § 18; July 1.
History: L. 1965, ch. 307, § 1; Repealed, L. 1997, ch. 154, § 18; July 1.
History: L. 1945, ch. 215, § 3; L. 1978, ch. 177, § 2; L. 1979, ch. 141, § 2; L. 1988, ch. 356, § 90; Repealed, L. 1990, ch. 165, § 3; July 1.
History: L. 1990, ch. 154, § 2; L. 1993, ch. 286, § 22; Repealed, L. 1997, ch. 154, § 18; July 1.
History: L. 1945, ch. 215, § 4; L. 1965, ch. 303, § 7; L. 1988, ch. 356, § 91; Repealed, L. 1997, ch. 154, § 18; July 1.
History: L. 1965, ch. 303, § 8; L. 1988, ch. 356, § 92; Repealed, L. 1997, ch. 154, § 18; July 1.
History: L. 1945, ch. 215, § 5; L. 1965, ch. 303, § 9; Repealed, L. 1997, ch. 154, § 18; July 1.
History: L. 1945, ch. 215, §§ 6, 7; L. 1965, ch. 303, §§ 10, 11; L. 1988, ch. 356, §§ 93, 94; Repealed, L. 1997, ch. 154, § 18; July 1.
History: L. 1945, ch. 215, § 8; L. 1965, ch. 303, § 12; L. 1987, ch. 166, § 2; Repealed, L. 1997, ch. 154, § 18; July 1.
No person or organization shall willfully withhold information from, or knowingly give false or misleading information to the commissioner, any statistical agency designated by the commissioner, any rating organization, or any insurer, which will affect the rates or premiums chargeable under this act. If the commissioner finds that any person or organization has violated this section, the commissioner, after notice and the opportunity for hearing, may impose a penalty of not more than $500 for each such violation. If the commissioner determines that such violation was willful, the commissioner may impose a penalty of not more than $2,000 for each such violation. Such penalties may be in addition to any other penalty provided by law.
History: L. 1945, ch. 215, § 9; L. 1965, ch. 303, § 13; L. 1997, ch. 24, § 4; July 1.
History: L. 1945, ch. 215, § 10; L. 1988, ch. 356, § 95; Repealed, L. 1997, ch. 24, § 7; July 1.
History: L. 1945, ch. 215, § 11; L. 1986, ch. 318, § 30; Repealed, L. 1997, ch. 154, § 18; July 1.
History: L. 1945, ch. 215, § 12; L. 1965, ch. 303, § 14; Repealed, L. 1997, ch. 154, § 18; July 1.
History: L. 1945, ch. 215, § 13; Repealed, L. 1997, ch. 154, § 18; July 1.
History: L. 1965, ch. 303, § 15; Repealed, L. 1997, ch. 154, § 18; July 1.
History: L. 1965, ch. 303, § 16; L. 1988, ch. 356, § 96; Repealed, L. 1997, ch. 154, § 18; July 1.
(a) Every insurer providing professional liability insurance to a health care provider who is licensed, registered or certified by the state board of healing arts and covered by the health care stabilization fund established pursuant to subsection (a) of K.S.A. 40-3403, and amendments thereto, or entity with whom the insurer contracts for purposes of complying with this act shall report to the state board of healing arts any action for damages for personal injuries or loss claimed to have been caused by error, omission, or negligence in performance of such insured's professional services or based on a claimed performance of professional services without consent, upon final disposition of the action.
(b) Reports of the information required by subsection (a) shall be filed with the state board of healing arts no later than 30 days following the final disposition of the action.
(c) Failure to report the information required by subsection (a) shall constitute a violation of K.S.A. 40-1120, and amendments thereto, and shall be subject to penalties applicable thereto.
History: L. 1975, ch. 241, § 1; L. 1976, ch. 216, § 1; L. 1977, ch. 160, § 1; L. 1978, ch. 178, § 1; L. 1986, ch. 231, § 3; L. 1988, ch. 246, § 11; L. 1994, ch. 196, § 1; L. 1996, ch. 65, § 1; July 1.
The reports required by subsection (a) of K.S.A. 40-1126 shall contain: (a) The insured's name and license number issued by the state board of healing arts; (b) date of occurrence which created the action; and (c) the name of the plaintiff and the injured party, if different.
History: L. 1975, ch. 241, § 2; L. 1976, ch. 216, § 2; L. 1977, ch. 160, § 2; L. 1978, ch. 178, § 2; L. 1994, ch. 196, § 2; July 1.
The state board of healing arts shall make such reports available to the public in a manner which will not reveal the names of any person or facility involved.
History: L. 1975, ch. 241, § 3; L. 1976, ch. 216, § 3; L. 1996, ch. 65, § 2; July 1.
There shall be no liability on the part of and no cause of action of any nature shall arise against any insurer reporting hereunder or its agents or employees, or the state board of healing arts or the board's employees, for any action taken by them pursuant to this act.
History: L. 1975, ch. 241, § 4; L. 1996, ch. 65, § 3; July 1.
History: L. 1977, ch. 156 § 1; L. 1978, ch. 179, § 1; Repealed, L. 1987, ch. 167, § 1; July 1.
History: L. 1978, ch. 179, § 2; Repealed, L. 1987, ch. 167, § 1; July 1.
History: L. 1983, ch. 152, § 1; L. 1992, ch. 28, § 1; Repealed, L. 1995, ch. 136, § 1; April 20.
History: L. 1983, ch. 152, § 2; Repealed, L. 1995, ch. 136, § 1; April 20.
(a) Any title insurance company insuring titles to real estate located within Kansas shall specify in any policy issued when the governing body of a municipal or quasi-municipal corporation in which the property is located has filed with the register of deeds of the county or counties in which such municipal or quasi-municipal corporation is located, a certified copy of any ordinance or resolution creating or establishing any public improvement or special benefit district or any other district having the power to impose special assessments upon taxable tangible real property in the district as required by K.S.A. 12-153, and amendments thereto, provided the municipal or quasi-municipal corporation creating such public improvement or special benefit district has particularly described: (1) The external boundaries of the district by metes and bounds; (2) all platted areas block or parcel in any addition, or subdivision; and (3) in all unplatted areas, every tract or parcel not otherwise specifically identified, which is or will be affected by such public improvement or special benefit district.
(b) No title insurance company shall exempt itself from the provisions of subsection (a) by means of a general exclusion in the title insurance policy.
History: L. 1983, ch. 151, § 1; July 1.
The purpose of K.S.A. 40-1135 through 40-1141 is to provide the state of Kansas with a comprehensive body of law for the effective regulation and supervision of title insurance agencies engaged in settlement and closing of the sale of an interest in real estate.
History: L. 1999, ch. 95, § 8; July 1.
As used in this act, unless the context otherwise requires:
(a) "Commissioner" means the commissioner of insurance of the state of Kansas.
(b) "Escrow" means written instruments, money or other items deposited by one party with a depository, escrow agent or escrow for delivery to another party upon the performance of a specified condition or the happening of a certain event.
(c) "Person" means a natural person, partnership, association, cooperative, corporation, trust or other legal entity.
(d) "Qualified financial institution" means an institution that is:
(1) Organized or (in the case of a U.S. branch or agency office of a foreign banking organization) licensed under the laws of the United States or any state and has been granted authority to operate with fiduciary powers;
(2) regulated, supervised and examined by federal or state authorities having regulatory authority over banks and trust companies;
(3) insured by the appropriate federal entity; and
(4) qualified under any additional rules established by the commissioner.
(e) "Title insurance agent" or "agent" means an authorized person, other than a bona fide employee of the title insurer who, on behalf of the title insurer, performs the following acts, in conjunction with the issuance of a title insurance report or policy:
(1) Determines insurability and issues title insurance reports or policies, or both, based upon the performance or review of a search, or an abstract of title;
(2) collects or disburses premiums, escrow or security deposits or other funds;
(3) handles escrow, settlements or closings;
(4) solicits or negotiates title insurance business; or
(5) records closing documents.
(f) "Title insurer" or "insurer" means a company organized under laws of this state for the purpose of transacting the business of title insurance and any foreign or non-U.S. title insurer licensed in this state to transact the business of title insurance.
(g) "Title insurance policy" or "policy" means a contract insuring or indemnifying owners of, or other persons lawfully interested in, real or personal property or any interest in real property, against loss or damage arising from any or all of the following conditions existing on or before the policy date and not excepted or excluded:
(1) Defects in or liens or encumbrances on the insured title;
(2) unmarketability of the insured title;
(3) invalidity, lack of priority, or unenforceability of liens or encumbrances on the stated property;
(4) lack of legal right of access to the land; or
(5) unenforceability of rights in title to the land.
History: L. 1999, ch. 95, § 9; July 1.
A title insurance agent may operate as an escrow, settlement or closing agent, provided that:
(a) All funds deposited with the title insurance agent in connection with an escrow, settlement or closing shall be submitted for collection to, invested in or deposited in a separate fiduciary trust account or accounts in a qualified financial institution no later than the close of the next business day, in accordance with the following requirements:
(1) The funds shall be the property of the person or persons entitled to them under the provisions of the escrow, settlement or closing agreement and shall be segregated for each depository by escrow, settlement or closing in the records of the title insurance agent in a manner that permits the funds to be identified on an individual basis;
(2) the funds shall be applied only in accordance with the terms of the individual instructions or agreements under which the funds were accepted; and
(3) an agent shall not retain any interest on any money held in an interest-bearing account without the written consent of all parties to the transaction.
(b) Funds held in an escrow account shall be disbursed only:
(1) Pursuant to written authorization of buyer and seller;
(2) pursuant to a court order; or
(3) when a transaction is closed according to the agreement of the parties.
(c) A title insurance agent shall not commingle the agent's personal funds or other moneys with escrow funds. In addition, the agent shall not use escrow funds to pay or to indemnify against the debts of the agent or of any other party. The escrow funds shall be used only to fulfill the terms of the individual escrow and none of the funds shall be utilized until the necessary conditions of the escrow have been met. All funds deposited for real estate closings, including closings involving refinances of existing mortgage loans, which exceed $2,500 shall be in one of the following forms:
(1) Lawful money of the United States;
(2) wire transfers such that the funds are unconditionally received by the title insurance agent or the agent's depository;
(3) cashier's checks, certified checks, teller's checks or bank money orders issued by a federally insured financial institution and unconditionally held by the title insurance agent;
(4) funds received from governmental entities, federally chartered instrumentalities of the United States or drawn on an escrow account of a real estate broker licensed in the state or drawn on an escrow account of a title insurer or title insurance agent licensed to do business in the state;
(5) other negotiable instruments that have been on deposit in the escrow account at least 10 days; or
(6) a real-time or instant payment through the FedNow service operated by the federal reserve banks or the clearing house payment company's real-time payments (RTP) system.
(d) Each title insurance agent shall have an annual audit made of its escrow, settlement and closing deposit accounts, conducted by a certified public accountant or by a title insurer for which the title insurance agent has a licensing agreement. The title insurance agent shall provide a copy of the audit report to the commissioner upon request. Title insurance agents who are attorneys and who issue title insurance policies as part of their legal representation of clients are exempt from the requirements of this subsection. However, the title insurer, at its expense, may conduct or cause to be conducted an annual audit of the escrow, settlement and closing accounts of the attorney. Attorneys who are exclusively in the business of title insurance are not exempt from the requirements of this subsection.
(e) The commissioner may promulgate rules and regulations setting forth the standards of the audit and the form of audit report required.
(f) If the title insurance agent is appointed by two or more title insurers and maintains fiduciary trust accounts in connection with providing escrow and closing settlement services, the title insurance agent shall allow each title insurer reasonable access to the accounts and any or all of the supporting account information in order to ascertain the safety and security of the funds held by the title insurance agent.
(g) Nothing in this section is intended to amend, alter or supersede other laws of this state or the United States, regarding an escrow holder's duties and obligations.
History: L. 1999, ch. 95, § 10; L. 2000, ch. 26, § 1; L. 2009, ch. 33, § 1; L. 2024, ch. 70, § 6; L. 2025, ch. 94, § 14; January 1, 2026.
(a) The title insurance agent shall maintain sufficient records of its escrow operations and escrow trust accounts so that the commissioner may adequately ensure that the title insurance agent is in compliance with all provisions of K.S.A. 40-1135 through 40-1141, and amendments thereto. The commissioner may prescribe the specific record entries and documents to be kept and the length of time for which the records must be maintained.
(b) The title insurance agent shall make available for inspection by the commissioner, or the commissioner's representatives, all records relating to the title insurance agent's escrow, settlement and closing business, and any other fiduciary trust accounts required to be kept by the title insurance agent. Such availability for inspection shall include any records to which subsection (f) of K.S.A. 40-1137, and amendments thereto, applies.
History: L. 1999, ch. 95, § 11; July 1.
(a) A title insurance agent that handles escrow, settlement or closing accounts shall file with the commissioner a $100,000 surety bond or irrevocable letter of credit in a form acceptable to the commissioner. Such surety bond or irrevocable letter of credit shall be issued by an insurance company or financial institution that is authorized to conduct business in this state securing the applicant's or the title insurance agent's faithful performance of all duties and obligations set out in K.S.A. 40-1135 through 40-1141, and amendments thereto.
(b) The surety bond shall provide that such bond may not be terminated without 30 days prior written notice to the commissioner.
(c) The irrevocable letter of credit shall:
(1) Be issued by a bank that is insured by the federal deposit insurance corporation or its successor; and
(2) initially be issued for a term of at least one year and by its terms is automatically renewed at each expiration date for at least an additional one-year term unless at least 30 days prior written notice of intention not to renew is provided to the commissioner of insurance.
(d) The surety bond or irrevocable letter of credit shall be for the benefit of any person suffering a loss if the title insurance agent converts or misappropriates money received or held in escrow, deposit or trust accounts while acting as a title insurance agent providing any escrow or settlement services.
History: L. 1999, ch. 95, § 12; L. 2025, ch. 94, § 15; January 1, 2026.
The commissioner may issue rules, regulations and orders necessary to carry out the provisions of K.S.A. 40-1135 through 40-1141, and amendments thereto.
History: L. 1999, ch. 95, § 13; July 1.
If the commissioner determines that the title insurance agent or any other person has violated this act, or any rules and regulation or order promulgated thereunder, after notice and opportunity to be heard, the commissioner may order that such person be subject to the penalties provided in K.S.A. 40-2406 et seq., and amendments thereto.
History: L. 1999, ch. 95, § 14; July 1.
(a) Any number of persons, not less than 20, a majority of whom shall be citizens of this state, by complying with the provisions of this code, may become a body corporate for the purpose of carrying on the business of mutual insurance as herein provided.
(b) The affairs of any such mutual insurance company, now existing or hereafter organized under the laws of this state, shall be managed by a board of not more than 25 nor less than five directors. Any vacancy in the board shall be filled by the remaining members until the next annual meeting of the policyholders, at which time a successor shall be elected to fill the unexpired term.
(c) Unless written balloting is required by the bylaws, directors shall be elected by voice vote. Each person who is a policyholder shall be entitled to one vote. A policyholder may vote by proxy, signed by the person legally entitled to vote such proxy.
(d) A majority of the total number of directors shall constitute a quorum for the transaction of business.
(e) Every such mutual insurance company, now existing or hereafter organized under the laws of this state, shall have such officers with such titles and duties as shall be stated in the bylaws or in a resolution of the board of directors which is not inconsistent with the bylaws. Officers shall be chosen in such manner and shall hold their offices for such terms as are prescribed by the bylaws or determined by the board of directors or other governing body.
History: L. 1927, ch. 231, 40-1201; L. 2007, ch. 30, § 4; July 1.
The persons proposing to form any such company shall subscribe and acknowledge articles of incorporation specifying:
(a) The name, which shall contain the word "mutual," the purpose for which formed, and the location of such company's principal or home office, which shall be within this state.
(b) The names and addresses of those composing the board of not less than five directors in which the management shall be vested until the first meeting of the members.
(c) The names and addresses of the incorporators.
History: L. 1927, ch. 231, 40-1202; June 1.
Any company organized under the provisions of this article is empowered and authorized to make contracts of insurance or to cede or accept reinsurance on any portion of any risk for such of the following kinds of insurance as are specified in its articles of incorporation, namely:
(a) Against loss or damage to property and loss of use and occupancy by fire, lightning, windstorm, tornado, cyclone, hail, tempest, flood, earthquake, frost or snow, bombardment, invasion, insurrection, riot, civil war or commotion, military or usurped power, explosion — fire ensuing, and explosion — no fire ensuing, except explosion by steam boilers or flywheels, against loss or damage by water caused by the breakage or leakage of sprinklers, pumps, or other apparatus, water pipes, plumbing, or their fixtures, erected for extinguishing fires, against accidental injury to such sprinklers, pumps, other apparatus, water pipes, plumbing or fixtures, against loss or damage to any goods on the premises of the assured, and loss or damage to the property of another for which the assured is liable, caused by the leakage of roofs, leaders and spouting, or by rain and snow driven through broken and open windows and skylights, or caused by the contents of any tank, or impact of any falling tank, tank platform or supports erected in or upon any building; against the risks of inland transportation and navigation; upon automobiles, aircraft or other vehicles, whether or not operated under their own power, against loss or damage by any of the causes or risks specified in this subsection, including also explosion, transportation, collision, liability for damage to property resulting from owning, maintaining or using automobiles, aircraft or other vehicles, and including burglary and theft, but not including loss or damage by reason of bodily injury to the person.
(b) Against loss, expense or liability by reason of bodily injury or death by accident, disability, sickness or disease suffered by others for which the insured may be liable or have assumed liability, including workmen's compensation.
(c) Against bodily injury or death by accident and disability by sickness.
(d) Against any or all loss, expense and liability resulting from the ownership, maintenance or use of any automobile, aircraft or other vehicle.
(e) Against loss or liability to persons or property resulting from explosion or accidents to boilers, containers, pipes, engines, flywheels, elevators and machinery in connection therewith, and against loss of use and occupancy caused thereby, and to make inspections and issue certificates of inspection thereon.
(f) To guarantee the fidelity of persons in positions of trust, private or public, and to act as surety on official bonds and for the performance of other obligations.
(g) To insurance* against the breakage of glass, local or in transit.
(h) To insure against property loss or damage by burglary, robbery and larceny, any breaking and entry, or entry without breaking, of any house, building, ship, vessel or railroad car, and loss or damage by forgery.
(i) Against loss from interruption of trade or business which may be the result of any accident or casualty.
(j) Against loss or damage by any hazard upon any risk not provided in this section, which is not prohibited by statute or at common law from being the subject of insurance, excepting life insurance.
History: L. 1927, ch. 231, 40-1203; June 1.
The commissioner of insurance shall issue a certificate of authority to such company, when it has fully complied with the following conditions:
(a) It shall hold bona fide applications for insurance upon which it shall issue simultaneously, or it shall have in force, at least 200 policies to at least 200 members for the same kind of insurance upon not less than 200 separate risks of any single class each within the maximum single risk described herein.
(b) No such insurance company organized under the laws of this state and transacting business in this state shall expose itself to loss on any one risk or hazard to an amount exceeding 10% of its surplus unless the excess shall be reinsured in some other company duly authorized to transact similar business in this state or as otherwise provided in the insurance code and no such insurance company not organized under the laws of this state and transacting business in this state shall expose itself to loss on any one risk or hazard to an amount exceeding 10% of its surplus unless the excess shall be reinsured either in some company duly authorized to transact similar business in this state or as provided by the laws of such company's domiciliary state.
(c) It shall have collected the full consideration according to its filed rate on each contract applied for. The total of such considerations shall be held in cash or securities in which such insurance companies are authorized by law to invest, and it shall be in the possession of a residue of lawful assets over and above all liabilities in an amount not less than the capital and surplus required of a domestic stock insurance company transacting the same kinds of insurance. Pursuant to K.S.A. 40-229a, such company shall deposit with the commissioner of insurance lawful securities in an amount equal to not less than the minimum capital stock required of a domestic stock insurance company transacting the same kinds of insurance.
History: L. 1927, ch. 231, 40-1204; L. 1939, ch. 211, § 2; L. 1965, ch. 300, § 6; L. 1967, ch. 268, § 2; L. 1969, ch. 237, § 9; L. 1971, ch. 169, § 1; L. 1979, ch. 143, § 1; L. 1984, ch. 169, § 8; L. 1996, ch. 25, § 14; July 1.
Any public or private corporation, board or association in this state or elsewhere may make applications, enter into agreements for and hold policies in any such mutual insurance company. Any officer, stockholder, trustee or legal representative of any such corporation, board, association or estate may be recognized as acting for or on its behalf for the purpose of such membership, but shall not be personally liable upon such contract of insurance by reason of acting in such representative capacity. The right of any corporation organized under the laws of this state to participate as a member of any such mutual insurance company is hereby declared to be incidental to the purpose for which such corporation is organized and as fully granted as the rights and powers expressly conferred.
History: L. 1927, ch. 231, 40-1205; June 1.
Every member of the company shall be entitled to one vote, or to a number of votes based upon the insurance in force, the number of policies held, or the amount of premiums paid, as may be provided in the bylaws.
History: L. 1927, ch. 231, 40-1206; June 1.
Such policies shall provide for a premium or premium deposit payable in cash, and in no event shall the holder of any such policy be liable for a greater amount than the premium or premium deposit expressed in the policy. Any insurance company organized and existing as a mutual fire insurance company of the state of Kansas shall have the authority and right to accept notes for premium on farm property. The unearned premium reserve on policies written on the installment note plan shall be determined by the amount of cash collected in excess of the percentage earned on policies written for a cash premium, and in no case shall the cash collected on such installment note policies be less than the percentage earned on policies written for a cash premium.
History: L. 1927, ch. 231, 40-1207; L. 1939, ch. 211, § 4; L. 1947, ch. 280, § 1; L. 1971, ch. 170, § 1; L. 1979, ch. 143, § 2; July 1.
Such company shall have and maintain unearned premium and other reserves upon the same basis as that required of domestic stock insurance companies transacting the same kind of insurance.
History: L. 1927, ch. 231, 40-1208; L. 1979, ch. 143, § 3; July 1.
Any director, officer or member of any such company, or any other person, may advance to such company any sum or sums of money necessary for the purposes of its business or to enable it to comply with any of the requirements of the laws of this state, and such moneys and such interest thereon as may have been agreed upon, not exceeding an amount equal to 11/2 percentage points below the maximum rate of interest prescribed by K.S.A. 16-207(a), and amendments thereto, for real estate transactions. The rate of interest to be applied to any specific certificate of indebtedness shall be calculated using the most immediate prior month's usury rate published by the secretary of state in the Kansas register. The sum or sums of money advanced pursuant to this authorization and any interest thereon shall be payable only out of the surplus remaining after providing for all reserves and other liabilities, and shall not otherwise be a liability or claim against the company or any of its assets. No commission or promotion expenses shall be paid in connection with the advance of any such money to the company, and the amount of such advance shall be reported in each annual statement. Such certificates of indebtedness shall not be issued nor retired and no interest thereon shall be paid without the approval of the commissioner of insurance who must be satisfied that all requirements of the law have been met.
History: L. 1927, ch. 231, 40-1209; L. 1939, ch. 211, § 5; L. 1992, ch. 35, § 1; L. 2024, ch. 6, § 119; January 1, 2025.
Any such mutual insurance company organized under the laws of any other country, state or territory, having a surplus and deposit equal to that required of a domestic company writing the same kind of business and having complied with the other requirements of this code, shall be authorized to transact business in this state.
No provision of this act shall require insurance companies doing business in this state on January 1, 1969, which have subsequently become authorized to transact business in accordance with a different article of chapter 40 of the Kansas Statutes Annotated to comply with the surplus and deposit requirements of this act until May 1, 1994.
History: L. 1927, ch. 231, 40-1210; L. 1939, ch. 211, § 6; L. 1984, ch. 169, § 9; July 1.
The taxable premiums or premium receipts of any mutual insurance company organized in or admitted to this state, for the purpose of taxation under any law of this state, shall be the gross premiums received for direct insurance upon property or risks in this state, deducting amounts received for reinsurance and deducting premiums upon policies not taken, premiums returned on canceled policies, and any refund or return made to policyholders other than for losses. The taxes and fees paid by mutual insurance companies into the state treasury through the commissioner of insurance shall be in lieu of all fees, licenses and taxes, state, county and municipal, except such taxes on real estate and tangible personal property as may be levied under other provisions of law.
History: L. 1927, ch. 231, 40-1211; June 1.
History: L. 1927, ch. 231, 40-1212; Repealed, L. 1939, ch. 211, § 8; June 30.
Any mutual company or association existing under any article other than article 12 of this code may by resolution of its board of directors, duly approved by the majority of the members at a meeting specially called for that purpose, and duly certified by the president and secretary, and filed with and approved by the commissioner of insurance, elect and adopt and become subject to the provisions of this article, in lieu of any act or acts theretofore governing such company or association. Any company or association so electing and fully complying with this article, may thereafter effect such kinds of insurance as authorized by this article and specified in its certificate of incorporation then in force, or as then or thereafter amended, together with such additional kinds of insurance as are specified in such resolution and authorized by this article.
History: L. 1927, ch. 231, 40-1213; L. 1939, ch. 211, § 7; June 30.
History: L. 1939, ch. 211, § 3; Repealed, L. 1951, ch. 290, § 1; June 30.
Before any such mutual company shall solicit initial applications for insurance or sell certificates of indebtedness, it shall file with the commissioner of insurance a certified copy of its charter, bylaws, policy forms, and application therefor and rates covering all classifications of insurance to be written and a copy of the certificate of indebtedness to be issued, and receive written approval of all documents filed and written authorization from the commissioner of insurance for the solicitation of application and the sale of certificates of indebtedness.
History: L. 1939, ch. 211, § 1; June 30.
Definitions
as used in this act:
(1) The term "merger" means the union of two (2) or more companies into a single company which is one of the companies so uniting.
(2) The term "consolidation" means the joining of two (2) or more companies in any manner so that a single new consolidated company results therefrom.
History: L. 1957, ch. 289, § 1; June 29.
Any, other than life, solvent domestic mutual insurance company, organized pursuant to the provisions of K.S.A. chapter 40, article 10, 12 or 15, may:
(1) Merge or consolidate with any other, other than life, solvent domestic mutual insurance company as hereinafter provided.
(2) Merge or consolidate with any other, other than life, solvent non-domestic mutual insurance company which is authorized to do an insurance business in this state if such merger or consolidation is authorized by the laws of the state or territory in which such non-domestic company is organized as hereinafter provided.
(3) By virtue of such merger or consolidation, do the kinds of insurance business in the manner and for the purposes for which a, other than life, mutual insurance company may be organized in this state or in the manner and for the purposes for which a, other than life, non-domestic mutual insurance company may be licensed or authorized to do business in this state.
History: L. 1957, ch. 289, § 2; L. 1970, ch. 180, § 1; July 1.
Such merger or consolidation shall be made under the conditions, provisions, and restrictions, and with the powers herein set forth to wit: The directors of each company shall enter into a joint agreement, under the corporate seal of each company, for the merger or consolidation of said companies, prescribing the terms and conditions thereof, the mode of carrying the same into effect, the name of the surviving or new company, the number and names of the directors and other officers thereof, and who shall be the first directors and officers, and their places of residence, and how and when directors and officers shall be chosen, with such other details as required by this act and as they shall deem necessary to perfect the said merger or consolidation. Said agreement shall not be effective unless the same shall be approved by the policyholders of said companies and the commissioner of insurance in the manner hereinafter provided.
History: L. 1957, ch. 289, § 3; L. 1972, ch. 53, § 6; July 1.
(a) Except as otherwise provided herein, the agreement of merger or consolidation shall be submitted to a vote of the policyholders of each company at an annual, periodic or special meeting of policyholders of each such company. The right of a policyholder to vote shall be governed by the laws of the domiciliary state and the bylaws of the company. Written or printed notice shall be given not less than 20 days before each such meeting, either personally or by mail, to each policyholder entitled to vote. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, with postage prepaid, addressed to the policyholder, at such policyholder's address as it appears on the records of the company. Such notice, whether the meeting is annual, periodic or special, shall state the place, day, hour and purpose of the meeting, and a copy or a summary of the agreement of merger or consolidation, as the case may be, shall be included in or enclosed with such notice.
(b) In the case of consolidation the proposed articles of incorporation of the new company must be set out in full in or enclosed with such notice and in the case of merger, any amendments to the articles of incorporation of the continuing company as may be desired or necessary to provide for the purposes of the merger or to comply with law, must be set out separately and in full in or enclosed with such notice clearly showing the nature of such amendments. The policyholders may vote in person or by proxy. Two-thirds of the votes cast by the policyholders of each such company, as are represented at the meeting in person or by proxy, must be in favor of the agreement in order to approve any such agreement. Should the agreement fail to receive the required number of votes it shall be null and void.
(c) The provisions of subsections (a) and (b) shall not apply to the surviving company of any merger or consolidation to which this act applies whose surplus as regards policyholders is greater than 25 times the surplus as regards policyholders of the nonsurviving company or companies. For purposes of this section, the surplus as regards policyholders of the respective companies shall be those reflected by the most recent statement of financial condition filed with and accepted by the commissioner pursuant to K.S.A. 40-225 and amendments thereto.
History: L. 1957, ch. 289, § 4; L. 1993, ch. 2, § 1; February 25.
Notwithstanding the provisions of K.S.A. 40-1219, and amendments thereto, if a domestic mutual insurer is impaired in that the insurer's surplus is less than the amount required for authority to transact the kinds of insurance being transacted by the insurer or the insurer has attained a financial condition such that its continued operation might be hazardous to the insuring public pursuant to K.S.A. 40-222b, and amendments thereto, the commissioner of insurance may approve the agreement of merger or consolidation after a hearing thereon conducted in accordance with the provisions of the Kansas administrative procedure act. Approval of the merger or consolidation by the policyholders of the insurers that are a party to the transaction is not required.
History: L. 1993, ch. 11, § 1; July 1.
Upon approval of the agreement of merger or consolidation by the policyholders of each of such companies, as hereinbefore provided, the merging or consolidating companies by their officers shall file a verified joint application in duplicate for approval with the commissioner of insurance accompanied by or containing the following:
(1) Two (2) duplicate originals of the agreement.
(2) Affidavits of officers of each of the companies setting forth the facts necessary to show that all requirements of law with respect to notices to persons entitled to vote have been complied with.
(3) If the surviving or the new company shall be a domestic company and any non-domestic company is a party to the merger or consolidation and the laws of the state or territory under which such non-domestic company is incorporated require approval of a merger or consolidation by an official of such state or territory, a certificate of approval of such official: Provided, That if the laws of the domiciliary state or territory of such non-domestic company require prior or joint approval by the proper supervisory official of this state, the Kansas insurance commissioner may act in unison or jointly with the proper official of such other state in the consideration of the application for approval of the agreement of merger or consolidation.
(4) An instrument appointing the commissioner of insurance and his successor or successors in office the true and lawful attorney of such company for service of process, containing the same provisions and having the same effect as the instrument required by K.S.A. 40-218.
(5) A certification by the secretary of each company for his respective company setting forth the number of policyholders of such company, the number of policyholders represented in person and the number represented by proxy at the meeting at which the agreement was considered, and the number of votes cast by said policyholders for and against such agreement.
(6) In the case of a merger, if the articles of incorporation of the surviving company are to be amended, such amendments.
(7) In the case of a consolidation, a copy of the articles of incorporation of the new company, and if a non-domestic company, such articles to be certified by the public official with whom the original is required to be filed in its domiciliary state or territory.
(8) A financial statement of each of the merging or consolidating companies as of a date not earlier than thirty (30) days prior to the date of the application to merge or consolidate.
(9) When the application for the approval of the merger or consolidation is filed with the commissioner of insurance for his action there shall also be filed a certificate executed by the president or a vice-president and attested by the secretary or an assistant secretary, or the executive officers corresponding thereto, and under the corporate seal of each of the companies party to the agreement of merger or consolidation, verified by the affidavits of such officers, setting forth all fees, commissions or other compensations, or valuable considerations paid or to be paid, directly or indirectly, to any person in any manner securing, aiding, promoting or assisting in any such merger or consolidation.
History: L. 1957, ch. 289, § 5; June 29.
The commissioner of insurance shall examine the application and accompanying papers, and, if he finds the same to be in accordance with the provisions of this act and not inconsistent with the laws and the constitutions of this state and the United States and not injurious to the interests of the policyholders and creditors of such companies, he shall endorse his approval thereon.
History: L. 1957, ch. 289, § 6; L. 1972, ch. 53, § 7; July 1.
The commissioner of insurance, upon approval or disapproval of said application, shall cause the same to be so endorsed and the entire proceedings to be filed and recorded in the office of the secretary of state and a copy of the same certified by the secretary of state to be filed in the office of the commissioner of insurance. Within fifteen (15) days after approval by the commissioner of insurance, a certified copy of the approved application and agreement shall also be filed by the officers of the new or surviving company in the office of the register of deeds in the county wherein the registered office and home offices of the merging or consolidating companies were located and in the county wherein the registered office and home office of the surviving or new company shall be located and in the office of the register of deeds of each county in this state in which any of the companies, parties to the agreement, shall have real property at the time of merger or consolidation. When approved by the commissioner of insurance, the said agreement shall be deemed effective and the date when so approved shall be the date of consolidation or merger of said companies, and:
(1) The said companies shall thereupon be one (1) company under the name adopted in and by said agreement, possessing all the rights, privileges, immunities, powers, and franchises theretofore vested in each of them.
(2) The separate existence of all the companies to the agreement of merger or consolidation except the surviving or new company shall cease.
(3) All property, real, personal and mixed, and all debts due on whatever account, including assessments payable from members and policyholders and all other choses in action and all and every other interest of, or belonging to or due to, each of the companies merged or consolidated shall be deemed to be transferred to and vested in such surviving or new company without further act or deed; and the title to any real estate, or any interest therein, under the laws of this state vested in any of the companies shall not revert or be in any way impaired by reason of such merger or consolidation.
(4) Such surviving or new company shall thenceforth be responsible and liable for all of the liabilities and obligations of each of the companies so merged or consolidated; and claim existing or action pending by or against any of such companies may be prosecuted to judgment as if such merger or consolidation had not taken place, or such surviving or new company may be substituted in its place; neither the rights of creditors nor liens upon the property of any of such companies shall be impaired by such merger or consolidation, but such liens shall be limited to the property upon which they were liens immediately prior to the time of such merger or consolidation, unless otherwise provided in the agreement of merger or consolidation.
(5) In the case of merger, the articles of incorporation of the surviving company shall be supplanted, amended or superseded to the extent, if any, that any provision or provisions of such articles of incorporation shall be revised in the agreement of merger (as provided in K.S.A. 40-1219 and 40-1220) and the articles of incorporation shall be deemed to be thereby and to that extent amended.
(6) In the case of a consolidation the new articles of incorporation shall be deemed to be the articles of incorporation of such new corporation.
(7) The surviving or new company may, for the purpose of complying with the requirements of the law relating to age of a company, elect to be the age of any of the merging or consolidating companies and shall for this purpose be considered as having such age: Provided, however, That such election shall be set forth in the application for approval of the agreement of merger or consolidation.
(8) The surviving or new company shall maintain the reserves and deposits as required by law of other like kinds of companies doing like kinds of insurance business.
(9) The surviving or new company after merger or consolidation shall be subject to the same fees, taxes, or penalties and other requirements of law as other like kinds of companies doing like kinds of insurance business.
History: L. 1957, ch. 289, § 7; L. 1972, ch. 53, § 8; July 1.
If any policyholder, who shall be entitled to vote and is residing in this state at the time of the merger or consolidation, shall be dissatisfied with or object to such merger or consolidation and shall have voted against the same at the meeting of policyholders, it shall be lawful for any such policyholder, within thirty (30) days after the approval of said agreement of merger or consolidation by the commissioner of insurance and upon reasonable notice to the merged or consolidated company, to apply by petition to the district court of the county in which the registered or home office of such merged or consolidated company may be situated to appoint three (3) qualified disinterested persons to estimate and appraise the interest or cash value of such interest in the company of which he was a policyholder prior to the merger or consolidation. The persons so appointed shall appraise the interest or the cash value of such interest of such policyholder in such company at the full value thereof, without regard to any appreciation or depreciation in consequence of the said merger or consolidation. Said appointed persons shall receive as full compensation for their services a sum not to exceed one hundred dollars ($100) per day for the actual and necessary time in making such estimate or appraisal as may be directed by the court which shall become a part of the costs.
Upon such petition it shall be the duty of said court to make such appointment, and the award of the persons so appointed, or a majority of them, when confirmed by the said court, shall be final and conclusive and such award shall become an obligation of the new or surviving company. The costs in such proceeding shall be shared equally by the petitioner and the merged or consolidated company, except that the court in any case may assess the costs in such proceeding as it may deem just and equitable under the particular facts and circumstances of the case. Upon the payment of the award made to any policyholder the interest of such policyholder shall cease. In case the award and costs, or both, as aforesaid, shall not be so paid within thirty (30) days after the said award shall have been confirmed by said court, the award and costs, or both, so found and confirmed, shall be a judgment against the party named by the court, and may be collected as other judgments in said court are by law recoverable.
History: L. 1957, ch. 289, § 8; L. 1970, ch. 180, § 2; L. 1972, ch. 53, § 9; July 1.
(1) No director or officer of any company party to a merger or consolidation, except as fully expressed in the agreement of merger or consolidation, shall receive any fee, commission, other compensation or valuable consideration, whatever, directly or indirectly, for in any manner aiding, promoting or assisting in such merger or consolidation.
(2) Any person violating the provisions of the preceding section shall be fined not less than one thousand dollars ($1,000), and not more than five thousand dollars ($5,000) or imprisoned in the county jail for not more than one (1) year, or both, and shall forfeit any office he holds in the merged or consolidated company.
History: L. 1957, ch. 289, § 9; June 29.
(1) Nothing contained in this act shall be construed to enlarge the charter powers of any insurance company except in conformity with the provisions of the proposed articles of incorporation of the merged or consolidated company as provided in this act, nor to authorize any insurance company to do any kind of insurance business not authorized by its charter or articles of incorporation, nor to authorize any insurance company to do any kind of insurance business in this state not authorized by its license or certificate of authority to do business in this state.
(2) This act shall be construed as a part of and supplementary to the insurance code of the state of Kansas.
(3) If any provision of this act, or the application of such provision to any person or circumstances, shall be held invalid the remainder of the act, and the application of such provision to persons and circumstances other than those as to which it is held invalid, shall not be affected thereby.
History: L. 1957, ch. 289, § 10; June 29.
(a) Any insurance company organized and existing under article 12 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, may make and issue contracts of insurance, in addition to the kinds of insurance specified in K.S.A. 40-1203, and amendments thereto, which include such amount and kind of insurance against legal liability for injury, damage or loss to the person or property of others, and for medical, hospital and surgical expense related to such injury, as the commissioner of insurance deems to be reasonably incidental to insurance of real or personal property against fire or other perils under policies covering residential properties involving not more than two families with or without incidental office, professional, private school or studio occupancy by an insured, whether or not the premium or rate charged for certain perils so covered is specified in the policy. Any provision of K.S.A. 40-1204, and amendments thereto, to the contrary notwithstanding: (1) No insurer having a bona fide net surplus of at least $1,000,000 but less than $1,500,000 authorized as to property insurance only shall, pursuant to this subsection (a), retain risk as to any one subject of insurance as to hazards other than property insurance hazards in an amount exceeding 3% of its surplus to policyholders; and (2) no insurer which has a bona fide net surplus of less than $1,000,000 but at least $750,000 authorized as to property insurance only shall, pursuant to this subsection (a), retain any risk other than property insurance hazards, and all such companies shall reinsure all such risks as to hazards other than property insurance hazards.
(b) It is required when a company is acting under subsection (a) that its board of directors authorize such action by the affirmative vote of at least ⅔ of its membership. Any company which has acted under this section shall certify such action to the commissioner of insurance, together with a statement showing its financial status and a net surplus sufficient to warrant such action.
(c) Any company operating under this section shall maintain unearned premium reserves equal to a pro rata amount of the premiums received on all unexpired risks, and such unearned premium reserves shall be held and regarded as an absolute liability of the company.
History: L. 1994, ch. 87, § 1; April 7.
As used in this act: (a) "Health care provider" means any person licensed to practice any branch of the healing arts by the state board of healing arts or any hospital licensed under the provisions of K.S.A. 65-425 et seq., and amendments thereto, or a private psychiatric hospital authorized under K.S.A. 39-2001 et seq., and amendments thereto;
(b) "person" means an individual, corporation, partnership, association, joint stock company, trust, unincorporated organization or any similar entity;
(c) "affiliate" means a person that directly or indirectly, through one or more intermediaries, employs, controls or is controlled by, or is under common control with a health care provider;
(d) "commissioner" means the commissioner of insurance; and
(e) "association" means any organization whose income is exempt from taxation pursuant to section 501(a) of the internal revenue code of 1986, and amendments thereto, as in effect on the effective date of this act, due to such association's compliance with section 501(c)(6) of such code, and amendments thereto, as in effect on the effective date of this act.
History: L. 1988, ch. 147, § 1; L. 1999, ch. 87, § 2; L. 2018, ch. 71, § 15; July 1.
(a) Except as otherwise provided in this act, the provisions of article 12 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, shall control the formation and operation of companies organized under this act.
(b) Any association of health care providers domiciled within the state of Kansas which has been in existence for three years or more, may, as provided in this act, form an insurance company for the purpose of issuing contracts of insurance providing insurance for health care providers which are members of the association, the member's employees, directors, professional associations and affiliates.
(c) Any two or more such associations of health care providers, may form an insurance company for the purpose of issuing contracts of insurance providing insurance for such association's respective members, the member's employees, directors, professional associations and affiliates.
(d) In addition to other requirements of law, any plan or agreement for the sale, merger, consolidation or change of control of any company organized under the provisions of this act shall not be effective unless such plan or agreement has been approved by resolution of the governing board of directors or board of trustees of the association which formed such company.
History: L. 1988, ch. 147, § 2; L. 1997, ch. 52, § 1; L. 2014, ch. 56, § 2; July 1.
The affairs of the company shall be managed by a board of directors of not less than five nor more than 25 persons selected by the association or associations forming the company. Directors shall not be required to be policyholders. The persons named as directors in the charter shall constitute the directors for the first year, and, at their first meeting, they shall select a president, secretary and treasurer and such other officers as may be necessary. Thereafter, directors shall be selected in accordance with the bylaws.
History: L. 1988, ch. 147, § 3; April 28.
The persons proposing to form any such company shall subscribe, acknowledge and file with the commissioner articles of incorporation specifying:
(a) The name, which shall contain the word "mutual," the names of persons initially associated, the method by which other persons may be admitted to the company as members, the purposes for which the company is organized and the location of such company's principal or home office, which shall be within this state. The articles of incorporation shall provide for bylaws and for the amendment of the articles of incorporation and the bylaws.
(b) The names and addresses of those persons composing the board.
(c) The names and addresses of the incorporators.
History: L. 1988, ch. 147, § 4; L. 1997, ch. 52, § 2; July 1.
The bylaws shall provide for a governing body for the company, the manner of election thereof, and the specific kinds of insurance or indemnification which will be offered. The bylaws may provide for the transfer of risks to other insurance companies or for reinsurance.
History: L. 1988, ch. 147, § 5; L. 1997, ch. 52, § 3; July 1.
(a) Any company organized under the provisions of this act shall be empowered to make contracts of insurance as provided herein and to cede to any insurer or accept from any insurer reinsurance on any portion of any such risk for the kinds of insurance authorized by article 12 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto.
(b) Any company organized under the provisions of this act shall be empowered to contract with the governing board of any plan created pursuant to K.S.A. 40-3413, and amendments thereto, to issue policies to any applicant for liability insurance under the provisions of any such plan, to service and manage such policies and in all respects to administer and carry out the functions of any plan as the same may be authorized by the contract. Policies may be issued to persons and corporations under the provisions of such contract even though the insured is not a member of the association of health care providers forming the insurance company. No provision of this act or of article 12 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, regarding the voting rights of members or the payment of dividends shall apply to policies issued under this subsection.
History: L. 1988, ch. 147, § 6; L. 1990, ch. 166, § 1; L. 1997, ch. 52, § 4; L. 2014, ch. 56, § 3; July 1.
The commissioner shall issue a certificate of authority when any company, organized under this act, has fully complied with the following conditions:
(a) The company holds bona fide applications for insurance upon which it shall issue at least 20 policies to at least 20 members. If the company is in compliance with all other provisions of this act, the commissioner shall not revoke or refuse to renew the certificate of authority because membership has declined to less than 20 members.
(b) No insurance company organized pursuant to this act shall expose itself to loss on any one risk or hazard to an amount exceeding 20% of its surplus unless the excess is reinsured.
(c) It shall have collected, in accordance with the method provided in the articles of incorporation or the bylaws, the full consideration according to its filed rate on each contract for which application has been made. The total of such consideration shall be held in cash or securities in which such insurance companies are authorized to invest, or one or more clean and irrevocable letters of credit, and it shall possess and thereafter maintain a surplus of lawful assets or letters of credit over and above liabilities in an amount not less than the capital and surplus required of a domestic stock insurance company transacting the same kinds of insurance. Pursuant to K.S.A. 40-229a, the company shall deposit with the commissioner securities in which such insurance companies are authorized to invest, or one or more clean and irrevocable letters of credit, for the benefit of the commissioner, in an amount not less than the minimum capital stock required of a domestic stock insurance company. For the purpose of this act, letters of credit shall be in the form allowed by K.S.A. 40-221a(b)(2), and amendments thereto, drawn on the account of a health care provider for the benefit of the company, or for the benefit of the commissioner if the letter of credit is on deposit in accordance with this section.
History: L. 1988, ch. 147, § 7; L. 1996, ch. 25, § 15; July 1.
No insured shall be liable for any amounts other than the annual premium. The business of the company shall be conducted so as to preclude any distribution of income, profit or property of the company to the individual members thereof except in payment of dividends, debts, claims or indemnities or upon the final dissolution of the company. Dividends may be credited to a member's account and distributed in accordance with a plan adopted by the board of directors.
History: L. 1988, ch. 147, § 8; L. 1997, ch. 52, § 5; L. 2013, ch. 97, § 7; July 1.
Each company organized pursuant to this act shall file an annual statement each year in accordance with the requirements for domestic insurers writing the same kind of insurance.
History: L. 1988, ch. 147, § 9; L. 2000, ch. 147, § 1; L. 2014, ch. 56, § 4; July 1.
History: L. 1927, ch. 231, 40-1301; Repealed, L. 1961, ch. 237, § 2; June 30.
History: L. 1927, ch. 231, 40-1302; Repealed, L. 1961, ch. 237, § 2; June 30.
History: L. 1927, ch. 231, 40-1303; Repealed, L. 1961, ch. 237, § 2; June 30.
History: L. 1927, ch. 231, 40-1304; Repealed, L. 1961, ch. 237, § 2; June 30.
History: L. 1927, ch. 231, 40-1305 to 40-1311; Repealed, L. 1961, ch. 237, § 2; June 30.
Any corporation organized under the provisions of article 13, chapter 40 of the Kansas Statutes Annotated and now transacting business as a mutual indemnity association may continue the transaction of such business: Provided, That, on or before May 1, 1962, every such corporation shall comply fully with the provisions of the insurance code of this state relating to mutual insurance companies other than life as set out in article 12, chapter 40 of the Kansas Statutes Annotated, and acts amendatory thereof or supplemental thereto.
History: L. 1961, ch. 237, § 1; June 30.
History: L. 1927, ch. 231, 40-1401; Repealed, L. 1970, ch. 181, § 1; July 1.
History: L. 1927, ch. 231, 40-1402; Repealed, L. 1970, ch. 181, § 1; July 1.
History: L. 1927, ch. 231, 40-1403; Repealed, L. 1970, ch. 181, § 1; July 1.
History: L. 1927, ch. 231, 40-1404; Repealed, L. 1970, ch. 181, § 1; July 1.
History: L. 1927, ch. 231, 40-1405; L. 1951, ch. 296, § 14; Repealed, L. 1970, ch. 181, § 1; July 1.
Revisor's Note: Later act, see 40-2204, 40-2205.
History: L. 1927, ch. 231, 40-1406 to 40-1408; Repealed, L. 1951, ch. 296, § 16; June 30.
History: L. 1927, ch. 231, 40-1409; Repealed, L. 1970, ch. 181, § 1; July 1.
History: L. 1931, ch. 211, § 1; Repealed, L. 1970, ch. 181, § 1; July 1.
Any number of persons, not less than four hundred, residing in this state, who collectively own not less than twenty thousand acres of growing grain, in this state, which they desire to insure against loss or damage by hail, and who shall actually subscribe for such insurance to the amount of two hundred thousand dollars, in not less than four hundred separate risks, located in not less than ten counties, and upon not more than five risks of one hundred sixty acres each in any one township, may form an incorporated company for the purpose of mutually insuring growing grain against loss or damage by hail: Provided, That each subscriber shall have paid a membership fee of five dollars, for which duplicate receipts have been executed conditioned for the return thereof at the end of one year from date of first subscription if the company has not then completed its organization, the original receipt to be delivered to the member subscribing, and the duplicate receipt, together with the fee, shall within thirty days after the execution thereof be deposited with the commissioner of insurance, until a certificate of authority to transact business has been granted by the commissioner of insurance, if granted within one year from date of first subscription, otherwise to be returned to the subscribing member.
History: L. 1927, ch. 231, 40-1501; June 1.
Such persons so desiring to incorporate shall file in the office of the commissioner of insurance a statement signed and duly acknowledged by all of the incorporators stating their purpose of forming a company as expressed in the first section of this article, for the transaction of the business of hail insurance, the number of acres of growing grain owned by each, the amount of insurance subscribed for, the description and location of the grain, the address of each subscriber, and a certified copy of the charter. The charter shall set forth the corporate title of the organization, which title shall include the word "mutual," the place of business, the home or general office thereof, the intended duration of the company, the directors chosen, and the specific purpose for which the organization is formed. No certificate of authority shall be issued by the commissioner of insurance until there shall have been deposited with the commissioner by such company cash or securities in an amount not less than $20,000, which shall not be withdrawn until all claims for hail damage be paid in full.
History: L. 1927, ch. 231, 40-1502; L. 1929, ch. 200, § 1; L. 1996, ch. 25, § 16; July 1.
Any person desiring insurance shall make application on blanks furnished by the company, and shall pay the annual premium in cash or by giving a note. If a note be given it shall be a lien on the property insured, when recorded as chattel mortgages are recorded. Every person who effects insurance in any company organized under the provisions of this article, and also their heirs, executors, administrators and assigns, continuing to be so insured, shall thereby become members of the company during the period of insurance, and shall be bound to pay for losses and such expenses as accrue to the company and to maintain the reserve fund hereinafter required in proportion to the amount of the annual premium paid by such person. In companies organized under the provisions of this article all notes taken by them in consideration of premiums on their policies shall be assessable and collectible in part or in whole for the purpose of paying all losses and expenses that may accrue to the company and maintain the reserve fund hereinafter required: Provided, however, That such expenses shall in no event exceed fifty percentum of the premiums received by the company in cash and notes.
History: L. 1927, ch. 231, 40-1503; June 1.
The directors of every such company on the first day of August of each year, or as soon thereafter as practicable, shall meet and review all adjustments and determine the rate of assessment necessary to pay all losses and expenses in full, and to maintain the reserve fund hereinafter required, and shall levy such assessment at once. All assessments shall be due at the home office of the company not later than thirty days after the date such assessment is made. All losses shall be adjusted by the company promptly upon receipt of notice thereof, in compliance with the provisions of such policy, and all adjusted losses shall be paid prior to December 1. Any company may pay its losses as soon as adjusted if such company shall have submitted its plan for payment of such losses together with all of its reinsurance contracts and a current financial statement to the commissioner of insurance, and shall have secured the written approval of such plan. The commissioner shall not approve any plan unless it is clearly indicated that the company will be able to meet all of its obligations when due.
History: L. 1927, ch. 231, 40-1504; L. 1953, ch. 232, § 1; L. 1959, ch. 215, § 1; June 30.
If any member shall for the space of thirty days after receiving notice, neglect or refuse to pay the sum assessed against him, the company may sue for and recover the amount of his deposit note or notes, with cost of suit; but execution shall only issue for assessments and costs as they accrue. If the assets of the company shall be insufficient to pay the losses due the members, in any one year, such members shall receive as payment in full for their respective losses a proportionate share of the assets of the company: Provided, That in calculating the pro rata amount to be paid each member on account of his loss, the total amount of the salaries and commissions heretofore paid any officer of the company, during such year, shall be considered as a part of the assets of the company and such officer shall receive the same proportionate share of his salary and commissions as the members receive of their claims and shall be liable to the company for any salary and commissions in excess of the amount of his proportionate share of such salary and commissions as aforesaid. The commissioner of insurance shall not renew the certificate of authority of such company until the provisions of this section have been fully complied with: Provided further, That no member shall be liable to such a company for more than the whole amount of his premium.
History: L. 1927, ch. 231, 40-1505; June 1.
Whenever the losses and expenses in any year shall be less than the amount of the entire premium income of the year, the remainder of the premium income shall be set apart in the reserve fund: Provided, That when the reserve fund shall equal seven thousand five hundred dollars the company may return to the members so much of the premium income in excess of the amount required for losses and expenses as may exceed ten percentum of the total premium income of the year. Whenever the company's premium income of the year is insufficient to pay the losses and expenses of the year the company shall pay such obligations from the reserve fund. Such part of the reserve fund of the company as is not needed for immediate use of the company shall be invested as provided by section 40-227.
History: L. 1927, ch. 231, 40-1506; June 1.
The annual meeting shall be held in the month of January of each year, at the principal office of the company and every member shall be entitled to as many votes as there are directors to be elected, and shall cast the same in person or by proxy and a plurality shall elect.
History: L. 1927, ch. 231, 40-1507; June 1.
The directors shall at their annual meeting elect a president and such other officers with such titles and duties as shall be stated in the bylaws or in a resolution of the board of directors which is not inconsistent with the bylaws. Officers shall be chosen in such manner and shall hold their offices for such terms as are prescribed by the bylaws or determined by the board of directors.
History: L. 1927, ch. 231, 40-1508; L. 2007, ch. 30, § 5; July 1.
The annual meeting of the board of directors shall be held immediately following the annual meeting of the members of the company when practicable, but in no event later than five days thereafter, for the election of its officers and the transaction of such other business as may be necessary. The board of directors may meet at such times as may be designated in the bylaws of the company.
History: L. 1927, ch. 231, 40-1509; June 1.
The board of directors of such company shall manage and control its affairs, and shall adopt such bylaws as may be necessary, and may prescribe the duties of its officers and agents and fix their compensation, and may alter and amend its bylaws at any annual meeting of the board of directors by a majority vote of the whole number of directors. All bylaws adopted shall forthwith be certified to the commissioner of insurance for his approval or disapproval. They shall also fix the rates of insurance, and the membership fees if any are charged.
History: L. 1927, ch. 231, 40-1510; June 1.
In companies organized under the provisions of this article the number of directors shall not be more than 25 nor less than five. Unless written balloting is required by the bylaws, directors shall be elected by voice vote. Each person who is a policyholder shall be entitled to one vote. A policyholder may vote by proxy, signed by the person legally entitled to vote such proxy. A majority of the board of directors shall be a quorum for the transaction of business. Vacancies in the board shall be filled by the remaining members until the next annual meeting.
History: L. 1927, ch. 231, 40-1511; L. 2007, ch. 30, § 6; July 1.
Any company organized under the provisions of this article may issue policies to its members on growing crops against loss or damage by hail. Every policy shall contain a printed copy of the application and also a copy of the bylaws, which shall become a part of the contract between the company and the assured; and all policies of the company shall be signed by the president and secretary. The liability of every such company shall not cease prior to August 1 or later than December 1 in the year in which the policy was written; but the membership, for voting purposes only, shall extend to the last day of February in the year following that in which the policy was written.
History: L. 1927, ch. 231, 40-1512; L. 1953, ch. 232, § 2; June 30.
No oral or written misrepresentation made by the assured or in his behalf, in the negotiation of insurance, shall be deemed material or defeat or void the policy, or prevent its attaching, unless made with intent to deceive and defraud, or unless the matter misrepresented increases the risk.
History: L. 1927, ch. 231, 40-1513; June 1.
Any member may withdraw from the company by surrendering his policy for cancellation, and by the full payment of the premium or note therefor, actually delivered to the company in cash, in which case the company shall retain the customary short rate. In case of loss, upon maturity of any note given as consideration the company may deduct such note in settlement of any claim which may arise. Cancellation by any company of its contract of insurance shall be made upon proper notice to the policyholder and by the return to the assured of the unearned premium.
History: L. 1927, ch. 231, 40-1514; June 1.
No mutual hail insurance company shall charge or receive, directly or indirectly, a higher or greater rate for insurance against destruction or damage by hail of any property within the state than it charges for other risks in this state of the same kind or class, consideration being given to the location of the risk and the hazards thereof.
History: L. 1927, ch. 231, 40-1515; June 1.
It shall be unlawful for any mutual hail insurance company organized under the laws of any other state to transact any business directly or indirectly in this state, and it shall be unlawful for any mutual hail insurance company organized under the laws of this state to reinsure its business with any mutual hail insurance company organized under the laws of any other state.
History: L. 1927, ch. 231, 40-1516; June 1.
Any member of a company organized under the provisions of this article, who shall sue such company for loss or damage claimed to be due him under his policy and who shall recover judgment in such action for an amount larger than may have been tendered him by such company in settlement of his claim, shall be entitled to recover from such company in addition to such loss or damage, a reasonable attorney's fee, which shall be included in such judgment and be collected and paid as a part thereof.
History: L. 1927, ch. 231, 40-1517; June 1.
Any mutual hail insurance company organized in this state may by policy, treaty or other agreement cede to or accept from any insurance company or other insurer, reinsurance upon the whole or any part of any risk with or without contingent liability or participation, or with or without membership in such insurance company: Provided, No such reinsurance shall be effected with any company or insurer until approved by written order of the commissioner of insurance filed in his office.
History: L. 1927, ch. 231, 40-1518; L. 1957, ch. 285, § 1; March 27.
Any insurance company organized and doing business as provided in K.S.A. 40-1501, and amendments thereto, in addition to the class of business authorized in such section, may make and issue contracts of insurance upon growing crops against direct loss or damage by fire and for any loss caused while the harvested crop is being transported to the initial place of storage or to an initial market location of such crops or to cede or accept reinsurance on any portion of any such risk. Such company shall have a bona fide net surplus exceeding all liabilities and reserve funds required by law of not less than $100,000 of which $50,000 shall be invested and deposited as provided in K.S.A. 40-227 and 40-230, and amendments thereto, for the protection of all policyholders. Before issuing any such contracts or accepting any such reinsurance, the board of directors of such company shall by a majority vote of the whole number of directors as provided in K.S.A. 40-1510, and amendments thereto, authorize the writing of such fire coverage. The company shall file with the commissioner of insurance a certified copy of the resolution of the board of directors taking such action and a certified copy of its amended bylaws and amended charter as provided in K.S.A. 40-216, and amendments thereto.
History: L. 1953, ch. 231, § 1; L. 1995, ch. 231, § 1; May 4.
Persons of this state, hereby designated subscribers, are hereby authorized to exchange reciprocal or interinsurance contracts with each other, or with persons of other states and countries, providing indemnity among themselves from any loss which may be the subject of legal insurance, excepting life insurance.
History: L. 1927, ch. 231, 40-1601; L. 2000, ch. 170, § 17; July 1.
Reciprocal insurance contracts may be executed by an attorney-in-fact, duly authorized and acting for the subscribers of a reciprocal, and such attorney-in-fact may be a corporation. The office or offices of such attorney-in-fact may be maintained at such place or places as may be designated by the subscribers in the power of attorney.
History: L. 1927, ch. 231, 40-1602; L. 2000, ch. 170, § 18; July 1.
(a) The attorney-in-fact of a domestic reciprocal shall file with the commissioner of insurance a declaration verified by the oath of such attorney-in-fact, or when such attorney-in-fact is a corporation by the oath of a chief officer thereof, setting forth:
(1) The name of the attorney-in-fact, and the name of the domestic reciprocal.
(2) The kind or kinds of insurance to be effected or exchanged.
(3) A copy of the form of power of attorney and subscriber's agreement or other authority of such attorney-in-fact under which such insurance is to be effected or exchanged.
(4) The location of the office or offices from which such contracts or agreements are to be issued.
(5) That except as to the kinds of insurance hereinafter specifically mentioned in this subdivision, applications shall have been made for indemnity upon at least 100 separate risks aggregating not less than $1,500,000, represented by executed contracts or bona fide applications to become concurrently effective. In the case of employers' liability or workers compensation insurance, applications shall have been made for indemnity upon at least 100 separate risks, covering a total annual payroll of not less than $2,500,000, as represented by executed contracts or bona fide applications to become concurrently effective.
(6) That there is in the possession of such attorney-in-fact, and available for the payment of losses, assets conforming to the requirements of K.S.A. 40-1605, and amendments thereto.
(7) A financial statement in form prescribed for the annual statement.
(8) An instrument authorizing service of process as provided in this article.
(b) No declaration shall be required under this section for any reciprocal organized in this state as a result of a conversion under the provisions of K.S.A. 40-1620, and amendments thereto.
History: L. 1927, ch. 231, 40-1603; L. 2000, ch. 170, § 19; July 1.
There shall be filed with the commissioner of insurance a statement under oath by the attorney-in-fact giving the maximum amount of indemnity upon any single risk, and such attorney-in-fact, whenever and as often as such attorney-in-fact shall be required, shall file with the commissioner of insurance a statement verified by such attorney-in-fact's oath, to the effect that the reciprocal has not assumed on any one risk an amount greater than 10% of its surplus, unless the excess shall be reinsured (1) in some other insurance company duly authorized to transact similar business in this state or as otherwise provided in the insurance code; or (2) as provided by the laws of the state in which the principal office of the reciprocal is located.
History: L. 1927, ch. 231, 40-1604; L. 1967, ch. 268, § 3; L. 2000, ch. 170, § 20; July 1.
(a) At all times, each reciprocal shall maintain the same unearned premium and loss or claim reserves, in cash or securities authorized by the laws of the state in which the reciprocal is domiciled, as required for domestic stock and mutual companies writing the same classes of insurance.
(b) No reciprocal shall be licensed to transact the business of insurance in this state unless such reciprocal shall have and maintain a surplus equal to the capital and surplus required of a domestic stock insurance company transacting the same kinds of insurance.
(c) Each reciprocal shall have lawful securities on deposit, for the protection of all subscribers or creditors, or both, of the reciprocal, with the department of insurance of this or any other state in the United States in an amount equal to the minimum capital stock required of a domestic stock insurance company transacting the same kinds of insurance.
History: L. 1927, ch. 231, 40-1605; L. 1955, ch. 243, § 1; L. 1965, ch. 300, § 7; L. 1969, ch. 237, § 10; L. 1979, ch. 144, § 1; L. 1984, ch. 169, § 10; L. 2000, ch. 170, § 21; July 1.
If at any time it appears that the amount of funds required in K.S.A. 40-1605, and amendments thereto, has not been accumulated or maintained, then the attorney-in-fact or any other interested party may advance to a reciprocal any funds required in such reciprocal's operations. The funds so advanced shall not be treated as a liability of the reciprocal and interest shall not be paid or funds repaid except with the approval of the supervising insurance official of the state in which the reciprocal is domiciled. Any such advance and interest shall be repaid only out of the surplus funds of the reciprocal.
History: L. 1927, ch. 231, 40-1606; L. 2000, ch. 170, § 22; July 1.
Concurrently with the filing of the declaration provided for by the terms of K.S.A. 40-1603, and amendments thereto, the attorney-in-fact shall file with the commissioner of insurance an instrument in writing, executed by such attorney-in-fact for the reciprocal conditioned that upon the issuance of the certificate of authority provided for in K.S.A. 40-1610, and amendments thereto, service of process may be had upon the commissioner in all suits in this state arising out of such policies, contracts or agreements, which service shall be valid and binding upon the reciprocal. Such service of process shall be executed in accordance with the provisions of K.S.A. 40-218, and amendments thereto. Any reciprocal operating under the laws of this state may sue or be sued in the declared name of the reciprocal.
History: L. 1927, ch. 231, 40-1607; L. 1953, ch. 233, § 1; L. 2000, ch. 170, § 23; July 1.
The attorney-in-fact of a reciprocal, or any employee having the care and handling of the funds and securities of a reciprocal, shall maintain a good and sufficient bond running to the board of directors of the reciprocal conditioned for the faithful accounting and disbursement of all money that may come into such attorney-in-fact's or employee's hands; such bond may be executed by a surety company or may be a personal bond approved by the commissioner of insurance. Such bond shall be fixed in an amount and approved by the board of directors or other governing body of such reciprocal. In lieu of filing the bond, the attorney-in-fact may maintain on deposit with the commissioner an equivalent amount in approved securities which are subject to the same conditions as the bond.
History: L. 1927, ch. 231, 40-1608; L. 2000, ch. 170, § 24; July 1.
Any corporation now or hereafter organized under the laws of this state, shall, in addition to the right, powers and franchises specified in its articles of incorporation, have full power and authority to exchange contracts of the kind and character herein mentioned. The right to exchange such contracts is hereby declared to be incidental to the purposes for which such corporations are organized and as much granted as the rights and powers expressly conferred.
History: L. 1927, ch. 231, 40-1609; June 1.
Each reciprocal shall procure from the commissioner a certificate of authority stating that all of the requirements of this article have been complied with. Upon such compliance and the payment of the fees required by this article, the commissioner shall issue such certificate of authority. The commissioner may revoke or suspend any certificate of authority issued hereunder in case of breach of any of the conditions imposed by this article after reasonable notice has been given to the reciprocal in writing, so that such reciprocal may appear and show cause why such action should not be taken. The certificate of authority shall continue in full force and effect until such certificate is suspended or revoked or a new certificate of authority is issued or specifically refused.
History: L. 1927, ch. 231, 40-1610; L. 2000, ch. 170, § 25; July 1.
(a) Each reciprocal shall pay to the commissioner of insurance levies and taxes in the amount and as specified in K.S.A. 40-252, 40-1703, 40-1704 and 75-1508, and amendments thereto. All such levies and taxes on premiums shall be applicable to premiums received on or after January 1, 1957. The above fees, levies and taxes shall be in lieu of all license fees and taxes of whatever character in this state and in calculating all such levies and taxes such reciprocal shall be permitted to deduct therefrom premiums returned on account of cancellations, all premiums received for reinsurance from any other company authorized to do business in this state, and savings paid or credited to subscriber policyholders.
(b) For the purpose of payment of the levies and taxes specified in K.S.A. 40-252, 40-1703, 40-1704 and 75-1508, and amendments thereto, a reciprocal and its attorney-in-fact shall be considered to be the same entity.
History: L. 1927, ch. 231, 40-1611; L. 1957, ch. 286, § 1; L. 1965, ch. 299, § 2; L. 2000, ch. 170, § 26; L. 2007, ch. 54, § 1; July 1.
In addition to the provisions of this article, the provisions set forth in the following sections of the Kansas Statutes Annotated, and amendments thereto, which govern other types of insurance companies shall apply to reciprocals to the extent that such provisions do not conflict with the provisions of this article: Sections 40-208, 40-209, 40-214, 40-215, 40-216, 40-218, 40-220, 40-221a, 40-222, 40-223, 40-224, 40-225, 40-229, 40-229a, 40-231, 40-233, 40-234, 40-234a, 40-235, 40-236, 40-237, 40-238, 40-239, 40-240, 40-241, 40-242, 40-244, 40-245, 40-246, except as to contracts written through traveling salaried representatives to whom no commissions are paid, 40-246a, 40-247, 40-248, 40-249, 40-250, 40-251, 40-253, 40-256, 40-281, 40-2,125, 40-2,126, 40-2,127, 40-2,128, 40-2,156, 40-2,156a, 40-2,157, 40-2,159, 40-952, 40-2001, 40-2002, 40-2003, 40-2004, 40-2005, 40-2006 and 40-2404 and article 2a of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, and any other provision of law pertaining to insurance which specifically refers to reciprocals.
History: L. 1927, ch. 231, 40-1612; L. 1953, ch. 234, § 1; L. 2000, ch. 170, § 27; L. 2013, ch. 97, § 9; July 1.
Under authority given by the commissioner, a reciprocal may engage in the business of writing fidelity and surety bonds but only upon the condition that such reciprocal shall have and maintain an amount of surplus equal to the total of capital and surplus required of domestic stock insurance companies transacting the same kind of business and any such reciprocal shall be deemed a stock insurance company for the purposes of K.S.A. 40-214, 40-239 to 40-247, inclusive, 40-252, 40-1107 and 40-1108 of the Kansas Statutes Annotated, and amendments thereto. No fidelity or surety bond shall be issued by any such reciprocal until the form of such bond shall have been submitted to and accepted by the commissioner. Any fidelity or surety bonds executed pursuant to this act shall be received and accepted as company, corporation or corporate bonds.
History: L. 1943, ch. 183, § 1; L. 2000, ch. 170, § 28; July 1.
History: L. 1943, ch. 183, § 2; Repealed, L. 2000, ch. 170, § 32; July 1.
As used in this act:
(a) "Armed Forces Cooperative Insuring Association" means the association organized as an unincorporated cooperative association operating within the federal enclave of Ft. Leavenworth, Kansas.
(b) "Armed Forces Insurance Exchange" means the unincorporated reciprocal exchange operating in Leavenworth, Kansas, under the laws of the state of Kansas.
(c) "Armed Forces Insurance Corporation" means the attorney-in-fact for Armed Forces Insurance Exchange, incorporated under the laws of the state of Kansas.
(d) "Insurance entity" means the Armed Forces Cooperative Insuring Association or Armed Forces Insurance Exchange, or both.
(e) "Merger" means the union of two or more insurance entities into a single insurance entity which is one of the insurance entities uniting.
History: L. 1992, ch. 72, § 1; May 7.
(a) Armed Forces Cooperative Insuring Association may, with the approval of the commissioner of insurance, merge with Armed Forces Insurance Exchange as provided by this act, the surviving insurance entity to be Armed Forces Insurance Exchange.
(b) By virtue of such merger, all in force policies of Armed Forces Cooperative Insuring Association shall be assumed by Armed Forces Insurance Exchange and may be rewritten in the name of the surviving insurance entity upon expiration.
(c) Business assumed in any state or territory of the United States where Armed Forces Insurance Exchange is not legally authorized to do business under the laws of such state or territory shall not violate, for the purposes of this act, the provisions of K.S.A. 40-214, and amendments thereto, provided such business is not renewed upon its expiration or the entity obtains authorization from such state or territory to transact or continue such business.
History: L. 1992, ch. 72, § 2; May 7.
(a) The board of directors of Armed Forces Cooperative Insuring Association and the board of directors of Armed Forces Insurance Corporation shall enter into a written agreement on behalf of their respective insurance entities for the merger of such insurance entities, prescribing the terms and conditions of the merger, which shall include the method of carrying the merger into effect, the name of the surviving insurance entity and such other provisions as are deemed advisable.
(b) Upon approval of such agreement by the boards of directors of both Armed Forces Cooperative Insuring Association and Armed Forces Insurance Corporation, at meetings called for the purpose of considering such agreement, each board of directors shall by resolution direct that the agreement be submitted to the commissioner of insurance of this state for approval.
History: L. 1992, ch. 72, § 3; May 7.
(a) No merger under this act shall occur unless, in advance of the proposed merger, the following information has been filed with the commissioner of insurance: (1) The agreement of merger; (2) a verified schedule by the actuaries of the insurance entities interested in merging, showing that the legal reserves for the subscribers of each insurance entity as of December 31 of the preceding year are not less than the amount that would be required of a Kansas domestic reciprocal or interinsurance exchange; (3) a pro forma financial statement showing that, upon approval of the merger by the commissioner of insurance, the surviving insurance entity will continue to satisfy the financial requirements to transact all of the line or lines of insurance in all jurisdictions where it is presently authorized to transact business; and (4) any other information which may be requested by the commissioner of insurance.
(b) After notice and a hearing in accordance with the Kansas administrative procedure act, the commissioner of insurance shall approve the merger unless the commissioner of insurance determines that any one of the following exist or would result from the merger, in which event the commissioner of insurance shall disapprove the merger: (1) The insurance entities proposing to merge have not complied with the provisions of this act; (2) the merger of the two insurance entities is not in the best interests of the subscribers of Armed Forces Insurance Exchange; (3) after the merger, Armed Forces Insurance Exchange would be in violation of any of the laws of this state; or (4) the effect of the merger would be to substantially lessen competition in insurance in this state.
(c) The parties proposing to merge under this act shall bear all costs associated with the hearing required by this section.
History: L. 1992, ch. 72, § 4; May 7.
(a) Nothing contained in this act shall be construed to enlarge the powers of any insurance entity or to authorize any insurance entity to transact any kind of insurance business which it is not presently authorized to transact in this state or any other state or territory of the United States.
(b) No merger under this act shall be subject to the provisions of K.S.A. 40-3304, and amendments thereto.
History: L. 1992, ch. 72, § 5; May 7.
(a) Any insurance company may convert to a Kansas insurance reciprocal in accordance with a plan for the conversion of the insurance company into an insurance reciprocal filed with and approved by the commissioner.
(b) The commissioner may establish reasonable requirements and procedures for the submission and approval of a conversion plan authorized by subsection (a).
(c) No conversion plan shall be approved under this section unless such conversion plan includes:
(1) A provision for the conversion of existing stockholder or policyholder interests in the insurance company into reciprocal or exchange subscriber interests in the insurance reciprocal so that each subscriber's interest in the resulting Kansas insurance reciprocal shall be fairly proportionate to such subscriber's interest in the insurance company;
(2) a provision for the amendment of the insurance company's existing articles of incorporation or other chartering document to a subscriber's agreement which complies with the provisions of K.S.A. 40-1602, 40-1603 and 40-1626, and amendments thereto;
(3) a copy of the proposed subscriber's agreement;
(4) proof of the approval or adoption of the conversion plan by not less than ⅔ of the shares or policyholders entitled to vote, represented either in person or by proxy, at a duly called regular or special meeting of the stockholders or policyholders of the insurance company at which a quorum, as determined by the bylaws or other chartering documents of the insurance company, is present;
(5) a transition plan for the change of governance of the insurance company from the board of directors and officer structure of the insurance company to the insurance reciprocal which shall be governed by article 16 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto; and
(6) any other information required by the commissioner.
(d) The commissioner shall approve the conversion plan if the commissioner finds that the proposed conversion will:
(1) Not be detrimental to the interests of the stockholders or policyholders of the insurance company;
(2) not be detrimental to the interests of the state of Kansas; and
(3) not render the insurer incapable of fulfilling the insurer's contractual obligations.
(e) Upon approval of a conversion plan under this section, the commissioner shall issue a new or amended certificate of authority, which shall be deemed to be the final act of conversion at which time the insurance company shall concurrently become an insurance reciprocal. The insurance reciprocal shall be deemed to be a continuation of the insurance company and deemed to have been organized at the time the converted insurance company was organized.
(f) Each insurance reciprocal created pursuant to this section shall comply with all provisions of K.S.A. 40-1612, and amendments thereto.
(g) Any conversion of an insurance company to a reciprocal shall not be subject to the provisions of K.S.A. 40-3304, and amendments thereto.
(h) For the purposes of this section, "insurance company" means a stock or mutual insurance company.
History: L. 1999, ch. 110, § 6; L. 2000, ch. 170, § 29; July 1.
Within 15 days of the date of the commissioner's approval or denial of a conversion plan submitted in accordance with K.S.A. 40-1620, and amendments thereto, or K.S.A. 40-1631, and amendments thereto, the insurance company or reciprocal shall have the right to request a hearing by filing a written request with the commissioner. The commissioner shall conduct the hearing in accordance with the provisions of the Kansas administrative procedure act within 30 days after such request is filed. Any action of the commissioner pursuant to this section is subject to review in accordance with the provisions of the Kansas judicial review act.
History: L. 1999, ch. 110, § 7; L. 2010, ch. 17, § 68; L. 2020, ch. 10, § 4; June 11.
The provisions of K.S.A. 40-1620 through 40-1630, and amendments thereto, and K.S.A. 40-1631, and amendments thereto, shall be a part of and supplemental to article 16 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto.
History: L. 1999, ch. 110, § 8; L. 2000, ch. 170, § 30; L. 2020, ch. 10, § 5; June 11.
As used in this act:
(a) "Attorney-in-fact" means the person designated and authorized by subscribers as having authority to obligate them on reciprocal insurance contracts.
(b) "Commissioner" means the commissioner of insurance.
(c) "Person" means any association, aggregate of individuals, business, company, corporation, individual, joint-stock company, Lloyds-type of organization, organization, cooperative, partnership, receiver, trustee or society, with power to enter into contractual undertakings within or without the state.
(d) "Reciprocal" means an aggregation of subscribers under a common name.
(e) "Reciprocal insurance" means insurance resulting from the mutual exchange of insurance contracts among persons in an unincorporated association under a common name through an attorney-in-fact having authority to obligate each person both as insured and insurer.
(f) "Subscriber" means a person obligated under a reciprocal insurance agreement.
History: L. 2000, ch. 170, § 9; July 1.
Every reciprocal shall have and use a business name that includes the word "reciprocal," "interinsurer," "interinsurance," "exchange," "underwriters" or "underwriting." The name of the reciprocal shall not be so similar to any other name or title previously adopted by a similar organization, or by any other insurance company or association, as in the opinion of the commissioner of insurance is calculated to result in confusion or deception.
History: L. 2000, ch. 170, § 10; July 1.
The board of directors exercising the subscribers' rights in a domestic reciprocal shall be selected under rules adopted by the subscribers. At least ¾ of the board of directors of a domestic reciprocal shall be composed of subscribers or representatives of subscribers, other than the attorney-in-fact or any person employed by, representing or having a financial interest in the attorney-in-fact. An individual shall not be considered to be employed by, representing or having a financial interest in the attorney-in-fact if such individual is a subscriber or a representative of a subscriber of the reciprocal. The board of directors shall supervise the finances of the reciprocal and the reciprocal's operations to the extent required to assure their conformity with the subscriber's agreement and power of attorney and shall exercise any other powers conferred on it by the subscriber's agreement. The board of directors may also be referred to as a subscribers advisory committee, board of trustees or by such other name as the board chooses.
History: L. 2000, ch. 170, § 11; July 1.
(a) Every subscriber of a domestic reciprocal may execute a subscriber's agreement and power of attorney setting forth the rights, privileges and obligations of the subscriber as an underwriter and as a policyholder, and the powers and duties of the attorney-in-fact. If a domestic reciprocal does not require execution of a subscriber's agreement and power of attorney, the reciprocal shall include on its policies a statement that the subscriber shall be bound by the terms and conditions of the then current subscriber's agreement and power of attorney on file with the attorney-in-fact and the commissioner of insurance, and each subscriber shall by operation of law be bound by such subscriber's agreement and power of attorney as if individually executed. Without additional execution, notice or acceptance, every subscriber of a reciprocal agrees to be bound by any modification of the terms of the power of attorney and subscriber's agreement which is jointly made by the attorney-in-fact and the board of directors pursuant to K.S.A. 40-1616, and amendments thereto, and which shall be on file with the attorney-in-fact and the commissioner of insurance. The subscriber's agreement and power of attorney shall contain in substance the following provisions:
(1) A designation and appointment of the attorney-in-fact to act for and bind the subscriber in all transactions relating to or arising out of the operations of the reciprocal;
(2) a provision empowering the attorney-in-fact:
(A) To accept service of process on behalf of the reciprocal; and
(B) to appoint the commissioner as an agent of the reciprocal upon whom may be served all lawful process against or notice to the reciprocal; and
(3) the maximum amount to be deducted from advance premiums or deposits to be paid the attorney-in-fact, and the items of expense, in addition to losses, to be paid by the reciprocal.
(b) The subscriber's agreement may:
(1) Provide for the right of substitution of the attorney-in-fact and revocation of the power of attorney;
(2) impose any restrictions upon the exercise of the power agreed upon by the subscribers;
(3) provide for the exercise of any right reserved to the subscribers directly or through the board of directors; or
(4) contain other lawful provisions deemed to be advisable.
History: L. 2000, ch. 170, § 12; July 1.
Any modification of the terms of the power of attorney and subscriber's agreement of a domestic reciprocal shall be made jointly by the attorney-in-fact and the board of directors. Any such modification shall be filed with the attorney-in-fact and the commissioner of insurance. By operation of law any such filing shall bind all subscribers the same as if each subscriber individually had adopted and executed the modified, altered or amended subscriber's agreement and power of attorney. No modification shall be effective retroactively, nor shall such modification affect any insurance contract issued prior to the date of such modification.
History: L. 2000, ch. 170, § 13; July 1.
A reciprocal may return to its subscribers any savings or credit which accrues to such subscriber's accounts.
History: L. 2000, ch. 170, § 14; July 1.
Upon the liquidation of a domestic reciprocal, the assets remaining after discharge of its indebtedness and policy obligations, the return of any contributions of the attorney-in-fact or any other person made as provided in K.S.A. 40-1606, and amendments thereto, and the return of any unused deposits, savings or credits, shall be distributed. The distribution shall be made to the persons who were its subscribers within the 12 months prior to the final termination of such reciprocal's license in accordance with a formula approved by the commissioner of insurance or the court.
History: L. 2000, ch. 170, § 15; July 1.
No reciprocal shall issue any assessable insurance policies. The subscribers of a reciprocal shall not be personally liable for the payment of the reciprocal's debts or obligations. Any judgment against a reciprocal shall be binding only upon the reciprocal and not upon each of the reciprocal's subscribers.
History: L. 2000, ch. 170, § 16; July 1.
(a) A reciprocal may convert to a Kansas mutual insurance company in accordance with the terms of a conversion plan filed with and approved by the commissioner.
(b) The commissioner may establish reasonable requirements and procedures for the submission and approval of a conversion plan required by subsection (a).
(c) No conversion plan shall be approved under this section unless such conversion plan includes:
(1) A provision for converting the existing subscriber interests in the reciprocal into policyholder interests in the resulting Kansas mutual insurance company so that each policyholder's interest in the mutual insurance company shall be fairly proportionate to such subscriber's interest in the reciprocal;
(2) a provision amending the existing subscriber's agreement to articles of incorporation that complies with the provisions of K.S.A. 40-1202, 40-1206 and 40-1215, and amendments thereto;
(3) a copy of the proposed articles of incorporation;
(4) proof of the approval or adoption of the conversion plan by not less than 2/3
of the subscriber interests entitled to vote, represented either in person or by proxy, at a duly called regular or special meeting of subscribers of the reciprocal at which a quorum, as determined by the subscriber's agreement or other chartering documents of the reciprocal, is present, or, in the absence of any quorum requirement, 10% of outstanding subscribers;
(5) a transition plan for the change of governance of the reciprocal from an attorney-in-fact to a board of directors and officers that shall be governed by article 12 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto; and
(6) any other information required by the commissioner.
(d) The commissioner shall approve the conversion plan if the commissioner finds that the proposed conversion will not:
(1) Be detrimental to the interests of subscribers of the reciprocal;
(2) be detrimental to the interests of the state of Kansas; and
(3) render the insurer incapable of fulfilling the insurer's contractual obligations.
(e) Upon approval of a conversion plan under this section, the commissioner shall issue a new or amended certificate of authority, which shall be deemed to be the final act of conversion at which time the reciprocal shall concurrently become a mutual insurance company. The mutual insurance company shall be deemed to be a continuation of the reciprocal and deemed to have been organized at the time the converted reciprocal was organized.
(f) Each mutual insurance company created pursuant to this section shall comply with all provisions of article 12, article 40 and such other articles of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, that are otherwise applicable to mutual insurance companies.
(g) As used in this section:
(1) "Conversion plan" means a document detailing the process and requirements that a reciprocal shall undertake and satisfy to convert from a reciprocal company to a mutual insurance company.
(2) "Mutual insurance company" means a mutual insurance company that is organized under the provisions of K.S.A. 40-1201, and amendments thereto, except that the provisions of K.S.A. 40-1201(a), and amendments thereto, shall not apply.
(3) "Reciprocal" has the same meaning as set forth in K.S.A. 40-1623, and amendments thereto.
History: L. 2020, ch. 10, § 1; June 11.
As used in the firefighters relief act:
(a) "Firefighters relief association" or "firemen's relief association" means an association incorporated under the laws of this state composed of members of a fire department which is (1) a public fire department under the control of the governing body of an incorporated city, township, county or fire district or (2) a private fire department operated by a not-for-profit corporation which provides all of the fire protection services for an incorporated city, township, county or fire district pursuant to a contract with the governing body thereof, and which in either case has fire apparatus and necessary equipment therefor that is in serviceable condition for fire duty and has a value of $5,000 or more; and
(b) "insurance company" means every company, corporation, firm or association transacting the business of fire insurance in this state.
History: L. 1927, ch. 231, 40-1701; L. 1957, ch. 287, § 1; L. 1984, ch. 165, § 2; July 1.
(a) On or before April 1 of each year, every insurance company doing business in this state shall return to the commissioner of insurance a just and true account, generated by or at the direction of its president and secretary or other chief officers, under penalty of K.S.A. 21-5824, and amendments thereto, of all premiums received for fire and lightning insurance covering risks located within this state during the year ending December 31, or the fire and lightning portion of any other insurance transacted by the insurance company covering risks within this state. Every insurance company shall include in its return an account of all premiums received for fire and lightning insurance covering risks located within this state.
(b) Each firefighters relief association shall prepare and file with the commissioner a plat drawn to scale showing the area provided fire protection service by the fire department of the firefighters relief association and the location of each fire department house. No such plat shall include any part of any area served by another fire department.
History: L. 1927, ch. 231, 40-1702; L. 1941, ch. 257, § 1; L. 1957, ch. 287, § 2; L. 1979, ch. 145, § 1; L. 1984, ch. 165, § 3; L. 2007, ch. 122, § 4; L. 2011, ch. 30, § 178; July 1.
On or before April 1 of each year, every insurance company shall deliver and pay to the commissioner of insurance a tax at the rate of 2% of the total amount of all premiums on fire and lightning insurance written covering risks located within this state during the preceding calendar year.
History: L. 1927, ch. 231, 40-1703; L. 1941, ch. 257, § 2; L. 1957, ch. 287, § 3; L. 1979, ch. 145, § 2; L. 1984, ch. 165, § 4; July 1.
Every insurance company shall keep accurate books of account of all fire and lightning insurance written by them covering risks located within this state. In the case of any fraud or dishonesty in the returns made by an insurance company, as provided in K.S.A. 40-1702, and amendments thereto, the commissioner of insurance shall investigate the returns and collect the amount which the commissioner finds to be due.
History: L. 1927, ch. 231, 40-1704; L. 1941, ch. 257, § 3; L. 1957, ch. 287, § 4; L. 1979, ch. 145, § 3; L. 1984, ch. 165, § 5; July 1.
History: L. 1927, ch. 231, 40-1705; L. 1941, ch. 257, § 4; L. 1957, ch. 287, § 5; L. 1984, ch. 165, § 6; Repealed, L. 1997, ch. 24, § 7; July 1.
(a) On or before April 1 of each year, every firefighters relief association which holds funds received under the firefighters relief act shall submit to the commissioner of insurance a verified account showing in full the receipts and disbursements and general condition of such funds for the year ending on the preceding December 31. If such account or other information shows such funds are not being expended for the purposes authorized by the firefighters relief act, the commissioner of insurance shall notify the county attorney of the county in which any such firefighters relief association is located and the county attorney shall institute proceedings to recover for the use of the firefighters relief association all moneys expended for purposes not in accordance with the provisions of the firefighters relief act. The commissioner of insurance shall hold any funds of such firefighters relief association until the commissioner is notified by the district or county attorney that such condition has been corrected.
(b) (1) All moneys received by the commissioner of insurance from the tax imposed by K.S.A. 40-1703, and amendments thereto, shall be remitted to the state treasurer in accordance with the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount in the state treasury to the credit of the state firefighters relief fund which is hereby created in the state treasury.
(2) The state firefighters relief fund shall be administered by the commissioner of insurance. An amount equal to not more than the amount authorized for expenditure during the current fiscal year by appropriations enacted by the legislature may be set aside in the state firefighters relief fund and expended by the commissioner of insurance for the administrative expenses of the department of insurance under the firefighters relief act, subject to the provisions of appropriations acts.
(c) Prior to August 1, 1987, and each August 1 thereafter, except as provided in subsections (b) and (d), of the total amount of moneys credited to the state firefighters relief fund as of July 1 of the same year the amounts determined as prescribed in subsections (c)(1) through (c)(6) shall be paid as provided therein.
(1) An amount equal to 3% of such total amount shall be paid by the commissioner of insurance to the treasurer of the Kansas state firefighters association, inc. for fire prevention and fire extinguishment education and study.
(2) An amount equal to 5% of such total amount shall be paid by the commissioner of insurance to the Kansas state firefighters association, inc. which shall be set aside as a death benefit fund to provide such benefits as determined by the association in accordance with the constitution and bylaws thereof, except the amount paid under this subsection (c)(2) shall not be more than the lesser of $100,000 or the result obtained by subtracting the balance in the death benefit fund of the association on July 1 from $100,000.
(3) The amount of $1,000 shall be paid by the commissioner of insurance to each firefighters relief association.
(4) The remaining amount of the moneys credited to the state firefighters relief fund, after the amounts are reserved or paid for the purposes authorized by subsections (b)(2), (c)(1), (c)(2) and (c)(3), shall be paid by the commissioner of insurance to firefighters relief associations so that the amount received by each firefighters relief association bears the same proportion to the total amount to be paid as the amount such firefighters relief association received from the amounts collected from the tax imposed by K.S.A. 40-1703, and amendments thereto, for all of calendar year 1983, bears to the total amount paid to all firefighters relief associations from the taxes collected for all of calendar year 1983, subject to adjustments made to correct for errors in the payments distributed and as otherwise provided pursuant to this subsection (c)(4), adjustments made pursuant to subsection (c)(5) for firefighters relief associations that did not receive a payment from taxes paid for all of calendar year 1983 and adjustments pursuant to subsection (c)(6) for redeterminations based upon changed circumstances. The commissioner of insurance may make adjustments in the amounts of payments for the current year made under this subsection (c)(4) for errors in the payments distributed for the prior year, except that adjustments may be made in the payments to be distributed by August 1, 1987, for any errors in the payments distributed during the period from July 1, 1984, through June 30, 1987, and an adjustment shall be made in the payment to be distributed by August 1, 1987, for each firefighters relief association which was in existence for only part of calendar year 1983 and which received a payment for calendar year 1983 based on the taxes received for only part of calendar year 1983, to reflect the total of the payments that would most probably have been received by such firefighters relief association during the period from August 1, 1984, through June 30, 1987, if such firefighters relief association had been in existence for all of calendar year 1983, reduced by the payments actually received by such firefighters relief association during the period from August 1, 1984, through June 30, 1987. For purposes of all payments under subsection (c)(4) after the adjusted payment distributed by August 1, 1987, such firefighters relief association shall be considered to have received for calendar year 1983, the amount it most probably would have received if it had been in existence for all of calendar year 1983, which shall be the amount having the same proportional relationship to 365 days as the amount actually received for calendar year 1983 has to the number of days that such firefighters relief association was in existence during calendar year 1983, subject to adjustments pursuant to subsection (c)(6) for redeterminations based upon changed circumstances.
(5) Whenever a firefighters relief association is to receive a payment under subsection (c)(4) but did not receive a payment from any of the taxes collected for calendar year 1983, the commissioner of insurance shall determine for the nonreceiving association, from such information as is made available to the commissioner by the nonreceiving association, the amount the nonreceiving association would most probably have received if it had actually received such a payment from the taxes collected for all of calendar year 1983, with appropriate adjustments based on payments to firefighters relief associations of fire departments providing fire protection services within geographic areas having similar populations and assessed tangible property valuation as the geographic area provided fire protection services by the fire department of each such nonreceiving association. The commissioner shall make such determination as follows:
(A) One-half of the amount due shall be determined based upon the population figure provided by the association pursuant to administrative rules and regulations adopted by the commissioner. The determination of this ½ of the amount due shall be made in accordance with the following formula:
(i) An association which received a payment from the taxes collected for all of calendar year 1983 and which has a population similar to that of the nonreceiving association shall be ascertained;
(ii) the payment the comparable association received from taxes collected for all of calendar year 1983 shall be divided by two;
(iii) the population of the area served by the nonreceiving association shall be divided by the population of the area served by the association to which the nonreceiving association is being compared, to produce an adjustment factor reflecting the variance in population size; and
(iv) the amount received from taxes collected for all of calendar year 1983 by the association with the comparable population shall be multiplied by the population adjustment factor obtained in paragraph (iii) of this subsection (c)(5)(A).
(B) The remaining ½ of the amount due shall be determined based upon the assessed tangible property valuation figure provided by the nonreceiving association pursuant to administrative rules and regulations adopted by the commissioner. The determination of the remaining ½ of the amount due shall be made in accordance with the following formula:
(i) An association which received a payment from the taxes collected for all of calendar year 1983 and which has an assessed tangible property valuation as of November 1, 1989, similar to that of the nonreceiving association shall be ascertained;
(ii) the payment the comparable association received from taxes collected for all of calendar year 1983 shall be divided by two;
(iii) the assessed tangible property valuation of the area served by the nonreceiving association shall be divided by the assessed tangible property valuation of the area served by the association to which the nonreceiving association is being compared, to produce an adjustment factor reflecting the variance in assessed tangible property valuation; and
(iv) the amount received from taxes collected for all of calendar year 1983 by the association with the comparable assessed tangible property valuation shall be multiplied by the valuation adjustment factor obtained in paragraph (iii) of this subsection (c)(5)(B).
(C) The amount obtained in paragraph (iv) of subsection (c)(5)(A) shall be added to the amount obtained in paragraph (iv) of subsection (c)(5)(B) to determine the total amount the nonreceiving association most probably would have received if it had actually received a payment from the taxes collected for all of calendar year 1983. The amount a nonreceiving association most probably would have received if it had actually received a payment from taxes collected for all of calendar year 1983 shall be divided by the total amount paid to all firefighters relief associations from the taxes collected for all of calendar year 1983 to determine the proportionate amount due the nonreceiving association for the current and succeeding years and thereafter such association shall not be considered to be a nonreceiving association. The commissioner of insurance shall include the amount so determined within the computations prescribed by subsection (c)(4) for payments thereunder.
(6) One or more firefighters relief associations may apply, prior to October 1 of any year, to the commissioner of insurance for a redetermination of the proportionate amounts payable to all firefighters relief associations under subsection (c)(4) and, upon receipt of such application, the commissioner of insurance shall hold one joint hearing in accordance with the provisions of the Kansas administrative procedure act prior to December 1 of such year, at which all applicants shall be heard and may present information. The commissioner of insurance may redetermine such proportionate amounts based upon such information as is presented to or otherwise made available by the applicants to the commissioner and may make a finding of changed circumstances. However, increases in the assessed tangible property valuation resulting from a statewide reappraisal conducted pursuant to K.S.A. 79-1476 et seq., and amendments thereto, shall not constitute a changed circumstance. Upon making such finding, the commissioner of insurance may include such redetermination within the computations prescribed by subsection (c)(4) for payments in subsequent years. Any increase or reduction in the amounts to be distributed as a result of a finding of changed circumstances by the commissioner shall be proportionately distributed among all firefighters relief associations. An application for redetermination shall not be made by any firefighters relief association more often than once every three years, but this restriction shall not apply with respect to applications for redetermination submitted in calendar year 1989 that were based in whole or in part on an increase in the assessed tangible property valuation resulting from statewide reappraisal.
(d) Except as otherwise provided in this section, whenever any firefighters relief association fails to qualify for funds, as provided in the firefighters relief act, for a period of two consecutive years, the funds on deposit with such association shall be returned by the district or county attorney to the commissioner of insurance. The commissioner of insurance shall remit all such funds to the state treasurer in accordance with the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount in the state treasury to the credit of the state firefighters relief fund. The commissioner of insurance shall pay such amount of funds to the Kansas state firefighters association, inc. for fire prevention and fire extinguishment education and study.
(e) When a firefighters relief association fails to qualify for payments under the firefighters relief act as a result of the territory which it serves being consolidated, merged or annexed with another governmental unit having a qualified firefighters relief association, the funds and obligations of such disqualified association shall be transferred to the surviving firefighters relief association and the disqualified association shall dissolve forthwith under the existing laws of this state.
(f) When any firefighter, the spouse of such firefighter or those dependent upon any member of a disqualified association is receiving reasonable benefits from such association at the time of disqualification, the benefits shall be continued in accordance with the resolution of such disqualified association and shall be paid by the surviving association if the disqualification resulted from consolidation, merger or annexation and shall be paid by the district or county attorney if disqualification resulted from reasons other than consolidation, merger or annexation. Nothing in the firefighters relief act shall be construed as a bar to the lawful receipt of such benefits.
(g) The treasurer of a firefighters relief association shall give bond for the safekeeping of funds received under the firefighters relief act and for faithful performance in such sum with such sureties as may be approved by the governing body of such city, township, county or fire district. All the moneys so received shall be set apart and used by the firefighters relief association of such cities, townships, counties or fire districts solely and entirely for the objects and purposes of the firefighters relief act and shall be paid to and distributed by the firefighters relief associations of such cities, townships, counties or fire districts under such provisions as shall be made by the governing body thereof. All such expenditures or payments shall be subject to the continued availability of moneys distributed to the association from the tax imposed by K.S.A. 40-1703, and amendments thereto, in amounts sufficient for such expenditures. In all cases involving expenditures or payments in an amount of $1,500 or more prior certification shall be obtained from an attorney designated by the governing body of the city, township, county or fire district that such expenditure or payment complies with the requirements of the firefighters relief act.
(h) The officers of a firefighters relief association may invest any amount, not to exceed 90% of all such moneys, in investments authorized by K.S.A. 12-1675, and amendments thereto, in the manner prescribed therein or in purchasing bonds of the city, township, county or fire district in which such firefighters relief association is located. When such investments are not obtainable, United States government bonds may be purchased or municipal bonds or other obligations issued by any municipality of the state of Kansas as defined in K.S.A. 10-1101, and amendments thereto, which are general obligations of the municipality issuing the same. Such investment shall be approved by the governing body of such city, township, county or fire district.
History: L. 1927, ch. 231, 40-1706; L. 1935, ch. 200, § 1; L. 1941, ch. 257, § 5; L. 1957, ch. 287, § 6; L. 1967, ch. 269, § 1; L. 1977, ch. 54, § 32; L. 1979, ch. 145, § 4; L. 1984, ch. 165, § 7; L. 1987, ch. 168, § 1; L. 1988, ch. 356, § 97; L. 1990, ch. 167, § 1; L. 2001, ch. 5, § 115; July 1.
(a) Except as otherwise provided in the firefighters relief act, all moneys received by a firefighters relief association under the provisions of the firefighters relief act shall be held in trust and used as a fund:
(1) For the relief of any member of the fire department of such city, township, county or fire district when injured or physically disabled in or by reason of the discharge of such member's duties as a firefighter;
(2) for the payment of a death benefit when any member of such fire department is killed in the discharge of such member's duties as a firefighter, or who dies from the effect of injuries so received or from disease contracted by reason of such member's duties as a firefighter, to the beneficiary or beneficiaries as designated by the member or, in the event that no beneficiary has been designated to receive such death benefit, to the following persons in the following priority:
(A) If there is a spouse and there are no natural or adopted children of the deceased member, the death benefit shall be for the spouse;
(B) if there are one or more natural or adopted children and spouse of the deceased member, ½ of the death benefit shall be for the spouse and the remaining ½ of the death benefit shall be for the children, in equal shares thereof;
(C) if there are one or more natural or adopted children and there is no spouse of the deceased member, the death benefit shall be for the children, in equal shares thereof;
(D) if there is a father or mother, or both, and there are no natural or adopted children and no spouse of the deceased member, the death benefit shall be for the father or mother, or to both in equal shares thereof if there are both;
(E) if there are one or more siblings and there is no father or mother or spouse and there are no natural or adopted children of the deceased member, the death benefit shall be for the siblings, in equal shares thereof; and
(F) if there are no siblings, no father or mother, no natural or adopted children and no spouse of the deceased member, the death benefit shall be for the estate of the deceased member;
(3) for the payment of the necessary funeral expenses of any member of such fire department when killed in the discharge of such duties as a firefighter, or in the case of death resulting from injuries so received or disease contracted by reason of such member's duties as a firefighter;
(4) for the further purpose of paying a pension to members of full-paid fire departments who are unfit for service after having served for a period of not less than 20 years with the department, such pension not to exceed ½ of the monthly salary at the date of retirement; or
(5) for the purchase of insurance which would provide for any or all of the foregoing purposes for which such fund is authorized to be expended.
(b) In any city of the second class which maintains a fire department consisting of both salaried and volunteer firefighters, such moneys may be expended for the purchase of, or payment of premiums on, policies of life, accident, or accident and health insurance upon members of the fire department of such city, which policies may be owned either by the firefighters relief association of such city or by the individual members thereof but, before any premium is paid on such policies of insurance, the provisions thereof shall be approved by such firefighters relief association as suitable to carry out the objects for which such association was established.
(c) (1) In any fire department consisting of volunteer firefighters, such moneys may be used to establish an annuity for each firefighter who served for not less than 20 years with such fire department and who attended and fought not less than 75% of the fires which were attended by such fire department during such period of time and which the firefighter was available to attend, as verified by the governing body of such fire department, but such annuity shall not exceed the amount paid to fully paid members of fire departments of comparable size to such volunteer department. In any full-paid or any volunteer fire department such moneys may be expended for the purchase of group term, group permanent or individual permanent life insurance contracts for members of such department. Any benefits or coverage accruing to individual members of the department under such policies shall be and shall remain the property of the firefighters relief association except as follows:
(A) A member that has completed 10 years of service with the department and has been covered under such policy for a continuous period of not less than five years, a member who suffers a total and permanent disability or death, or a member who retires under the retirement plan in effect for the fire department, shall, upon termination of employment, be entitled to any benefits or coverage available to an individual member under the provisions of the contract; and
(B) A member that has not fulfilled one of the requirements set forth in paragraph (A) of this subsection (c)(1) shall, upon termination of employment, be entitled to the same proportion of benefits or coverage available to an individual member as such member's individual premium contributions bear to the total premiums paid on the policy at the time of termination. Any additional coverage or benefits may be obtained by reimbursing the firefighters relief association an equitable and reasonable amount in accordance with procedures set forth in the bylaws of the association.
(2) Prior to the purchase of any annuity contract for and on behalf of any volunteer firefighter, the provisions thereof shall be approved and the adequacy of the funds available for such purpose shall be established by such firefighters relief association.
(d) The moneys paid by the commissioner of insurance to the Kansas state firefighters association, inc., as provided in subsection (c) of K.S.A. 40-1706, and amendments thereto, shall be used by the Kansas state firefighters association, inc., in accordance with that statute and as may be regulated by such association in this state at the annual meetings of the Kansas state firefighters association, inc., which shall be held annually at places to be selected by such association within this state. The Kansas state firefighters association, inc., shall make an annual accounting to the commissioner of insurance of all moneys paid to such association as provided in K.S.A. 40-1706, and amendments thereto.
(e) In the city of El Dorado, in Butler county, which city has by election established a firemen's pension fund under the provisions of K.S.A. 14-10a01 to 14-10a15, inclusive, and amendments thereto, the firefighters relief association of such city may, when the money and securities belonging to such association exceed $35,000, grant from time to time sums not exceeding ½ the earnings of the fund and not exceeding ½ the yearly amount received from the commissioner of insurance under this act to the city to be credited to the firemen's pension fund of such city.
(f) Any such firefighters relief association is hereby authorized to loan part or all of such funds to the city, township, county or fire district in which such association is located, to be used by such city, township, county or fire district in the improvement of its fire department and equipment thereof, and such city, township, county or fire district is hereby authorized to borrow the same and issue to the treasurer of such firefighters relief association its warrant therefor bearing interest payable semiannually, at a rate not to exceed 6% per annum.
(g) The commissioner of insurance is hereby authorized to adopt such rules and regulations as are necessary to effect the purposes of the firefighters relief act.
(h) All assets of any firefighters relief association, which is composed of members of a private fire department and which has ceased to provide fire protection services for an incorporated city, township, county or fire district, shall be transferred to and shall become the property of the firefighters relief association for the fire department which is the immediate successor of such private fire department, after satisfaction of any outstanding obligations. If there is no firefighters relief association for the immediately succeeding fire department, such assets shall become the property of the Kansas state firefighters association, inc., as of the date such private fire department ceased to provide such fire protection services, after satisfaction of any outstanding obligations. The Kansas state firefighters association, inc. shall use all such assets for fire prevention and fire extinguishment education and study.
History: L. 1927, ch. 231, 40-1707; L. 1929, ch. 201, § 1; L. 1941, ch. 257, § 6; L. 1943, ch. 187, § 1; L. 1953, ch. 235, § 1; L. 1957, ch. 287, § 7; L. 1974, ch. 188, § 1; L. 1978, ch. 180, § 1; L. 1981, ch. 193, § 1; L. 1984, ch. 165, § 8; L. 1987, ch. 168, § 2; July 1.
The provisions of K.S.A. 40-1701 to 40-1707, inclusive, and amendments to those statutes, shall be known and may be cited as the firefighters relief act.
History: L. 1984, ch. 165, § 1; July 1.
(a) (1) Except as provided in paragraph (2), whenever a municipality provides for the payment of premiums for any health benefit plan for its firefighters, it shall pay premiums for the continuation of coverage under COBRA for the surviving spouse and eligible dependent children under the age of 26 years of a firefighter who dies in the line of duty. Premiums for continuation of coverage under COBRA shall be paid for 18 months.
(2) A municipality may not be required to pay the premiums described in paragraph (1) for a surviving spouse:
(A) On or after the end of the 18th calendar month after the date of death of the deceased firefighter;
(B) upon the remarriage of the deceased firefighter's surviving spouse; or
(C) upon the deceased firefighter's surviving spouse reaching the age of 65.
(b) For the purposes of this section:
(1) "Firefighter" means an actual member of an organized fire department, of a municipality, whether regular or volunteer.
(2) "Health benefit plan" means the same as defined in K.S.A. 40-4602, and amendments thereto.
(3) "Municipality" means a city, county, fire district or township.
History: L. 2012, ch. 152, § 1; L. 2013, ch. 109, § 3; L. 2023, ch. 50, § 3; July 1.
History: L. 1941, ch. 259, § 1; Repealed, L. 1997, ch. 8, § 15; July 1.
History: L. 1941, ch. 259, § 2; L. 1951, ch. 298, § 1; L. 1955, ch. 244, § 1; L. 1968, ch. 205, § 1; L. 1980, ch. 137, § 1; Repealed, L. 1997, ch. 8, § 15; July 1.
History: L. 1941, ch. 259, § 3; L. 1951, ch. 298, § 2; L. 1955, ch. 244, § 2; L. 1975, ch. 245, § 1; L. 1979, ch. 146, § 1; L. 1980, ch. 137, § 2; Repealed, L. 1997, ch. 8, § 15; July 1.
History: L. 1941, ch. 259, § 4; L. 1951, ch. 298, § 3; L. 1980, ch. 137, § 3; Repealed, L. 1997, ch. 8, § 15; July 1.
History: L. 1941, ch. 259, § 5; L. 1947, ch. 281, § 1; L. 1951, ch. 298, § 4; L. 1955, ch. 244, § 3; L. 1975, ch. 462, § 50; L. 1978, ch. 181, § 2; L. 1980, ch. 137, § 4; L. 1984, ch. 172, § 1; Repealed, L. 1997, ch. 8, § 15; July 1.
History: L. 1941, ch. 295, § 6; L. 1970, ch. 182, § 1; L. 1972, ch. 185, § 1; L. 1980, ch. 137, § 5; L. 1986, ch. 318, § 31; L. 1988, ch. 356, § 98; Repealed, L. 1997, ch. 8, § 15; July 1.
History: L. 1941, ch. 259, §§ 7, 8; Repealed, L. 1997, ch. 8, § 15; July 1.
History: L. 1941, ch. 259, § 9; L. 1970, ch. 183, § 2; L. 1972, ch. 186, § 1; L. 1974, ch. 190, § 1; L. 1976, ch. 217, § 5; L. 1976, ch. 218, § 6; L. 1977, ch. 161, § 2; L. 1978, ch. 166, § 2; L. 1980, ch. 137, § 6; L. 1981, ch. 194, § 2; L. 1984, ch. 173, § 3; Repealed, L. 1997, ch. 8, § 15; July 1.
History: L. 1941, ch. 259, § 10; Repealed, L. 1969, ch. 429, § 3; January 1, 1970.
History: L. 1941, ch. 259, § 11; L. 1972, ch. 187, § 1; L. 1975, ch. 245, § 2; L. 1980, ch. 137, § 7; Repealed, L. 1997, ch. 8, § 15; July 1.
History: L. 1941, ch. 259, § 12; Repealed, L. 1970, ch. 183, § 6; July 1.
History: L. 1941, ch. 259, § 13; L. 1980, ch. 137, § 8; Repealed, L. 1997, ch. 8, § 15; July 1.
History: L. 1943, ch. 168, §§ 1, 2; Repealed, L. 1951, ch. 298, § 6; March 31.
History: L. 1951, ch. 298, § 5; Repealed, L. 1997, ch. 8, § 15; July 1.
History: L. 1945, ch. 216, § 1; Repealed, L. 1997, ch. 8, § 15; July 1.
History: L. 1945, ch. 216, § 2; L. 1951, ch. 299, § 1; L. 1955, ch. 245, § 1; L. 1972, ch. 188, § 1; L. 1980, ch. 137, § 9; Repealed, L. 1997, ch. 8, § 15; July 1.
History: L. 1945, ch. 216, § 3; L. 1951, ch. 299, § 2; L. 1955, ch. 245, § 2; L. 1975, ch. 245, § 3; L. 1979, ch. 147, § 1; L. 1979, ch. 148, § 1; L. 1980, ch. 137, § 10; Repealed, L. 1997, ch. 8, § 15; July 1.
History: L. 1945, ch. 216, § 4; L. 1980, ch. 137, § 11; Repealed, L. 1997, ch. 8, § 15; July 1.
History: L. 1945, ch. 216, § 5; L. 1947, ch. 282, § 1; L. 1951, ch. 299, § 3; L. 1955, ch. 245, § 3; L. 1978, ch. 181, § 3; L. 1980, ch. 137, § 12; L. 1984, ch. 172, § 2; Repealed, L. 1997, ch. 8, § 15; July 1.
History: L. 1945, ch. 216, § 6; L. 1970, ch. 182, § 2; L. 1972, ch. 185, § 2; L. 1980, ch. 137, § 13; L. 1986, ch. 318, § 32; L. 1988, ch. 356, § 99; Repealed, L. 1997, ch. 8, § 15; July 1.
History: L. 1945, ch. 216, § 7; Repealed, L. 1997, ch. 8, § 15; July 1.
History: L. 1945, ch. 216, § 8; L. 1980, ch. 137, § 14; Repealed, L. 1997, ch. 8, § 15; July 1.
History: L. 1945, ch. 216, § 9; L. 1970, ch. 183, § 3; L. 1972, ch. 186, § 2; L. 1973, ch. 194, § 2; L. 1973, ch. 195, § 2; L. 1974, ch. 189, § 2; L. 1974, ch. 190, § 2; L. 1976, ch. 217, § 6; L. 1976, ch. 218, § 7; L. 1977, ch. 161, § 3; L. 1978, ch. 166, § 3; L. 1980, ch. 137, § 15; L. 1981, ch. 194, § 3; L. 1982, ch. 204, § 2; L. 1984, ch. 173, § 4; L. 1996, ch. 96, § 3; L. 1997, ch. 156, § 82; Repealed, L. 1999, ch. 162, § 13; July 1.
History: L. 1945, ch. 216, § 10; Repealed, L. 1969, ch. 429, § 3; January 1, 1970.
History: L. 1945, ch. 216, § 11; L. 1972, ch. 187, § 2; L. 1975, ch. 245, § 4; L. 1980, ch. 137, § 16; Repealed, L. 1997, ch. 8, § 15; July 1.
History: L. 1945, ch. 216, § 12; L. 1980, ch. 137, § 17; Repealed, L. 1997, ch. 8, § 15; July 1.
History: L. 1945, ch. 216, § 13; Repealed, L. 1970, ch. 183, § 6; July 1.
History: L. 1945, ch. 216, § 14; L. 1980, ch. 137, § 18; Repealed, L. 1997, ch. 8, § 15; July 1.
History: L. 1951, ch. 299, § 4; Repealed, L. 1997, ch. 8, § 15; July 1.
This act shall be known and may be cited as "the nonprofit dental service corporation act."
History: L. 1972, ch. 174, § 1; July 1.
Nonprofit corporations may be organized for the purpose of entering into contracts with participating dentists to provide or administer professional service for subscribers on such bases as may be designated in the corporation's contracts with purchasing groups, individuals and government agencies. Such corporations may provide service or indemnity benefits. Compensation for professional services shall be either on a scheduled basis or on the basis of usual, customary and reasonable charges. Inherent in the authority provided hereby is the right of any such corporation to function as an administrative agent with respect to any group dental care program installed by a private organization for its employees or members, or with respect to any dental care program initiated by any local, state or federal governmental body.
History: L. 1972, ch. 174, § 2; July 1.
The membership of a nonprofit dental service corporation organized under this act shall be comprised of the dentists who have executed participating agreements with the corporation: Provided, however, That no such corporation shall be issued a certificate of authority to engage in business until it shall have demonstrated, to the satisfaction of the commissioner of insurance that it has obtained participating agreements from at least fifty percent (50%) of the dentists licensed to practice, and engaged in practice, in the state of Kansas. The affairs of the corporation shall be managed by a board of directors comprised of ten (10) members, four (4) of whom shall be elected from among the corporations' participating dentists and six (6) of whom shall be appointed from among the general public of the state of Kansas. With respect to the public members of the board, two (2) shall be appointed by the governor of the state of Kansas and the remainder by the commissioner of insurance. The terms of office of all directors shall be as defined in the bylaws of the corporation. The directors shall take the oath of office as in other corporations and duplicates of such subscribed oaths shall be forwarded to the commissioner of insurance for filing in his office. The bylaws shall specify the number of directors necessary to constitute a quorum which shall be not less than one more than one-half of the number of directors.
History: L. 1972, ch. 174, § 3; July 1.
Corporations organized under the provisions of this act are empowered and authorized to enter into contracts with groups and individuals to provide professional service through their participating dentists and to indemnify covered persons who obtain professional services through nonparticipating dentists. The services covered under such contracts shall be of such type and kind as such corporation, through its board of directors, may determine. Such contracts shall constitute direct obligations of the participating dentists to the corporation's contract purchasers. Nothing in any contract to be made by any such corporation with a participating dentist or contract purchaser shall have the effect of imposing upon any participating dentist any obligation or liability for any act, omission or default of any other participating dentist or such corporation. Such corporations may also enter into contracts with any health maintenance organization, partnership, domestic or foreign corporation or association in the state of Kansas or in other states or possessions of the United States or Canada, or with any local, state, or federal governments, or units thereof, so that:
(a) Reciprocity of benefits may be provided to subscribers of such corporations.
(b) Transfer of subscribers from one corporation to another may be effected, if authorized under the contract with the group or the subscriber, in order to conform to the subscriber's place of residence.
(c) Uniform benefits may be provided for all employees and the dependents of such employees of corporations and other organizations transacting business in Kansas and elsewhere, and a composite rate, a rate representing predicted, or actual, composite experience, of the areas involved may be charged for such employees and their dependents.
(d) Service or indemnity benefits for dental care for the subscribers, members or policyholders of such corporations or associations may be provided but not to exceed reasonable and customary charges that a subscriber may incur for these services, or the ceding or accepting of reinsurance may be done.
(e) Administrative, accounting, data processing, cost control, marketing, claims processing, fiscal and other services may be provided for a dental care or other health service plan with any agency, instrumentality or political subdivision of the United States or the state of Kansas, or with any person, corporation, health maintenance organization, partnership, group or association providing such dental care or other health service plan under any applicable state or federal law. Such contract may authorize such corporation to accept, receive and administer in trust, funds directly or indirectly made available for the purposes set forth in the contract.
(f) Administrative, accounting, data processing, cost control, marketing, claims processing, fiscal and other services may be provided to employers or voluntary employees' beneficiary associations where such employers or voluntary employees' beneficiary associations provide indemnity for dental care or other health services to their employees or members under the terms of a plan of indemnification. Such contract may authorize such corporation to accept, receive and administer in trust, funds directly or indirectly made available for the purposes set forth in the contract. Contracts entered into pursuant to the provisions of this subsection shall provide for recoupment of all expenses incurred by the corporation in performing the services required by the contract and shall not adversely affect the interests of subscribers. Such corporation may enter into contracts with participating dentists to provide professional services and other health services for such employees or members.
(g) Experimental or demonstration projects may be undertaken to determine the relative advantages and disadvantages of various alternative methods of providing service or indemnity benefits for health services. Such projects may include payment systems to providers designed to encourage providers to use their facilities and personnel more efficiently and thereby to reduce the total costs of professional services and other health services involved without adversely affecting the quality of such services.
History: L. 1972, ch. 174, § 4; L. 1984, ch. 171, § 1; July 1.
The commissioner of insurance shall issue a certificate of authority to such corporation upon compliance with the following conditions: (1) It shall file with the commissioner of insurance a certified copy of its charter and bylaws, copies of the subscription agreement forms and the rating formula that it proposes to use and the form of its agreement with its participating dentists, all of which shall be approved by the commissioner of insurance. (2) It shall demonstrate to the satisfaction of the commissioner of insurance that it has conformed with the requirement of section 2* of this act with respect to achieving the minimum percentage of participating dentists therein specified. Any such corporation shall be in possession of lawful assets over and above all liability in an amount not less than ten thousand dollars ($10,000), and shall file with the commissioner of insurance a financial statement certified by at least two executive officers. Before issuing a certificate of authority, the commissioner shall cause an examination to be made of the affairs of the corporation as provided by K.S.A. 40-208.
History: L. 1972, ch. 174, § 5; July 1.
(a) No subscription agreement, except as provided in subsection (d) of this section, between any such corporation and a subscriber, shall entitle more than one person to benefits, except that a "family subscription agreement" may be issued, at an established subscription charge, to a husband and wife, or husband, wife and their dependent child or children and any other person dependent upon the policyholder. Only the subscriber must be named in the subscription agreement.
(b) Every subscription agreement entered into by any such corporation with any subscriber thereto shall be in writing and a certificate stating the terms and conditions thereof shall be furnished to the subscriber to be kept by him. No such certificate shall be made, issued or delivered in this state unless it contains the following provisions: (1) A statement of the nature of the benefits to be furnished and the period during which they will be furnished, and if there are any benefits to be excepted, a detailed statement of such exceptions printed as hereinafter specified; (2) a statement of the terms and conditions, if any, upon which the subscription agreement may be cancelled or otherwise terminated at the option of either party; (3) a statement that the subscription agreement includes the endorsements thereon and attached papers, if any, and contains the entire contract; (4) a statement that no statement by the subscriber in his application for a subscription agreement shall avoid the subscription agreement or be used in any legal proceeding thereunder, unless such application or an exact copy thereof is included in or attached to such subscription agreement, and that no agent or representative of such corporation, other than an officer or officers designated therein, is authorized to change the subscription agreement or waive any of its provisions; (5) a statement that if the subscriber defaults in making any payments under the subscription agreement, the subsequent acceptance of a payment by the corporation or by one of its duly authorized agents shall reinstate the subscription agreement but with respect to sickness and injury, only to cover such sickness as may be first manifested more than ten (10) days after the date of such acceptance; (6) a statement of the period of grace which will be allowed the subscriber for making any payment due under the subscription agreement. Such period shall not be less than ten (10) days.
(c) In every such subscription agreement made, issued or delivered in this state: (1) All printed portions shall be plainly printed; (2) the exceptions of the subscription agreement shall appear with the same prominence as the benefits to which they apply; and (3) if the subscription agreement contains any provisions purporting to make any portion of the articles of incorporation or bylaws of the corporation a part of the subscription agreement, such portion shall be set forth in full.
(d) A dental service corporation may issue a group or blanket subscription agreement provided the group of persons thereby covered conforms to the requirements of law applicable to companies writing group or blanket sickness and accident insurance policies and provided such subscription agreement and the individual certificates issued to members of the group shall comply in substance with this section. Any such subscription agreement may provide for the adjustment of the subscription charges based upon the experience thereunder at the end of the first year or of any subsequent year of insurance thereunder and such readjustment may be made retroactive in the form of a rate credit or a cash refund.
History: L. 1972, ch. 174, § 6; July 1.
History: L. 1972, ch. 174, § 7; L. 1986, ch. 318, § 33; L. 1988, ch. 356, § 100; Repealed, L. 1991, ch. 134, § 13; July 1.
Such corporation shall maintain unearned subscription charges and other reserves upon the same basis as that required of domestic stock insurance companies transacting the same kind of insurance.
History: L. 1972, ch. 174, § 8; July 1.
Any director, officer or member of any such corporation, or any other person may advance to such corporation any sum or sums of money necessary for the purposes of its business or to enable it to comply with any of the requirements of the laws of this state, and such moneys and such interest thereon as may have been agreed upon, not exceeding five percent (5%) per annum, shall be payable only out of the surplus remaining after providing for all reserves and other liabilities and shall not otherwise be a liability or claim against the corporation or any of its assets. No commission or promotion expenses shall be paid in connection with the advance of any such money to the corporation, and the amount of such advance shall be reported in each annual statement.
History: L. 1972, ch. 174, § 9; July 1.
(a) Such corporations shall be subject to the provisions of K.S.A. 40-214, 40-215, 40-216, 40-218, 40-219, 40-222, 40-223, 40-224, 40-225, 40-229, 40-230, 40-231, 40-235, 40-236, 40-237, 40-247, 40-248, 40-249, 40-250, 40-251, 40-252, 40-2,102, 40-2a01 et seq., 40-2215 to 40-2220, inclusive, 40-2253, 40-2401 to 40-2421, inclusive, 40-3301 to 40-3313, inclusive, K.S.A. 40-2,125, 40-2,154 and 40-2,161, and amendments thereto, except as the context otherwise requires, and shall not be subject to any other provisions of the insurance code except as expressly provided in this act.
(b) No policy, agreement, contract or certificate issued by a corporation to which this section applies shall contain a provision which excludes, limits or otherwise restricts coverage because medicaid benefits as permitted by title XIX of the social security act of 1965 are or may be available for the same accident or illness.
(c) Violation of subsection (b) shall be subject to the penalties prescribed by K.S.A. 40-2407 and 40-2411, and amendments thereto.
History: L. 1972, ch. 174, § 10; L. 1974, ch. 190, § 3; L. 1976, ch. 217, § 7; L. 1976, ch. 218, § 8; L. 1991, ch. 133, § 3; L. 1991, ch. 134, § 5; L. 1993, ch. 132, § 1; L. 1994, ch. 18, § 2; L. 1996, ch. 229, § 111; L. 2013, ch. 97, § 10; July 1.
(a) No corporation subject to the provisions of this act shall during any one year disburse more than 5% of the aggregate amount of the payments received pursuant to K.S.A. 40-19a02, and amendments thereto, during that year as expenditures for solicitation, except that during the first year after the issuance of a permit, such corporation may so disburse not more than 20% of such amount, during the second year not more than 15%, and during the third year not more than 10%.
(b) No such corporation shall, during any one year, disburse more than 12% of the aggregate amount of the payments received pursuant to K.S.A. 40-19a02, and amendments thereto, during that year as administrative expenses, except that during the first two years after the issuance of the permit, such corporation may disburse not more than 20% of the payments received pursuant to K.S.A. 40-19a02, and amendments thereto. The term, "administrative expenses," as used in this section, shall include all expenditures for nonprofessional services and, in general, all expenses not directly connected with the furnishing of the benefits specified in this act, but not including expenses referred to in subsection (a).
History: L. 1972, ch. 174, § 11; L. 2015, ch. 45, § 3; July 1.
Any surplus accumulated by a corporation subject to this act beyond a reserve fund equal to the amount disbursed during the preceding year for care received by subscribers and beyond the reserves required by K.S.A. 40-19a08, shall within one year after its accumulation be distributed to subscribers either in the form of increased benefits or rebate of subscription charges.
History: L. 1972, ch. 174, § 12; July 1.
No provisions of this act or of any subscription agreement for dental service, between a corporation subject to the provisions of this act and a subscriber shall in any way affect the operation of K.S.A. 44-501 et seq., and amendments thereto, constituting the workmen's compensation law.
History: L. 1972, ch. 174, § 13; July 1.
A nonprofit dental service corporation organized under the laws of any other state may be authorized to transact business in this state, subject to the approval of the commissioner of insurance, only in such areas as form a natural extension of the consumer-market area in which such corporation operates or where the interests of the subscribers are better served.
History: L. 1972, ch. 174, § 14; July 1.
History: L. 1975, ch. 243, §§ 1 to 6; Repealed, L. 1997, ch. 8, § 15; July 1.
History: L. 1975, ch. 243, § 7; L. 1986, ch. 318, § 34; L. 1988, ch. 356, § 101; Repealed, L. 1991, ch. 134, § 13; July 1.
History: L. 1975, ch. 243, §§ 8, 9; Repealed, L. 1997, ch. 8, § 15; July 1.
History: L. 1975, ch. 243, § 10; L. 1976, ch. 217, § 8; L. 1991, ch. 133, § 4; L. 1991, ch. 134, § 6; L. 1993, ch. 132, § 2; L. 1994, ch. 18, § 3; L. 1996, ch. 229, § 112; Repealed, L. 1997, ch. 163, § 1; July 1.
History: L. 1975, ch. 243, § 11 to 14; Repealed, L. 1997, ch. 8, § 15; July 1.
K.S.A. 40-19c01 to 40-19c11, inclusive, shall be known and may be cited as the "nonprofit medical and hospital service corporation act."
History: L. 1980, ch. 137, § 19; July 1.
(a) Any nonprofit hospital service corporation organized under the mutual nonprofit hospital service corporation act or nonprofit medical service corporation organized under the nonprofit medical service corporation act may:
(1) Merge or consolidate with any other nonprofit medical or hospital service corporation as hereinafter provided;
(2) merge or consolidate with any other nonprofit medical or hospital service corporation which is authorized to do business in this state if such merger or consolidation is authorized by the laws of the state or territory in which such nondomestic nonprofit medical or hospital service corporation is organized as hereinafter provided;
(3) by virtue of such merger or consolidation, do the kinds of business in the manner and for the purposes for which a nonprofit medical or hospital service corporation or a combination thereof, may be organized in this state or in the manner and for the purposes for which a nonprofit medical or hospital service corporation, or both, may be licensed or authorized to do business in this state.
(b) Such merger or consolidation shall be made under the conditions, provisions, and restrictions, and with the powers herein set forth to wit: The directors of each corporation shall enter into a joint agreement, under the corporate seal of each corporation for the merger or consolidation of said corporations, prescribing the terms and conditions thereof, the mode of carrying the same into effect, the name of the surviving or new corporation, the number and names of the directors and other officers thereof, and who shall be the first directors and officers, and their places of residence, and how and when directors and officers shall be chosen, with such other details as required by this act and as they shall deem necessary to perfect the said merger or consolidation. Said agreement shall not be effective unless the same shall be approved by the commissioner of insurance in the manner hereinafter provided.
(c) Upon approval of the agreement of merger or consolidation by the directors of each of such corporations, as hereinbefore provided, the merging or consolidating corporations by their officers shall file a verified joint application in duplicate for approval with the commissioner of insurance accompanied by or containing the following:
(1) Two (2) duplicate originals of the agreement;
(2) affidavits of officers of each of the corporations setting forth the facts necessary to show that all requirements of law have been complied with;
(3) if the surviving or the new corporation shall be a domestic corporation and any nondomestic corporation is a party to the merger or consolidation and the laws of the state or territory under which such nondomestic corporation is incorporated require approval of a merger or consolidation by an official of such state or territory, a certificate of approval of such official. If the laws of the domiciliary state or territory of such nondomestic corporation require prior or joint approval by the proper supervisory official of this state, the Kansas insurance commissioner may act in unison or jointly with the proper official of such other state in the consideration of the application for approval of the agreement of merger or consolidation;
(4) an instrument appointing the commissioner of insurance and the commissioner's successor or successors in office the true and lawful attorney of such corporation for service of process, containing the same provisions and having the same effect as the instrument required by K.S.A. 40-218, and amendments thereto;
(5) in the case of a merger, if the articles of incorporation of the surviving corporation are to be amended, such amendments;
(6) in the case of a consolidation, a copy of the articles of incorporation of the new corporation, and if a nondomestic corporation, such articles to be certified by the public official with whom the original is required to be filed in its domiciliary state or territory;
(7) a financial statement of each of the merging or consolidating corporations as of a date not earlier than thirty (30) days prior to the date of the application to merge or consolidate; and
(8) when the application for the approval of the merger or consolidation is filed with the commissioner of insurance for action there shall also be filed a certificate executed by the president or a vice-president and attested by the secretary or an assistant secretary, or the executive officers corresponding thereto, and under the corporate seal of each of the corporations party to the agreement of merger or consolidation, verified by the affidavits of such officers, setting forth all fees, commissions or other compensations, or valuable considerations paid or to be paid, directly or indirectly, to any person in any manner securing, aiding, promoting or assisting in any such merger or consolidation.
(d) The commissioner of insurance shall examine the application and accompanying papers, and, if the commissioner finds the same to be in accordance with the provisions of this act and not inconsistent with the laws and the constitutions of this state and the United States and not injurious to the interests of the subscribers and creditors of such corporations, the commissioner shall endorse approval thereon.
(e) The commissioner of insurance, upon approval or disapproval of said application, shall cause the same to be so endorsed and the entire proceedings to be filed and recorded in the office of the secretary of state and a copy of the same certified by the secretary of state to be filed in the office of the commissioner of insurance. Within fifteen (15) days after approval by the commissioner of insurance, a certified copy of the approved application and agreement shall also be filed by the officers of the new or surviving corporation in the office of the register of deeds in the county wherein the registered office and home offices of the merging or consolidating corporations were located and in the county wherein the registered office and home office of the surviving or new corporation shall be located and in the office of the register of deeds of each county in this state in which any of the corporations, parties to the agreement, shall have real property at the time of merger or consolidation. When approved by the commissioner of insurance, the said agreement shall be deemed effective and the date when so approved shall be the date of consolidation or merger of said corporations, and:
(1) The said corporations shall thereupon be one (1) corporation under the name adopted in and by said agreement, possessing all the rights, privileges, immunities, powers, and franchises theretofore vested in each of them.
(2) The separate existence of all the corporations to the agreement of merger or consolidation except the surviving or new corporation shall cease.
(3) All property, real, personal and mixed, and all debts due on whatever account, including premiums due from subscribers and all other choses in action and all and every other interest of, or belonging to or due to, each of the corporations merged or consolidated shall be deemed to be transferred to and vested in such surviving or new corporation without further act or deed; and the title to any real estate, or any interest therein, under the laws of this state vested in any of the corporations shall not revert or be in any way impaired by reason of such merger or consolidation.
(4) Such surviving or new corporation shall thenceforth be responsible and liable for all of the liabilities and obligations of each of the corporations so merged or consolidated; any claim existing or action pending by or against any of such corporations may be prosecuted to judgment as if such merger or consolidation had not taken place, or such surviving or new corporation may be substituted in its place; neither the rights of creditors nor liens upon the property of any of such corporations shall be impaired by such merger or consolidation, but such liens shall be limited to the property upon which they were liens immediately prior to the time of such merger or consolidation, unless otherwise provided in the agreement of merger or consolidation.
(5) In the case of merger, the articles of incorporation of the surviving corporation shall be supplanted, amended or superseded to the extent, if any, that any provision or provisions of such articles of incorporation shall be revised in the agreement of merger and the articles of incorporation shall be deemed to be thereby and to that extent amended.
(6) In the case of a consolidation the new articles of incorporation shall be deemed to be the articles of incorporation of such new corporation.
(7) The surviving or new corporation may, for the purpose of complying with the requirements of the law relating to age of a corporation, elect to be the age of any of the merging or consolidating corporations and shall for this purpose be considered as having such age. Such election shall be set forth in the application for approval of the agreement of merger or consolidation.
(8) The surviving or new corporation shall maintain the reserves and deposits as required by law of other like kinds of corporations doing like kinds of business.
(9) The surviving or new corporation after merger or consolidation shall be subject to the same fees, taxes, or penalties and other requirements of law as other like kinds of corporations doing like kinds of business.
(f) (1) No director or officer of any corporation party to a merger or consolidation, except as fully expressed in the agreement of merger or consolidation, shall receive any fee, commission, other compensation or valuable consideration, whatever, directly or indirectly, for in any manner aiding, promoting or assisting in such merger or consolidation.
(2) Any person violating the provisions of paragraph (1) of subsection (f) shall be fined not less than one thousand dollars ($1,000), and not more than five thousand dollars ($5,000) or imprisoned in the county jail for not more than one (1) year, or both, and shall forfeit any office such person holds in the merged or consolidated corporation.
(g) Nothing contained in this section shall be construed to enlarge the charter powers of any nonprofit medical or nonprofit hospital service corporation except in conformity with the provisions of the proposed articles of incorporation of the merged or consolidated corporation as provided in this act, nor to authorize any such corporation to do any kind of business not authorized by its charter or articles of incorporation, nor to authorize any such corporation to do any kind of business in this state not authorized by its license or certificate of authority to do business in this state.
History: L. 1980, ch. 137, § 20; July 1.
Nonprofit corporations may be organized under the nonprofit medical and hospital service corporation act for the purpose of entering into contracts with participating health care providers and participating hospitals to provide professional and hospital services for subscribers as may be designated in subscription agreements. Such corporations shall also indemnify subscribers as designated in subscription agreements for services which may be received from nonparticipating health care providers or nonparticipating hospitals. Such corporations may also provide service or indemnity for other health services or facilities but not to exceed reasonable and customary charges that a subscriber may incur for these services. The affairs of any such corporation shall be managed by a board of directors of not less than 15 members as specified by the articles of incorporation composed of: Persons licensed under the Kansas healing arts act and trustees or administrators of hospitals who participate in providing professional and institutional service to subscribers and members of the public exclusive of persons licensed under the Kansas healing arts act and hospital trustees or administrators who, at the time of their election, are subscribers. Beginning with the election of directors immediately following the effective date of this act, the board of directors at all times shall include at least one person licensed under the Kansas healing arts act to practice allopathic medicine and surgery, osteopathic medicine and surgery and chiropractic. Two members of the public who are subscribers shall be appointed to the board of directors by the governor of the state of Kansas. The members of the public, exclusive of physicians and hospital trustees or administrators, shall at all times comprise a majority of the membership of the board of directors. The directors shall take the oath of office as in other corporations and duplicates of such subscribed oaths shall be forwarded at the time of election to the commissioner of insurance for filing. The bylaws shall specify the number of directors necessary to constitute a quorum which shall not be less than 10 members.
History: L. 1980, ch. 137, § 21; L. 1990, ch. 168, § 1; July 1.
A corporation organized under the provisions of the nonprofit medical and hospital service corporation act is empowered and authorized to enter into contracts to provide professional and hospital service for its subscribers with health care providers licensed to practice in the state of Kansas and with hospitals, including municipal, county, proprietary and charitable hospitals, as may be licensed by the secretary of health and environment for such types and kinds of service such corporation may determine. The governing bodies of municipal or county hospitals are hereby authorized and empowered to contract with corporations organized under this act to provide hospital service for the subscribers of such corporations. Such contracts shall constitute direct obligations of the participating health care providers and hospitals to the subscribers. Nothing in any contract to be made by any such corporation with a participating health care provider, participating hospital or subscriber shall have the effect of imposing upon any participating health care provider or hospital any obligation or liability for any act, omission or default of any other participating health care providers or hospitals or of such corporation.
Such corporations may also enter into contracts with any health maintenance organization, partnership, domestic or foreign corporation or association in the state of Kansas or in other states, territories, possessions of the United States or in Canada, or with any local, state or federal governments or units thereof, so that:
(1) Reciprocity of benefits may be provided to subscribers of such corporations;
(2) transfer of subscribers from one corporation to another may be effected to conform to the subscriber's place of residence;
(3) uniform benefits may be provided for all employees and the dependents of such employees of corporations and other organizations transacting business in Kansas and elsewhere, and a composite rate (a rate representing the composite experience) of the areas involved may be charged for such employees and their dependents;
(4) service or indemnity benefits for medical care or other health services for the subscribers, members or policyholders of such corporations or associations may be provided but not to exceed reasonable and customary charges that a subscriber may incur for these services;
(5) administrative, accounting, data processing, cost control, marketing, claims processing, fiscal and other services may be provided for a hospital care or other health service plan with any agency, instrumentality or political subdivision of the United States or the state of Kansas, or with any person, corporation, health maintenance organization, partnership, group, or association providing such hospital care or other health service plan under any applicable state or federal law. Such contract may authorize such corporation to accept, receive, and administer in trust, funds directly or indirectly made available for the purposes set forth in said contract;
(6) reinsurance or joint assumption of risks may be undertaken between two or more corporations organized under the provisions of this act. Such contracts may provide for experience rating, the sharing of premiums, claims and expenses by the participating corporation, or for acceptance or ceding of the whole or portions of the risk on a reinsurance basis;
(7) administrative, accounting, data processing, cost control, marketing, claims processing, fiscal and other services may be provided to employers or voluntary employees' beneficiary associations where such employers or voluntary employees' beneficiary associations provide indemnity for hospital care or other health services to their employees or members under the terms of a plan of indemnification. Such contract may authorize such corporation to accept, receive and administer in trust, funds directly or indirectly made available for the purposes set forth in said contract. Contracts entered into pursuant to the provisions of this subsection shall provide for recoupment of all expenses incurred by the corporation in performing the services required by said contract and shall not adversely affect the interests of subscribers. Such corporation may enter into contracts with participating hospitals and health care providers to provide hospital services, professional services and other health services for such employees or members; and
(8) experimental and demonstration projects may be undertaken to determine the relative advantages and disadvantages of various alternative methods of providing service or indemnity benefits for hospital care or other health services. Such projects may include payment systems to providers designed to encourage providers to use their facilities and personnel more efficiently and thereby to reduce the total costs of hospital care, professional services and other health services involved without adversely affecting the quality of such services.
History: L. 1980, ch. 137, § 22; L. 1990, ch. 168, § 2; July 1.
The commissioner of insurance shall issue a certificate of authority to such corporation upon compliance with the following conditions: (1) It shall file with the commissioner of insurance a certified copy of its articles of incorporation, bylaws, and the subscription agreement forms and premiums and contracts with participating health care providers and participating hospitals it proposes to use all of which shall be approved by the commissioner of insurance; (2) it shall file with the commissioner of insurance contracts with at least 20 participating hospitals having a total of not less than 300 beds, and contracts with at least 50 participating health care providers; and (3) it shall hold bona fide applications for hospital service and medical service upon which it shall have collected a minimum of two months' premiums from at least 200 subscribers upon which it shall issue subscription agreements simultaneously. The total of such premiums shall be held in cash and shall not be disbursed until the subscription agreements are in force. Any such corporation shall be in possession of lawful assets over and above all liability in an amount not less than $5,000, and shall file with the commissioner of insurance a financial statement certified by at least two executive officers.
Before issuing a certificate of authority the commissioner shall cause an examination to be made of the affairs of the corporation as provided by K.S.A. 40-208, and amendments thereto.
History: L. 1980, ch. 137, § 23; L. 1990, ch. 168, § 3; July 1.
(a) No subscription agreement, except as provided in subsection (d), between a corporation organized under the nonprofit medical and hospital service corporation act and a subscriber, shall entitle more than one person to benefits, except that a "family subscription agreement" may be issued, at an established subscription charge, to a husband and wife, or husband, wife, and their dependent child or children and any other person dependent upon the subscriber. Only the subscriber must be named in the subscription agreement.
(b) Every subscription agreement entered into by any such corporation with any subscriber shall be in writing and a certificate stating the terms and conditions shall be furnished to the subscriber to be kept by the subscriber. No such certificate form shall be made, issued or delivered in this state unless it contains the following provisions: (1) A statement of the nature of the benefits to be furnished and the period during which they will be furnished, and if there are any benefits to be excepted, a detailed statement of such exceptions printed as hereinafter specified; (2) a statement of the terms and conditions, if any, upon which the subscription agreement may be canceled or otherwise terminated at the option of either party; (3) a statement that the subscription agreement includes the endorsements and attached papers, if any, and contains the entire contract; (4) a statement that no statement by the subscriber in the application for a subscription agreement shall avoid the subscription agreement or be used in any legal proceeding, unless such application or an exact copy is included in or attached to such subscription agreement, and that no agent or representative of such corporation, other than an officer or officers designated therein, is authorized to change the subscription agreement or waive any of its provisions; (5) a statement that if the subscriber defaults in making any payments under the subscription agreement, the subsequent acceptance of a payment by the corporation or by one of its duly authorized agents shall reinstate the subscription agreement but with respect to sickness and injury, only to cover such sickness as may be first manifested more than 10 days after the date of such acceptance; (6) a statement of the period of grace which will be allowed the subscriber for making any payment due under the subscription agreement. Such period shall not be less than 10 days; and (7) if applicable, a statement of the kind of hospital in which the subscriber may receive benefits and the types of benefits to which the subscriber may be entitled to in such kinds of hospitals. The subscriber shall be entitled to benefits in any nonparticipating hospital in Kansas which is licensed by the secretary of health and environment and in which the average length of stay of patient is similar to the average length of stay in participating hospitals. The agreements issued by any corporation currently or previously organized under this act may include provisions allowing for direct payment of benefits only to contracting health care providers.
(c) In every such subscription agreement made, issued or delivered in this state: (1) All printed portions shall be plainly printed; (2) the exceptions of the subscription agreement shall appear with the same prominence as the benefits to which they apply; (3) if the subscription agreement contains any provisions purporting to make any portion of the articles of incorporation or bylaws of the corporation a part of the subscription agreement, such portion shall be set forth in full; and (4) there shall be a brief description of the subscription agreement on the first page and on its filing back.
(d) Any such corporations may issue a group or blanket subscription agreement, provided the group of persons insured conforms to the requirements of law applicable to other companies writing group or blanket sickness and accident insurance policies and provided such subscription agreement and the individual certificates issued to members of the group shall comply in substance with this section. Any such subscription agreement may provide for the adjustment of the premiums based upon the experience at the end of the first year or of any subsequent year of insurance, and such readjustment may be made retroactive in the form of a rate credit or a cash refund.
(e) (1) Any group subscription agreement issued pursuant to subsection (d) shall provide that an employee or member or such employee's or member's covered dependents whose insurance under the group subscription agreement has been terminated for any reason, including discontinuance of the group in its entirety or with respect to an insured class, and who has been continuously insured under the group subscription agreement or under any group policy or subscription agreement providing similar benefits which it replaces for at least three months immediately prior to termination, shall be entitled to have such coverage nonetheless continued under the group policy for a period of 18 months and at the end of such eighteen-month period of continuation, such employee or member or such employee's or member's covered dependents shall be entitled to obtain, at the employee's, member's or dependent's option either:
(A) A converted subscription agreement providing coverage equal to 80% of that afforded under the group subscription agreement for basic hospital, surgical and medical benefits. Persons selecting this option shall also be entitled to obtain major medical expense coverage which will provide hospital, medical and surgical expense benefits to an aggregate maximum of not less than $50,000. The major medical expense coverage may be subject to a copayment by the covered person of not more than 20% of covered charges and a deductible stated on a per person, per family, per illness, per benefit period, or per year basis or a combination of such bases of not more than $500 per person subject to a maximum annual deductible of $750 per family; or
(B) a subscription agreement which imposes a deductible of not less than $1,000 per subscriber and not less than $2,000 per family and subjects the covered person to a copayment of not more than 20% of covered charges with a $1,000 maximum copayment per subscriber and $2,000 maximum copayment per family per contract year and providing a lifetime maximum benefit of not less than $1,000,000.
(2) The requirements imposed by this subsection (e) shall not apply to a group subscription agreement which provides benefits for specific diseases or for accidental injuries only or any group subscription agreement issued to an employer subject to the continuation and conversion obligations set forth at title I, subtitle B, part 6 of the employee retirement income security act of 1974 or at title XXII of the public health service act, as each act was in effect on January 1, 1987, to the extent federal law provides the employee or member or such employee's or member's covered dependents with equal or greater continuation or conversion rights, or any employee or member or such employee's or member's covered dependents whose termination of insurance under the group subscription agreement occurred because:
(A) Such person failed to pay any required contribution after receiving reasonable notice of such required contribution from the insurer in accordance with rules and regulations adopted by the commissioner of insurance;
(B) any discontinued group coverage was replaced by similar group coverage within 31 days; or the employee or member is or could be covered by medicare (title XVIII of the United States social security act as added by the social security amendments of 1965 or as later amended or superseded);
(C) coverage for the employee or member, or any covered dependent thereof, was terminated for cause as permitted by the group policy or certificate of coverage approved by the commissioner; or
(D) the employee or member is or could be covered to the same extent by any other insured or lawful self-insured arrangement which provides expense incurred hospital, surgical or medical coverage and benefits for individuals in a group under which the person was not covered prior to such termination. In the event the group policy is terminated and not replaced the insurer may issue an individual policy or certificate in lieu of a conversion policy or the continuation of group coverage required herein if the individual policy or certificate provides substantially similar coverage for the same or less premium as the group subscription agreement. In any event, the employee or member shall have the option to be issued a conversion policy which meets the requirements set forth in this subsection (e) in lieu of the right to continue group coverage.
(3) Written application for the converted subscription agreement shall be made and the first premium paid to the insurer not later than 31 days after termination of the group coverage and shall become effective the day following the termination of insurance under the group subscription agreement. In addition, the converted subscription agreement shall be subject to the provisions contained in paragraphs (2), (3), (4), (5), (6), (7), (8), (9), (10), (13), (14), (15), (16), (17), (18), (19), and (20) of subsection (j) of K.S.A. 40-2209, and amendments thereto.
History: L. 1980, ch. 137, § 24; L. 1984, ch. 172, § 3; L. 1987, ch. 169, § 1; L. 1988, ch. 157, § 1; L. 1992, ch. 196, § 1; L. 1998, ch. 174, § 2; L. 2005, ch. 145, § 1; L. 2008, ch. 164, § 3; July 1.
History: L. 1980, ch. 137, § 25; L. 1986, ch. 318, § 35; L. 1988, ch. 356, § 102; L. 1990, ch. 168, § 4; Repealed, L. 1991, ch. 134, § 13; July 1.
Any director, officer or member of any corporation organized under the nonprofit medical and hospital service corporation act, or any other person may advance to such corporation any sum or sums of money necessary for the purposes of its business or to enable it to comply with any of the requirements of the laws of this state, and such moneys and such interest thereon as may have been agreed upon, not exceeding four percentum per annum, shall be payable only out of the surplus remaining after providing for all reserves and other liabilities and shall not otherwise be a liability or claim against the corporation or any of its assets. No commission or promotion expenses shall be paid in connection with the advance of any such money to the corporation, and the amount of such advance shall be reported in each annual statement.
History: L. 1980, ch. 137, § 26; July 1.
(a) Corporations organized under the nonprofit medical and hospital service corporation act shall be subject to the provisions of the Kansas general corporation code, articles 60 through 74 of chapter 17 of the Kansas Statutes Annotated, and amendments thereto, applicable to nonprofit corporations, to the provisions of K.S.A. 40-214, 40-215, 40-216, 40-218, 40-219, 40-222, 40-223, 40-224, 40-225, 40-229, 40-230, 40-231, 40-235, 40-236, 40-237, 40-247, 40-248, 40-249, 40-250, 40-251, 40-252, 40-2,100, 40-2,101, 40-2,102, 40-2,103, 40-2,104, 40-2,105, 40-2,116, 40-2,117, 40-2,125, 40-2,153, 40-2,154, 40-2,160, 40-2,161, 40-2,163 through 40-2,170, 40-2a01 et seq., 40-2111 through 40-2116, 40-2215 through 40-2220, 40-2221a, 40-2221b, 40-2229, 40-2230, 40-2250, 40-2251, 40-2253, 40-2254, 40-2401 through 40-2421, and 40-3301 through 40-3313 and K.S.A. 40-2,105a, 40-2,105b, 40-2,184, 40-2,190, 40-2,194 and 40-2,210 through 40-2,216, and amendments thereto, except as the context otherwise requires, and shall not be subject to any other provisions of the insurance code except as expressly provided in this act.
(b) No policy, agreement, contract or certificate issued by a corporation to which this section applies shall contain a provision which excludes, limits or otherwise restricts coverage because medicaid benefits as permitted by title XIX of the social security act of 1965 are or may be available for the same accident or illness.
(c) Violation of subsection (b) shall be subject to the penalties prescribed by K.S.A. 40-2407 and 40-2411, and amendments thereto.
History: L. 1980, ch. 137, § 27; L. 1984, ch. 173, § 5; L. 1986, ch. 178, § 2; L. 1988, ch. 159, § 3; L. 1990, ch. 162, § 5; L. 1990, ch. 162, § 6; L. 1991, ch. 133, § 2; L. 1991, ch. 134, § 3; L. 1993, ch. 231, § 2; L. 1994, ch. 18, § 4; L. 1994, ch. 321, § 1; L. 1996, ch. 96, § 4; L. 1997, ch. 156, § 83; L. 1998, ch. 174, § 3; L. 1999, ch. 128, § 6; L. 1999, ch. 162, § 4; L. 2001, ch. 178, § 6; L. 2010, ch. 120, § 5; L. 2011, ch. 111, § 10; L. 2013, ch. 97, § 11; L. 2014, ch. 62, § 8; L. 2018, ch. 98, § 10; July 1.
History: L. 1980, ch. 137, § 27; L. 1984, ch. 173, § 5; L. 1986, ch. 178, § 2; L. 1988, ch. 158, § 3; Repealed, L. 1990, ch. 162, § 7; Repealed, L. 1990, ch. 170, § 4; Repealed, L. 1990, ch. 169, § 2; July 1.
(a) No corporation subject to the provisions of the nonprofit medical and hospital service corporation act shall during any one year disburse more than 5% of the aggregate amount of the payments received from subscribers during that year as expenditures for the soliciting of subscribers, except that during the first year after the issuance of a permit, such corporation may so disburse not more than 20% of such amount, during the second year not more than 15% and during the third year not more than 10%.
(b) No such corporation shall, during any one year, disburse a sum greater than 10% of the payments received from subscribers during that year as administrative expenses. As used in this section the term "administrative expenses" shall include all expenditures for nonprofessional services including all activities, contractual arrangements and projects authorized by K.S.A. 40-19c04, and in general, all expenses not directly connected with the furnishing of the benefits specified in this act, but not including expenses referred to in subsection (a) hereof.
(c) Each corporation organized under the nonprofit medical and hospital service corporation act shall devote a reasonable effort to control costs, including both its administrative costs and cost charged to it by participating hospitals and health care providers. Such effort shall include, but not be limited to, a continuing attempt by such corporation through a combination of education, persuasion and financial incentives and disincentives to control cost and to encourage participating health care providers and hospitals to control cost by: (1) Elimination of duplicative or unnecessary services, facilities, and equipment; (2) nonprovider participation in the affairs of the corporation; (3) subscriber support of cost containment activities; (4) promotion of sound management practices in participating hospitals; (5) promotion of efficient delivery of health care services by participating health care providers; (6) implementation of sound management practices within the nonprofit medical and hospital service corporation; (7) promotion of alternative forms of health care; and (8) engagement in, and evaluation of, cost control experiments, including incentive reimbursement and utilization and peer review programs.
History: L. 1980, ch. 137, § 28; L. 1990, ch. 168, § 5; July 1.
A nonprofit mutual medical and hospital service corporation or similar entities organized under the laws of any other state or territory may be authorized to transact business in this state subject to the approval of the commissioner of insurance and the applicable provisions of this act, only in such areas that form part of a natural medical area of the area in which such corporation operates or where the interests of the subscribers are better served. Where a nonprofit medical and hospital service corporation organized under the laws of any other state or territory has merged with a corporation organized under the nonprofit medical and hospital service corporation act and such foreign corporation is the surviving corporation, such foreign corporation may be authorized to transact business in this state without territorial limitations.
History: L. 1980, ch. 137, § 29; July 1.
Any nonprofit medical and hospital service corporation organized pursuant to the provisions of article 19c of chapter 40 of the Kansas Statutes Annotated shall, without reincorporation, adopt and (at its option) shall either become subject to the provisions of article 5 of chapter 40 of the Kansas Statutes Annotated, governing mutual life insurance companies, or of article 12 of chapter 40 of the Kansas Statutes Annotated, governing mutual companies other than life, by the adoption of a resolution of its board of directors declaring the election of the nonprofit medical and hospital service corporation to become subject to the provisions of article 5 or 12 of chapter 40 of the Kansas Statutes Annotated. After the adoption of such resolution, the board of directors shall adopt such amendments to the articles of incorporation and bylaws of the corporation as shall be necessary and shall file the same with the commissioner of insurance, together with a plan for mutualization setting forth provisions for fulfilling the conditions necessary to effect the mutualization and a designated date upon which such mutualization shall become effective if such conditions are fulfilled. Upon the designated date set forth in the plan, but not later than July 1, 1992, the nonprofit medical and hospital service corporation shall become subject to the provisions of law so elected, and shall not be governed by article 19c of chapter 40 of the Kansas Statutes Annotated thereafter. The existing contract rights and obligations of such corporation, of subscribers and of health care providers shall not be impaired by such conversion to mutual status.
History: L. 1991, ch. 134, § 8; July 1.
History: L. 1987, ch. 159, §§ 1 to 6; Repealed, L. 1997, ch. 8, § 15; July 1.
History: L. 1987, ch. 159, § 7; Repealed, L. 1991, ch. 134, § 13; July 1.
History: L. 1987, ch. 159, § 8, 9; Repealed, L. 1997, ch. 8, § 15; July 1.
History: L. 1987, ch. 159, § 10; L. 1991, ch. 133, § 5; L. 1991, ch. 134, § 7; L. 1993, ch. 132, § 4; L. 1994, ch. 18, § 5; L. 1996, ch. 229, § 114; Repealed, L. 1997, ch. 163, § 1; July 1.
History: L. 1987, ch. 159, §§ 11 to 14; Repealed, L. 1997, ch. 8, § 15; July 1.
The purpose of this act is to subject certain insurers to the jurisdiction of courts of this state in suits by or on behalf of insureds or beneficiaries under insurance contracts.
The legislature declares that it is a subject of concern that many residents of this state hold policies of insurance issued or delivered in this state by insurers while not authorized to do business in this state, thus presenting to such residents the often insuperable obstacle of resorting to distant forums for the purpose of asserting legal rights under such policies. In furtherance of such state interest, the legislature herein provides a method of substituted service of process upon such insurers and declares that in so doing it exercises its powers to protect its residents and to define, for the purpose of this statute, what constitutes doing business in this state, and also exercises powers and privileges available to the state by virtue of Public Law 15, 79th
Congress of the United States, Chapter 20, 1st
Session, S. 340,* which declares that the business of insurance and every person engaged therein shall be subject to the laws of the several states.
History: L. 1949, ch. 283, § 1; June 30.
(a) Any of the following acts in this state, effected by mail or otherwise, by an unauthorized foreign or alien insurer: (1) The issuance or delivery of contracts of insurance to residents of this state or to corporations authorized to do business therein; (2) the solicitation of applications for such contracts; (3) the collection of premiums, membership fees, assessments or other considerations for such contracts; or (4) any other transaction of insurance business, is equivalent to and shall constitute an appointment by such insurer of the commissioner of insurance and his successor or successors in office, to be its true and lawful attorney, upon whom may be served all lawful process in any action, suit, or proceeding instituted by or on behalf of an insured or beneficiary arising out of any such contract of insurance, and any such act shall be signification of its agreement that such service of process is of the same legal force and validity as personal service of process in this state upon such insurer.
(b) Such service of process shall be made by delivering to and leaving with the commissioner of insurance or some person in apparent charge of his office two copies thereof and the payment to him of such fees as may be prescribed by law. The commissioner of insurance shall forthwith mail by registered mail one of the copies of such process to the defendant at its last known principal place of business, and shall keep a record of all process so served upon him. Such service of process is sufficient, provided notice of such service and a copy of the process are sent within ten days thereafter by registered mail by plaintiff or plaintiff's attorney to the defendant at its last known principal place of business, and the defendant's receipt, or receipt issued by the post office with which the letter is registered; showing the name of the sender of the letter and the name and address of the person to whom the letter is addressed, and the affidavit of the plaintiff or plaintiff's attorney showing a compliance herewith are filed with the clerk of the court in which such action is pending on or before the date the defendant is required to appear, or within such further time as the court may allow.
(c) Service of process in any such action, suit or proceeding shall in addition to the manner provided in subsection (b) of this section be valid if served upon any person within the state who, in this state on behalf of such insurer, is
(1) soliciting insurance, or
(2) making, issuing or delivering any contract of insurance, or
(3) collecting or receiving any premium, membership fee, assessment or other consideration for insurance; and a copy of such process is sent within ten days thereafter by registered mail by the plaintiff or plaintiff's attorney to the defendant at the last known principal place of business of the defendant, and the defendant's receipt, or the receipt issued by the post office with which the letter is registered, showing the name of the sender of the letter and the name and address of the person to whom the letter is addressed, and the affidavit of the plaintiff or plaintiff's attorney showing a compliance herewith are filed with the clerk of the court in which such action is pending on or before the date the defendant is required to appear, or within such further time as the court may allow.
(d) No plaintiff or complainant shall be entitled to a judgment by default under this section until the expiration of thirty days from the date of the filing of the affidavit of compliance.
(e) Nothing in this section contained shall limit or abridge the right to serve any process, notice or demand upon any insurer in any other manner now or hereafter permitted by law.
History: L. 1949, ch. 283, § 2; June 30.
(a) Before any unauthorized foreign or alien insurer shall file or cause to be filed any pleading in any action, suit or proceeding instituted against it, such unauthorized insurer shall deposit with the clerk of the court in which such action, suit or proceeding is pending cash or securities or file with such clerk a bond with good and sufficient sureties, to be approved by the court, in an amount to be fixed by the court sufficient to secure the payment of any final judgment which may be rendered in such action; or (2) procure a certificate of authority to transact the business of insurance in this state.
(b) The court in any action, suit or proceeding, in which service is made in the manner provided in subsection (b) or (c) of K.S.A. 40-2002 may, in its discretion, order such postponement as may be necessary to afford the defendant reasonable opportunity to comply with the provisions of subsection (a) of this section and to defend such action.
(c) Nothing in subsection (a) of this section is to be construed to prevent an unauthorized foreign or alien insurer from filing a motion to quash a writ or to set aside service thereof made in the manner provided in subsections (b) or (c) of K.S.A. 40-2002 on the ground either (1) that such unauthorized insurer has not done any of the acts enumerated in subsection (a) of K.S.A. 40-2002, or (2) that the person on whom service was made pursuant to subsection (c) of K.S.A. 40-2002 was not doing any of the acts therein enumerated.
History: L. 1949, ch. 283, § 3; June 30.
In any action in which any judgment is rendered against an unauthorized, foreign or alien insurer upon a contract of insurance issued or delivered in this state to a resident thereof or to a corporation authorized to do business therein, if it appears from the evidence that such insurer has refused to pay such loss, the court in rendering such judgment shall allow the plaintiff a reasonable sum as an attorney's fee to be recovered and collected as part of its costs: Provided, however, That when a tender is made by such insurer before the commencement of the action in which judgment is rendered and the amount recovered is not in excess of such tender, no such costs shall be allowed.
History: L. 1949, ch. 283, § 4; June 30.
If any provision of this act or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of the act which can be given effect without the invalid provision or application, and to this end the provisions of this act are declared to be severable.
History: L. 1949, ch. 283, § 5; June 30.
This act may be cited as the unauthorized insurers process act.
History: L. 1949, ch. 283, § 6; June 30.
Except as provided in K.S.A. 40-2142, and amendments thereto, agreements may be made among insurers with respect to the equitable apportionment among them of insurance which may be afforded applicants who are in good faith, entitled to but who are unable to procure such insurance through ordinary methods and such insurers may agree among themselves on the use of reasonable rate modifications for such insurance provided that such apportionment agreements and rate modifications are approved by the commissioner of insurance.
History: L. 1951, ch. 300, § 1; L. 2017, ch. 6, § 2; July 1.
(a) Every insurer undertaking to transact in the state of Kansas the business of automobile and motor vehicle bodily injury and property damage liability insurance and every rating organization that files rates for such insurance shall cooperate in preparing and submitting a plan to the commissioner of insurance for the equitable apportionment among insurers of applicants for insurance who, in good faith are entitled to, but are unable to procure such insurance through ordinary methods. Such plan or plans shall provide:
(1) Reasonable rules governing the equitable distribution of risks by direct insurance, reinsurance or otherwise and their assignment to insurers, including provisions requiring, at the request of the applicant, an immediate assumption of the risk by an insurer or insurers upon completion of an application, payment of the specified premium and deposit the application and the premium in the United States mail, postage prepaid and addressed to the plan's office;
(2) rates and rate modifications applicable to such risks that shall be reasonable, adequate and not unfairly discriminatory;
(3) the limits of liability that the insurer shall be required to assume;
(4) a method by which applicants for insurance, insureds and insurers may have a hearing on grievances and the right of appeal to the commissioner;
(5) a governing board to be appointed by the commissioner of insurance that shall meet at least annually to review and prescribe operating rules.
(b) (1) Prior to January 1, 2026, such board shall consist of the following nine members:
(A) (i) Seven members who shall be appointed prior to December 31, 2025, as follows:
(a) Three members shall be representatives of foreign insurance companies;
(b) two members shall be representatives of domestic insurance companies; and
(c) two members shall be licensed independent insurance agents;
(ii) such seven members shall be appointed for a term of three years, except that the initial appointment shall include two members appointed for a two-year term and two members appointed for a one-year term as designated by the commissioner; and
(B) two members shall be representatives of the general public interest with such members to be appointed for a term of two years.
(2) The terms of the members appointed and serving on the governing board as of July 1, 2025, shall expire on December 31, 2025.
(c) (1) The commissioner shall appoint a governing board for the plan that shall serve on and after January 1, 2026, and that shall have the same powers, duties and functions as its predecessor. On and after January 1, 2026, all members of such governing board shall serve three-year terms, except that such members shall be removable by the commissioner for inefficiency, neglect of duty or malfeasance. Such governing board shall consist of five members to be appointed as follows:
(A) Three members shall be representatives of insurers;
(B) one member shall be a representative of independent insurance agents; and
(C) one member shall be a representative of the general public.
(2) In making appointments to the governing board, the commissioner shall consider if foreign and domestic insurers are fairly represented.
(d) (1) The commissioner shall review the plan as soon as reasonably possible after filing in order to determine whether it meets the requirements set forth in subsections (a)(1) through (a)(4). As soon as reasonably possible after the plan has been filed the commissioner shall, in writing, approve or disapprove such plan. Any plan shall be deemed approved unless disapproved within 45 days. Subsequent to the waiting period the commissioner may disapprove any plan on the grounds that such plan does not meet the requirements set forth in subsections (a)(1) through (a)(4), but only after a hearing held upon not less than 10 days' written notice to every insurer and rating organization affected specifying the matter to be considered at such hearing and only by an order specifying in what respect the commissioner finds that such plan fails to meet such requirements, and stating when within a reasonable period thereafter such plan shall be deemed no longer effective. Such order shall not affect any assignment made or policy issued or made prior to the expiration of the period set forth in such order. Amendments to such plan or plans shall be prepared, filed and reviewed in the same manner as provided in this section with respect to the original plan or plans.
(2) If no plan meeting the standards set forth in subsections (a)(1) through (a)(4) is submitted to the commissioner within the period stated in any order disapproving an existing plan, the commissioner shall, if necessary to carry out the purpose of this section after hearing, prepare and promulgate a plan meeting such requirements. If, after a hearing conducted in accordance with the provisions of the Kansas administrative procedure act, the commissioner finds that any activity or practice of any insurer or rating organization in connection with the operation of such plan or plans is unfair or unreasonable or otherwise inconsistent with the provisions of this subsection, the commissioner may issue a written order specifying in what respects such activity or practice is unfair or unreasonable or otherwise inconsistent with the provisions of this subsection and requiring discontinuance of such activity or practice.
History: L. 1951, ch. 300, § 2; L. 1969, ch. 238, § 7; L. 1978, ch. 182, § 1; L. 1988, ch. 356, § 103; L. 2025, ch. 87, § 13; July 1.
An insurer participating in the plan approved by the commissioner may pay a commission with respect to insurance assigned under the plan to an agent licensed for any other insurer participating in the plan or to any insurer participating in the plan.
History: L. 1951, ch. 300, § 3; April 1.
If any clause, paragraph, subsection or section of this act shall be held invalid or unconstitutional, it shall be conclusively presumed that the legislature would have enacted the remainder of this act without such invalid or unconstitutional clause, paragraph, subsection or section.
History: L. 1951, ch. 300, § 4; April 1.
The officer who shall have charge of the stock or membership records of any stock or mutual life, or any stock fire or stock casualty insurance company organized under the laws of this state, shall at any meeting of stockholders or members have available the stock or membership records as will show who are stockholders or members. Such records shall be available for inspection and examination only by designated company employees and by such committee as shall be appointed prior to or at said meeting by the president or presiding officer to determine the number of shares or members present in person or by proxy and entitled to vote. Except as to membership records and records pertaining to stock issued and outstanding and the holders thereof, every stockholder or member shall have the right to examine in person or by agent or attorney, at any reasonable time for any reasonable purpose, the bylaws, books of account and minutes of the proceedings of the stockholders or members and directors, and to make copies of or extracts from them.
History: L. 1957, ch. 288, § 1; April 16.
Any member or stockholder of any stock or mutual life, stock fire or stock casualty insurance company organized under the laws of this state may make demand to examine the membership records or records pertaining to stock issued and outstanding and the holders thereof of such company by filing a verified application with the commissioner of insurance of this state setting forth specification of mismanagement on the part of the officers of such company. Upon the filing of such application, the commissioner of insurance shall conduct a hearing thereon in accordance with the provisions of the Kansas administrative procedure act. Unless the commissioner finds from the evidence produced at such hearing that there is reasonable cause to believe that the officers of such company have mismanaged the affairs of such company, such application shall be denied; otherwise, such commissioner shall make such order as the commissioner deems suitable for the protection of the policyholders, members and stockholders as to permitting such inspection or a modified or limited inspection as will best safeguard the interests of all concerned and will avoid injury or damage to such company or its members or stockholders.
History: L. 1957, ch. 288, § 2; L. 1988, ch. 356, § 104; July 1, 1989.
For the purpose of this act the word "members" shall be construed to include policyholders of a mutual life insurance company and the words "membership records" shall be construed to include policyholder records of a mutual life insurance company.
History: L. 1957, ch. 288, § 3; April 16.
Agreements may be made among insurers with respect to the equitable apportionment among them of insurance which may be afforded applicants who are in good faith, entitled to but who are unable to procure such insurance through ordinary methods and such insurers may agree among themselves on the use of reasonable rate modifications for such insurance: Provided, That such apportionment agreements and rate modifications are approved by the commissioner of insurance.
History: L. 1961, ch. 239, § 1; June 30.
(a) Every insurer undertaking to transact in this state the business of either workers compensation or employer's liability insurance or both, and every rating organization that files rates for such insurance shall cooperate in preparing and submitting a plan to the commissioner of insurance, for the equitable apportionment among insurers of applicants for insurance who, in good faith, are entitled to but are unable to procure such insurance through ordinary methods. Such plan or plans shall provide:
(1) Reasonable rules governing the equitable distribution of risks by direct insurance, reinsurance or otherwise and their assignment to insurers;
(2) rates and rate modifications applicable to such risks that shall be reasonable, adequate and not unfairly discriminatory;
(3) a method by which applicants for insurance, insured and insurers may have a hearing on grievances and the right of appeal to the commissioner; and
(4) a governing board to be appointed by the commissioner of insurance that shall meet at least annually to review and prescribe operating rules.
(b) (1) Prior to January 1, 2026, such board shall consist of the following nine members:
(A) (i) Seven members who shall be appointed prior to December 31, 2025, as follows:
(a) Three members shall be representatives of foreign insurance companies;
(b) two members shall be representatives of domestic insurance companies; and
(c) two members shall be licensed independent insurance agents.
(ii) Such seven members shall be appointed for a term of three years, except that the initial appointment shall include two members appointed for a two-year term and two members appointed for a one-year term, as designated by the commissioner; and
(B) two members representative of the general public interest with such members to be appointed for a term of two years.
(2) The terms of the members appointed and serving on the governing board as of July 1, 2025, shall expire on December 31, 2025.
(c) (1) The commissioner shall appoint a governing board for the plan that shall serve on and after January 1, 2026, and that shall have the same powers, duties and functions as its predecessor. On and after January 1, 2026, all members of such governing board shall serve three-year terms, except that such members shall be removable by the commissioner for inefficiency, neglect of duty or malfeasance. Such governing board shall consist of seven members to be appointed as follows:
(A) Four members shall be representatives of insurance companies;
(B) two members shall be licensed insurance agents; and
(C) one member shall be a representative of the general public interest.
(2) In selecting the members who shall be representatives of insurers, the commissioner shall consider if foreign and domestic insurers are fairly represented.
(d) (1) The commissioner shall review the plan as soon as reasonably possible after filing in order to determine whether it meets the requirements set forth in subsections (a)(1) through (a)(3). As soon as reasonably possible after the plan has been filed the commissioner shall in writing approve or disapprove such plan, except that any plan shall be deemed approved unless disapproved within 45 days. Subsequent to the waiting period the commissioner may disapprove any plan on the ground that it does not meet the requirements set forth in subsections (a)(1) through (a)(3), but only after a hearing held upon not less than 10 days' written notice to every insurer and rating organization affected specifying the matter to be considered at such hearing, and only by an order specifying in what respect the commissioner finds that such plan fails to meet such requirements and stating when within a reasonable period thereafter such plan shall be deemed no longer effective. Such order shall not affect any assignment made or policy issued or made prior to the expiration of the period set forth in such order. Amendments to such plan or plans shall be prepared, filed and reviewed in the same manner as provided in this section with respect to the original plan or plans.
(2) If no plan meeting the standards set forth in subsections (a)(1) through (a)(3) is submitted to the commissioner within the period stated in any order, disapproving an existing plan the commissioner shall, if necessary to carry out the purpose of this section after hearing, prepare and promulgate a plan meeting such requirements. When such plan or plans or amendments thereto have been approved or promulgated, no insurer shall thereafter issue a policy of workers compensation or employer's liability insurance or undertake to transact such business in this state unless such insurer shall participate in such an approved or promulgated plan. If, after a hearing conducted in accordance with the provisions of the Kansas administrative procedure act, the commissioner finds that any activity or practice of any insurer or rating organization in connection with the operation of such plan or plans is unfair or unreasonable or otherwise inconsistent with the provisions of this section, the commissioner may issue a written order specifying in what respects such activity or practice is unfair or unreasonable or otherwise inconsistent with the provisions of this section and requiring discontinuance of such activity or practice.
(e) The commissioner shall approve rates and rate modifications for each plan that provides workers compensation insurance. This provision shall not prohibit the application of surcharges, experience modifications or other rating variables.
History: L. 1961, ch. 239, § 2; L. 1969, ch. 238, § 8; L. 1988, ch. 356, § 105; L. 1993, ch. 286, § 23; L. 2011, ch. 113, § 3; L. 2025, ch. 87, § 14; July 1.
An insurer participating in the plan approved by the commissioner may pay a commission with respect to insurance assigned under the plan to an agent licensed for any other insurer participating in the plan or to any insurer participating in the plan.
History: L. 1961, ch. 239, § 3; June 30.
(a) Every insurer authorized to issue a policy of accident and sickness insurance as defined in K.S.A. 40-2201, and amendments thereto, or undertaking to transact in the state of Kansas the kinds of insurance specified in subsection (a), (b) or (c) of K.S.A. 40-901, and amendments thereto, or subsection (b) or (c) of K.S.A. 40-1102, and amendments thereto, and every rating organization which makes rates for such insurance, shall at the discretion of the commissioner of insurance, cooperate in the preparation of and submission to the commissioner and participate in a plan or plans for the equitable apportionment among insurers of applicants for insurance who are, in good faith, entitled to such kinds of insurance, or subdivisions or combinations thereof, but who are unable to procure the same through ordinary methods. This section shall not apply to the kinds of insurance specified in K.S.A. 40-2102 and 40-2108, and amendments thereto.
(b) Such plan or plans shall provide:
(1) Reasonable rules governing the equitable distribution of risks, by direct insurance, reinsurance or otherwise, and their assignment to insurers;
(2) rates and rate modifications applicable to such risks which shall be reasonable, adequate and not unfairly discriminatory;
(3) the extent of liability which each insurer shall be required to assume; and
(4) a method whereby applicants for insurance, insureds, agents and insurers may have a hearing on grievances and the right of appeal of the commissioner.
For every such plan or plans, there shall be a governing board, to be appointed by the commissioner of insurance, which shall meet at least annually to review and prescribe operating rules, and which shall consist of the following members:
(A) Seven members who shall be appointed as follows: Three members shall be representatives of foreign insurance companies, two members shall be representatives of domestic insurance companies and two members shall be licensed independent insurance agents. Such members shall be appointed for a term of three years, except that the initial appointment shall include two members appointed for a two-year term and two members appointed for a one-year term, as designated by the commissioner; and
(B) Two members representative of the general public interest, with such members to be appointed for a term of two years.
(c) With regard to accident and sickness insurance, prior to the implementation of a plan under this section: (1) Every insurer shall report to the commissioner at such time as the commissioner may require, on a form prescribed by the commissioner, information concerning each instance of declination of insurance coverage, termination of insurance coverage and offering to insure at higher than standard rates, with respect to the type of insurance proposed to be provided under this section; (2) the commissioner shall report to the governor and to the legislature, no later than the commencement of the 1988 regular session of the Kansas legislature, data obtained under the provisions of this section along with a proposed plan, including an analysis of the cost impact thereof, developed in accordance with this section; (3) the legislature shall have an opportunity to review the data and comment on whether there is a need for implementation of the plan; and (4) approval by the legislature must be obtained.
History: L. 1969, ch. 238, § 1; L. 1986, ch. 178, § 1; July 1.
The commissioner of insurance shall review any plan proposed pursuant to K.S.A. 40-2111, as soon as reasonably possible after the same is filed, in order to determine whether it meets the requirements set forth in said K.S.A. 40-2111; and as soon as reasonably possible after the plan has been filed, the commissioner shall in writing approve or disapprove the same: Provided, That any plan shall be deemed approved unless disapproved within forty-five (45) days after its submission, but subsequent to any plan receiving approval in such manner, the commissioner may disapprove said plan if it does not meet the requirements set forth in K.S.A. 40-2111, but only after: (1) A hearing has been held upon not less than ten (10) days' written notice to every insurer and rating organization which would be affected by such ruling, specifying the matter to be considered at such hearing; and (2) the commissioner has issued an order specifying in what respect he finds that such plan fails to meet such requirements, and stating when, within a reasonable period thereafter, such plan shall be deemed no longer effective. Such order shall not affect any assignment made or any policy issued or made prior to the expiration of the period set forth in said order, and it shall require that amendments of such plan or plans shall be prepared, filed and reviewed in the same manner as herein provided with respect to the original plan or plans.
History: L. 1969, ch. 238, § 2; July 1.
If no plan, meeting the standards set forth in K.S.A. 40-2111, and amendments thereto, is submitted to the commissioner within the period stated in any order disapproving an existing plan, the commissioner shall, if necessary to carry out the purpose of this section, and after hearing, prepare and promulgate a plan meeting such requirements. The commissioner may designate one or more rating organizations or other agencies to assist in the preparation, operation and promulgation of such a plan. If, after a hearing conducted in accordance with the provisions of the Kansas administrative procedure act, the commissioner finds that any activity or practice of any insurer or rating organization in connection with the operation of such plan or plans is unfair or unreasonable, or otherwise inconsistent with the provisions of this subsection, the commissioner may issue a written order specifying in what respects such activity or practice is unfair or unreasonable, or otherwise inconsistent with the provisions of this subsection, and requiring discontinuance of such activity or practice.
History: L. 1969, ch. 238, § 3; L. 1988, ch. 356, § 106; July 1, 1989.
Any insurer participating in the plan approved by the commissioner may pay a commission with respect to insurance assigned under the plan to an agent licensed for any other insurer participating in the plan or to any insurer participating in the plan.
History: L. 1969, ch. 238, § 4; July 1.
Any hearing held by the commissioner of insurance pursuant to the provisions of this act shall be in substantial compliance with the provisions of K.S.A. 40-281, and amendments thereto, unless the hearing involves an order as defined in K.S.A. 77-502, and amendments thereto, in which case the hearing shall be conducted in accordance with the provisions of the Kansas administrative procedure act.
History: L. 1969, ch. 238, § 5; L. 1988, ch. 356, § 107; July 1, 1989.
The commissioner may establish rules and regulations necessary to carry out the provisions of this act.
History: L. 1969, ch. 238, § 6; July 1.
This act shall be known and may be cited as the Kansas uninsurable health insurance plan act.
History: L. 1992, ch. 209, § 1; July 1.
As used in this act, unless the context otherwise requires, the following words and phrases shall have the meanings ascribed to them in this section:
(a) "Administering carrier" means the insurer or third-party administrator designated in K.S.A. 40-2120, and amendments thereto.
(b) "Association" means the Kansas health insurance association established in K.S.A. 40-2119, and amendments thereto.
(c) "Board" means the board of directors of the association.
(d) "Church plan" means a plan as defined under section 3(33) of the employee retirement income security act of 1974.
(e) "Commissioner" means the commissioner of insurance.
(f) "Creditable coverage" means with respect to an individual, coverage of the individual under any of the following:
(1) A group health plan;
(2) health insurance coverage;
(3) part A or part B of title XVIII of the social security act;
(4) title XIX of the social security act, other than coverage consisting solely of benefit under section 1928;
(5) chapter 55 of title 10, United States code;
(6) a medical care program of the Indian health service or of a tribal organization;
(7) a state health benefit risk pool;
(8) a health plan offered under chapter 89 of title 5, United States code;
(9) a public health plan as defined under regulations promulgated by the secretary of health and human services;
(10) a health benefit plan under section 5(e) of the peace corps act (22 U.S.C. § 2504(d)); and
(11) a state children's health insurance program established pursuant to title XXI of the social security act.
(g) "Dependent" means a resident spouse or resident unmarried child under the age of 19 years, a child who is a student under the age of 23 years and who is financially dependent upon the parent, or a child of any age who is disabled and dependent upon the parent.
(h) "Excess loss" means the total dollar amount by which claims expense incurred for any issuer of a medicare supplement policy or certificate delivered or issued for delivery to persons in this state eligible for medicare by reason of disability and who are under age 65 exceeds 65% of the premium earned by such issuer during a calendar year.
(i) "Federally defined eligible individual" means an individual:
(1) For whom, as of the date the individual seeks coverage under this section, the aggregate of the periods of creditable coverage is 18 or more months and whose most recent prior coverage was under a group health plan, government plan or church plan;
(2) who is not eligible for coverage under a group health plan, part A or B of title XVII of the social security act, or a state plan under title XIX of the social security act, or any successor program, and who does not have any other health insurance coverage;
(3) with respect to whom the most recent coverage was not terminated for factors relating to nonpayment of premiums or fraud; and
(4) who if offered the option of continuation coverage under COBRA or under a similar program, elected such continuation coverage, and has exhausted such continuation coverage.
(j) "Federally defined eligible individuals for FTAA" means an individual who is:
(1) Legally domiciled in this state; and
(2) eligible for the credit for health insurance costs under section 35 of the internal revenue code of 1986.
(k) "FTAA" means federal trade adjustment assistance under the federal trade adjustment assistance reform act of 2002, public law 107-210.
(l) "Governmental plan" means a plan as defined under section 3(32) of the employee retirement income security act of 1974 and any plan maintained for its employees by the government of the United States or by any agency or instrumentality of such government.
(m) "Group health plan" means an employee benefit plan as defined by section 3(1) of the employee retirement income security act of 1974 to the extent that the plan provides any hospital, surgical or medical expense benefits to employees or their dependents (as defined under the terms of the plan) directly or through insurance, reimbursement or otherwise.
(n) "Health insurance" means any hospital or medical expense policy, health, hospital or medical service corporation contract, and a plan provided by a municipal group-funded pool, or a health maintenance organization contract offered by an employer or any certificate issued under any such policies, contracts or plans. "Health insurance" does not include policies or certificates covering only accident, credit, dental, disability income, long-term care, hospital indemnity, medicare supplement, specified disease, vision care, coverage issued as a supplement to liability insurance, insurance arising out of a workers compensation or similar law, automobile medical-payment insurance, or insurance under which benefits are payable with or without regard to fault and which is statutorily required to be contained in any liability insurance policy or equivalent self-insurance.
(o) "Health maintenance organization" means any organization granted a certificate of authority under the provisions of the health maintenance organization act.
(p) "Insurance arrangement" means any plan, program, contract or any other arrangement under which one or more employers, unions or other organizations provide to their employees or members, either directly or indirectly through a group-funded pool, trust or third-party administrator, health care services or benefits other than through an insurer.
(q) "Insurer" means any insurance company, fraternal benefit society, health maintenance organization and nonprofit hospital and medical service corporation authorized to transact health insurance business in this state.
(r) "Medicaid" means the medical assistance program operated by the state under title XIX of the federal social security act.
(s) "Medicare" means coverage under both parts A and B of title XVIII of the federal social security act, 42 U.S.C. § 1395.
(t) "Medicare supplement policy" means a group or individual policy of accident and sickness insurance or a subscriber contract of hospitals and medical service associations or health maintenance organizations, other than a policy issued pursuant to a contract under section 1876 of the federal social security act (42 U.S.C. §§ 1395 et seq.) or an issued policy under a demonstration project specified in 42 U.S.C. § 1395ss(g)(1), which is advertised, marketed or designed primarily as a supplement to reimbursements under medicare for the hospital, medical or surgical expenses of persons eligible for medicare.
(u) "Member" means all insurers and insurance arrangements participating in the association.
(v) "Plan" means the Kansas uninsurable health insurance plan created pursuant to this act.
(w) "Plan of operation" means the plan to create and operate the Kansas uninsurable health insurance plan, including articles, bylaws and operating rules, adopted by the board pursuant to K.S.A. 40-2119, and amendments thereto.
History: L. 1992, ch. 209, § 2; L. 1997, ch. 190, § 7; L. 1999, ch. 106, § 1; L. 2004, ch. 159, § 8; L. 2010, ch. 108, § 2; July 1.
(a) There is hereby created a nonprofit legal entity to be known as the Kansas health insurance association. All insurers and insurance arrangements providing health care benefits in this state shall be members of the association. The association shall operate under a plan of operation established and approved under subsection (b) of this section and shall exercise its powers through a board of directors established under this section.
(b) (1) The board of directors of the association shall be selected by members of the association subject to the approval of the commissioner. To select the initial board of directors, and to initially organize the association, the commissioner shall give notice to all members in this state of the time and place of the organizational meeting. In determining voting rights at the organizational meeting, each member shall be entitled to one vote in person or by proxy. If the board of directors is not selected within 60 days after the organizational meeting, the commissioner shall appoint the initial board. In approving or selecting members of the board, the commissioner shall consider, among other things, whether all members are fairly represented. Members of the board may be reimbursed from the moneys of the plan for expenses incurred by them as members of the board of directors but shall not otherwise be compensated by the plan for their services.
(2) The board shall submit to the commissioner a plan of operation for the association and any amendments thereto necessary or suitable to assure the fair, reasonable and equitable administration of the plan. The plan of operation shall become effective upon approval in writing by the commissioner consistent with the date on which the coverage under this act must be made available. The commissioner shall, after notice and hearing, approve the plan of operation if it is determined to be suitable to assure the fair, reasonable and equitable administration of the plan and provides for the sharing of association losses on an equitable proportionate basis among the members of the association. If the board fails to submit a suitable plan of operation within 180 days after its appointment, or at any time thereafter fails to submit suitable amendments to the plan of operation, the commissioner shall, after notice and hearing, adopt and promulgate such reasonable rules and regulations as are necessary or advisable to effectuate the provisions of this section. Such rules and regulations shall continue in force until modified by the commissioner or superseded by a plan of operation submitted by the board and approved by the commissioner. The plan of operation shall, in addition to requirements enumerated elsewhere in this act:
(A) Establish procedures for the handling and accounting of assets and moneys of the plan;
(B) select an administering carrier in accordance with K.S.A. 40-2120, and amendments thereto;
(C) establish procedures for the collection of assessments from all members to provide for claims paid under the plan and for administrative expenses incurred or estimated to be incurred during the period for which the assessment is made. The level of payments shall be established by the board pursuant to K.S.A. 40-2121, and amendments thereto. Assessments shall be due and payable within 30 days of receipt of the assessment notice;
(D) establish appropriate cost control measures, including but not limited to, preadmission review, case management, utilization review and exclusions and limitations with respect to treatment and services under the plan; and
(E) develop and implement a program to publicize the existence of the plan, the eligibility requirements and procedures for enrollment and to maintain public awareness of the plan.
(F) Establish benefit levels, lifetime maximum benefits, and other coverage and eligibility parameters, and establish such other requirements and procedures as are necessary to assure the availability of a benefit program or programs conforming with the requirements of a qualified high risk pool as set forth in section 111 of Public Law 104-191 and amendments thereto.
(c) The association shall have the general powers and authority enumerated by this subsection in accordance with the plan of operation approved by the commissioner under subsection (b). The association shall have the general powers and authority granted under the laws of this state to insurers licensed to transact the kind of health service or insurance included under K.S.A. 40-2123, and amendments thereto, and in addition thereto, the specific authority and duty to:
(1) Enter into contracts as are necessary or proper to carry out the provisions and purposes of this act, including the authority, with the approval of the commissioner, to enter into contracts with similar plans of other states for the joint performance of common administrative functions, or with persons or other organizations for the performance of administrative functions;
(2) sue or be sued, including taking any legal actions necessary or proper for recovery of any assessments for, on behalf of, or against participating members;
(3) take such legal action as necessary to avoid the payment of improper claims against the association or the coverage provided by or through the plan;
(4) establish appropriate rates, rate schedules, rate adjustments, expense allowances, agents' referral fees, claim reserve formulas and any other actuarial function appropriate to the operation of the plan. During the first two years of operation of the plan, rates shall be established in an amount that is estimated by the board to cover all claims that may be made against the plan and the expenses of operating the plan. In following years, rates for coverage shall be reasonable in terms of the benefits provided, the risk experience and expenses of providing the coverage, except that such rates shall not exceed 150% of the average premium rate charged for similar coverage in the private market. Rates and rate schedules may be adjusted for appropriate risk factors such as age, sex and geographic location in claims costs and shall take into consideration appropriate risk factors in accordance with established actuarial and underwriting practices, however particular health conditions or illnesses shall not constitute appropriate risk factors;
(5) assess members of the association in accordance with the provisions of K.S.A. 40-2121, and amendments thereto;
(6) design the policies of insurance to be offered by the plan which shall cover at least the expenses enumerated in subsection (b) of K.S.A. 40-2123, and amendments thereto, but with such limitations and optional benefit levels as the plan prescribes;
(7) issue policies of insurance in accordance with the requirements of this act; and
(8) appoint from among members appropriate legal, actuarial and other committees as necessary to provide technical assistance in the operation of the plan, policy and other contract design, and any other function within the authority of the association.
(d) The association shall administer a reinsurance program for medicare supplement policies issued to Kansas residents who are eligible for medicare by reason of disability. All medicare supplement insurers issuing or renewing medicare supplement policies in this state shall be participants in such reinsurance program. (1) On or before May 1, 2000, and each year thereafter, each issuer of a medicare supplement policy in the state shall provide to the association a calendar year accounting of the medicare supplement policies delivered or issued for delivery in the state and covering persons eligible for medicare by reason of disability who are under age 65. (2) The accounting for medicare supplement policies covering persons eligible by reason of disability and under age 65 shall include the total number of such persons covered, the total premium earned on such persons, and the total claims expense incurred with respect to such persons during such year as paid through March 31, without estimates for incurred but not reported claims. (3) The association shall use such reports to develop the assessment required under subsection (d) of K.S.A. 40-2121, and amendments thereto.
History: L. 1992, ch. 209, § 3; L. 1996, ch. 98, § 1; L. 1997, ch. 190, § 8; L. 1999, ch. 106, § 2; July 1.
(a) The board shall select an insurer or third-party administrator to administer the plan. The board shall evaluate bids submitted by interested parties based on criteria established by the board which shall include:
(1) The bidder's proven ability to handle individual accident and health insurance;
(2) the efficiency of the bidder's claim paying procedure;
(3) an estimate of total charges for administering the plan; and
(4) the bidder's ability to administer the plan in a cost efficient manner.
(b) The administering carrier so selected shall serve for a period of three years subject to removal for cause. At least one year prior to the expiration of each three-year period of service, the board shall invite all interested parties, including the current administering carrier, to submit bids to serve as the administering carrier for the succeeding three-year period. Selection of the administering carrier for the succeeding period shall be made at least six months prior to the end of the current three-year period. The administering carrier shall be paid as provided in the plan of operation.
(c) The administering carrier shall perform all administrative, eligibility and administrative claims payment functions relating to the plan, including:
(1) Establishing a billing procedure for collection of premiums from insured persons. Billings shall be made on a periodic basis as determined by the board, which shall not be more frequent than a monthly billing;
(2) performing all necessary functions to assure timely payment of benefits to covered persons under the plan including making available information relating to the proper manner of submitting a claim for benefits to the plan, distributing forms upon which submission shall be made and evaluating the eligibility of each claim for payment under the plan;
(3) accepting payments of premiums from insured persons and remitting such payments to the state treasurer in accordance with the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount in the state treasury to the credit of the uninsurable health insurance plan fund established in K.S.A. 40-2126, and amendments thereto;
(4) submitting regular reports to the board regarding the operation of the plan. The frequency, content and form of the reports shall be as determined by the board;
(5) determining net written and earned premiums, the expense of administration, and the paid and incurred losses for each year and reporting such information to the board and the commissioner in a form and manner prescribed by the commissioner.
History: L. 1992, ch. 209, § 4; L. 2001, ch. 5, § 116; July 1.
(a) Following the close of each fiscal year, the administering carrier shall determine the net premiums, the plan expenses of administration and the incurred losses for the year. Any net loss of the plan determined after taking into account amounts transferred pursuant to subsection (h) of K.S.A. 79-4804, and amendments thereto, investment income and other appropriate gains and losses shall be assessed by the board to all members of the association in proportion to their respective shares of total health insurance premiums received in this state during the calendar year coinciding with or ending during the fiscal year of the association or any other equitable basis as may be provided in the plan of operation. For health maintenance organization members and insurance arrangements, the proportionate share of losses shall be determined through application of an equitable formula based upon claims paid on the value of services provided. In sharing losses, the board may abate or defer in whole or in part the assessment of a member if, in the opinion of the board, payment of the assessment would endanger the ability of the member to fulfill its contractual obligations. Health insurance benefits paid by an insurance arrangement that are less than an amount determined by the board to justify the cost of collection shall not be considered for purposes of determining assessments. Net gains, if any, shall be held at interest to offset future losses or allocated to reduce future premiums. In addition to any annual assessment at the close of the fiscal year of the plan authorized by this subsection, the board may provide for interim assessments of the members of the association, subject to the approval of the commissioner, as may be necessary to assure the financial capability of the association in meeting the incurred or estimated claims expenses of the plan and the operating and administrative expenses of the plan.
(b) In addition to any assessment authorized by subsection (a), the board may assess the members of the association for any initial costs associated with developing and implementing the plan to the extent such costs exceed the funds transferred to the uninsurable health insurance plan fund pursuant to K.S.A. 40-2125, and amendments thereto. Such assessment shall be allocated among the members of the association in the manner prescribed by subsection (a) of this section or any other equitable formula established by the board. Assessments under this subsection shall not be subject to the credit against premium tax under subsection (c).
(c) For taxable years commencing after December 31, 1995, and prior to January 1, 1998, 80% of any assessment made against a member of the association pursuant to subsection (a) of this section may be claimed by such member as a credit against such member's premium or privilege tax liability imposed by K.S.A. 12-2624, 40-252 or 40-3213, and amendments thereto, for the taxable year in which such assessment is paid. For the tax year commencing after December 31, 1997, 70% of any assessment made against a member of the association pursuant to subsection (a) of this section may be claimed by such member as a credit against such member's premium tax liability imposed by K.S.A. 12-2624, 40-252 or 40-3213, and amendments thereto, for the taxable year in which such assessment is paid.
For the tax year commencing after December 31, 1998, 65% of any assessment made against a member of the association pursuant to subsection (a) of this section may be claimed by such member as a credit against such member's premium tax liability imposed by K.S.A. 12-2624, 40-252 or 40-3213, and amendments thereto, for the taxable year in which such assessment is paid.
For the tax year commencing after December 31, 1999, 60% of any assessment made against a member of the association pursuant to subsection (a) of this section may be claimed by such member as a credit against such member's premium tax liability imposed by K.S.A. 12-2624, 40-252 or 40-3213, and amendments thereto, for the taxable year in which such assessment is paid.
(d) In addition to the assessments otherwise authorized herein, the board shall assess all issuers of medicare supplement policies covering persons within this state to the extent necessary to assure that the excess losses, if any, are distributed among such issuers of medicare supplement policies in a ratio equal to the percentage market share in Kansas of each such issuer for medicare supplement policies covering persons eligible for medicare by reason of age. The association shall also assess to such issuers of medicare supplement policies the costs the association incurs in operating the reinsurance program, making assessments, and collecting and distributing moneys, which shall be assessed pro rata to such issuers based on the market share of such issuers of medicare supplement policies covering persons eligible for medicare by reason of age. Such assessment shall occur not later than July 1 of each year, based on such excess losses and such market shares for the immediately preceding calendar year. Issuers of medicare supplement policies shall remit the amount so assessed to the association within the time frames established by the board for payment of assessment otherwise authorized herein. The association shall pay to any issuer of medicare supplement policies entitled thereto such amount as is necessary to result in the equalization among all issuers of medicare supplement policies in Kansas of excess losses in a proportion equivalent to the percentage market share in Kansas of each issuer of medicare supplement policies covering persons eligible for medicare by reason of age. The amount of such assessments received by an insurer shall not be accounted for as premium income nor shall such amounts be subject to premium tax. The amount of such assessments shall not be available for use in premium tax credits provided for under subsection (c) of K.S.A. 40-2122, and amendments thereto. The association shall have the ability to enforce assessments through its board.
History: L. 1992, ch. 209, § 5; L. 1996, ch. 98, § 2; L. 1997, ch. 190, § 9; L. 1999, ch. 106, § 3; L. 2000, ch. 34, § 1; July 1.
(a) The following individuals shall be eligible for plan coverage provided they meet the criteria set forth in subsection (b):
(1) Any person who has been a resident of this state for at least six months;
(2) any person who is a legal domiciliary of this state who previously was covered under the high risk pool of another state, provided they apply for coverage under the plan within 63 days of losing such other coverage for reasons other than fraud or nonpayment of premiums;
(3) any federally defined eligible individual who is a legal domiciliary of this state; or
(4) any federally defined eligible individual for FTAA.
(b) Those individuals who are eligible for plan coverage under subsection (a) must provide evidence satisfactory to the administering carrier that such person meets one of the following criteria:
(1) Such person has had health insurance coverage involuntarily terminated for any reason other than nonpayment of premium;
(2) such person has applied for health insurance and been rejected by two carriers because of health conditions;
(3) such person is a child under the age of 19 years and has been unable to purchase or obtain coverage under an individual health insurance policy providing health insurance coverage, because such coverage is not available for sale in the county in which the child resides;
(4) such person has applied for health insurance and has been quoted a premium rate which is in excess of the plan rate;
(5) such person has been accepted for health insurance subject to a permanent exclusion of a preexisting disease or medical condition;
(6) such person is a federally defined eligible individual; or
(7) such person is a federally defined eligible individual for FTAA.
(c) Each resident dependent of a person who is eligible for plan coverage shall also be eligible for plan coverage.
(d) The following persons shall not be eligible for coverage under the plan:
(1) Any person who is eligible for medicare or is eligible for medicaid benefits;
(2) any person who has had coverage under the plan terminated less than 12 months prior to the date of the current application, except that this provision shall not apply with respect to an applicant who is a federally defined eligible individual;
(3) any person who has received accumulated benefits from the plan equal to or in excess of the lifetime maximum benefits under the plan prescribed by K.S.A. 40-2124, and amendments thereto;
(4) any person having access to accident and health insurance through an employer-sponsored group or self-insured plan, including coverage under the consolidated omnibus budget reconciliation act (COBRA), except that the requirement for exhaustion of any available COBRA or state continuation is waived whenever such person:
(A) Is eligible for the credit for health care costs under section 35 of the internal revenue code of 1986; and
(B) has three months of prior creditable coverage as described in subsection (c) of K.S.A. 40-2124, and amendments thereto; or
(5) any person who is eligible for any other public or private program that provides or indemnifies for health services.
(e) Any person who ceases to meet the eligibility requirements of this section may be terminated at the end of a policy period.
(f) All plan members, insurers and insurance arrangements shall notify in writing persons denied health insurance coverage, for any reason, of the availability of coverage through the Kansas health insurance association.
History: L. 1992, ch. 209, § 6; L. 1995, ch. 129, § 1; L. 1997, ch. 190, § 10; L. 1998, ch. 174, § 4; L. 1999, ch. 30, § 1; L. 2004, ch. 159, § 9; L. 2011, ch. 111, § 6; June 2.
(a) The plan shall offer coverage to every eligible person pursuant to which such person's covered expenses shall be indemnified or reimbursed subject to the provisions of K.S.A. 40-2124, and amendments thereto.
(b) Except for those expenses set forth in subsection (c) of this section, expenses covered under the plan shall include expenses for:
(1) Services of persons licensed to practice medicine and surgery which are medically necessary for the diagnosis or treatment of injuries, illnesses or conditions;
(2) services of advanced registered nurse practitioners who hold a certificate of qualification from the board of nursing to practice in an expanded role or physicians assistants acting under the direction of a supervising physician when such services are provided at the direction of a person licensed to practice medicine and surgery and meet the requirements of paragraph (b)(1) above;
(3) services of licensed dentists when such procedures would otherwise be performed by persons licensed to practice medicine and surgery;
(4) emergency care, surgery and treatment of acute episodes of illness or disease as defined in the plan and provided in a general hospital or ambulatory surgical center as such terms are defined in K.S.A. 65-425, and amendments thereto;
(5) medically necessary diagnostic laboratory and x-ray services;
(6) drugs and controlled substances prescribed by a practitioner, as defined in K.S.A. 65-1626, and amendments thereto, or drugs and controlled substances prescribed by a mid-level practitioner as defined in K.S.A. 65-1626, and amendments thereto. Coverage for outpatient prescriptions shall be subject to a mandatory 50% coinsurance provision, and coverage for prescriptions administered to inpatients shall be subject to a coinsurance provision as established in the plan; and
(7) subject to the approval of the commissioner, the board shall also review and recommend the inclusion of coverage for mental health services and such other primary and preventive health care services as the board determines would not materially impair affordability of the plan.
(c) Expenses not covered under the plan shall include expenses for:
(1) Illness or injury due to an act of war;
(2) services rendered prior to the effective date of coverage under this plan for the person on whose behalf the expense is incurred;
(3) services for which no charge would be made in the absence of insurance or for which the insured bears no legal obligation to pay;
(4) (A) services or charges incurred by the insured which are otherwise covered by:
(i) Medicare or state law or programs;
(ii) medical services provided for members of the United States armed forces and their dependents or for employees of such armed forces;
(iii) military service-connected disability benefits;
(iv) other benefit or entitlement programs provided for by the laws of the United States (except title XIX of the social security act of 1965);
(v) workers compensation or similar programs addressing injuries, diseases, or conditions incurred in the course of employment covered by such programs;
(vi) benefits payable without regard to fault pursuant to any motor vehicle or other liability insurance policy or equivalent self-insurance.
(B) This exclusion shall not apply to services or charges which exceed the benefits payable under the applicable programs listed above and which are otherwise eligible for payment under this section.
(5) Services the provision of which is not within the scope of the license or certificate of the institution or individual rendering such service;
(6) that part of any charge for services or articles rendered or prescribed which exceeds the rate established by K.S.A. 40-2131, and amendments thereto, for such services;
(7) services or articles not medically necessary;
(8) care which is primarily custodial or domiciliary in nature;
(9) cosmetic surgery unless provided as the result of an injury or medically necessary surgical procedure;
(10) eye surgery if corrective lenses would alleviate the problem;
(11) experimental services or supplies not generally recognized as the normal mode of treatment for the illness or injury involved;
(12) service of a blood donor and any fee for failure of the insured to replace the first three pints of blood provided in each calendar year; and
(13) personal supplies or services provided by a health care facility or any other nonmedical or nonprescribed supply or service.
(d) Except as expressly provided for in this act, no law requiring the coverage or the offer of coverage of a health care service or benefit shall apply to the plan.
(e) A plan may incorporate provisions that will direct covered persons to the most appropriate lowest cost health care provider available.
History: L. 1992, ch. 209, § 7; L. 1993, ch. 132, § 5; L. 1997, ch. 184, § 1; L. 1999, ch. 115, § 6; L. 2007, ch. 177, § 28; L. 2014, ch. 131, § 3; July 1, 2015.
(a) Coverage under the plan shall be subject to both deductible and coinsurance provisions set by the board. The plan shall offer to current participants and new enrollees no fewer than four choices of deductible and copayment options. Coverage shall contain a coinsurance provision for each service covered by the plan, and such copayment requirement shall not be subject to a stop-loss provision. Such coverage may provide for a percentage or dollar amount of coinsurance reduction at specific thresholds of copayment expenditures by the insured.
(b) Coverage under the plan shall be subject to a maximum lifetime benefit of $4,000,000 per covered individual.
(c) Coverage under the plan shall exclude charges or expenses incurred during the first 90 days following the effective date of coverage as to any condition:
(1) Which manifested itself during the six-month period immediately prior to the application for coverage in such manner as would cause an ordinarily prudent person to seek diagnosis, care or treatment; or
(2) for which medical advice, care or treatment was recommended or received in the six-month period immediately prior to the application for coverage. In succeeding years of operation of the plan, coverage of preexisting conditions may be excluded as determined by the board, except that no such exclusion shall exceed 180 calendar days, and no exclusion shall be applied to either a federally defined eligible individual provided that application for coverage is made not later than 63 days following the applicant's most recent prior creditable coverage or an individual under the age of 19 years who is eligible for enrollment in the plan under paragraph (3) of subsection (b) of K.S.A. 40-2122, and amendments thereto. For any individual who is eligible for the credit for health insurance costs under section 35 of the internal revenue code of 1986, the preexisting conditions limitation will not apply whenever such individual has maintained creditable health insurance coverage for an aggregate period of three months, not counting any period prior to a 63-day break in coverage, as of the date on which such individual seeks to enroll in coverage provided by this act.
(d) (1) Benefits otherwise payable under plan coverage shall be reduced by all amounts paid or payable through any other health insurance, or insurance arrangement, and by all hospital and medical expense benefits paid or payable under any workers compensation coverage, automobile medical payment or liability insurance whether provided on the basis of fault or nonfault, and by any hospital or medical benefits paid or payable under or provided pursuant to any state or federal law or program.
(2) The association shall have a cause of action against an eligible person for the recovery of the amount of benefits paid which are not covered expenses. Benefits due from the plan may be reduced or refused as a set-off against any amount recoverable under this section.
History: L. 1992, ch. 209, § 8; L. 1994, ch. 125, § 1; L. 1997, ch. 190, § 11; L. 2004, ch. 159, § 10; L. 2008, ch. 164, § 4; L. 2011, ch. 111, § 7; L. 2013, ch. 97, § 6; July 1.
Upon request of the commissioner to provide for amounts that may be required to assist in financing the commencement of operations of the plan, the pooled money investment board shall loan to the uninsurable health insurance plan fund not to exceed $500,000 on July 15, 1992, July 15, 1993, July 15, 1994, and July 15, 1995. The total of the amounts so loaned shall be repaid from the uninsurable health insurance plan fund over the period of 10 fiscal years after fiscal year 1994 in accordance with appropriation acts. Amounts loaned under this section shall not bear interest.
History: L. 1992, ch. 209, § 9; July 1.
There is hereby created in the state treasury a fund to be known and designated as the uninsurable health insurance plan fund. Periodically, the plan shall compare the premiums earned to the losses and expenses sustained by the plan. If there is any excess of losses and expenses over premiums earned, an amount determined by the commissioner to be necessary to fund such excess losses and expenses shall be transferred from the uninsurable health insurance plan fund to the plan to pay claims and expenses resulting from its operation. If there is any surplus of premiums earned over losses and expenses, such surplus shall be transferred to the uninsurable health insurance plan fund from the plan. All expenditures from the uninsurable health insurance plan fund shall be made in accordance with appropriation acts upon warrants of the director of accounts and reports issued pursuant to vouchers approved by the commissioner or a person or persons designated by the commissioner.
History: L. 1992, ch. 209, § 10; July 1.
(a) Not later than July 1, 1993, and July 1 of each succeeding year, the board shall submit an audited financial report for the plan for the preceding calendar year to the commissioner in a form provided or prescribed by the commissioner.
(b) The financial status of the plan shall be subject to examination by the commissioner or the commissioner's designee. Such examination shall be conducted at least once every five years. The commissioner shall transmit a copy of the results of such examination to the legislature by February 1 of the year following the year in which the examination is conducted.
History: L. 1992, ch. 209, § 11; L. 2015, ch. 83, § 4; July 1.
The commissioner shall submit annually to the joint committee on health care decisions for the 90's the financial report of the plan, the number of individuals covered and the specific coverage of the plan. The report shall compare the provider reimbursement rates to those of medicaid and medicare, and include the number of participating providers and their locations and other information as the joint committee shall request.
History: L. 1992, ch. 209, § 12; July 1.
If, by July 1, 1995, operation of the Kansas uninsurable health insurance plan has inadequate participation; or activity in the health insurance marketplace materially impairs affordability or marketability of the plan; or the commissioner deems other factors jeopardize the operation of the plan, the commissioner shall develop and submit to the joint committee on health care decisions for the 90's recommendations the commissioner deems necessary to ensure the successful operation of the plan.
History: L. 1992, ch. 209, § 13; July 1.
The association or a member insurer thereof shall provide every applicant for health coverage under the provisions of this act with a form for making a declaration directing the withholding or withdrawal of life-sustaining procedures in a terminal condition in substantial conformance with subsection (c) of K.S.A. 65-28,103, and amendments thereto. If such applicant elects to execute such declaration the applicant shall submit a copy of such declaration to the association or member insurer thereof, and such copy shall be retained and made a part of the applicant's permanent records.
History: L. 1992, ch. 209, § 14; July 1.
Unless otherwise specified by the plan, as a prerequisite for payment from the plan, each provider of health services to persons covered under the plan shall enter into a provider agreement with the association under which reimbursement for services provided shall be at rates established by the board. Providers shall not charge persons covered under the plan with the exception of authorized deductible and co-pay requirements and noncovered services if the recipient has been informed in advance of the noncoverage.
History: L. 1992, ch. 209, § 15; July 1.
K.S.A. 40-2132 through 40-2137, and amendments thereto, shall be known and may be cited as the "long-term care partnership program act."
History: L. 2008, ch. 51, § 1; July 1.
As used in K.S.A. 40-2132 through 40-2137, and amendments thereto: (a) "Asset disregard" means, with regard to the state's medical assistance program, disregarding any assets or resources in an amount equal to the insurance benefit payments that are made to or on behalf of an individual who is a beneficiary under a qualified long-term care insurance partnership policy.
(b) "Long-term care insurance policy" means a policy as defined in K.S.A. 40-2227, and amendments thereto.
(c) "Long-term care partnership program" means a qualified state long-term care insurance partnership as defined in section 1917(b) of the social security act, 42 U.S.C. § 1396p.
(d) "Long-term care partnership program policy" means a qualified long-term care insurance policy that the commissioner of insurance certifies as meeting the requirements of section 1917(b) of the social security act, 42 U.S.C. § 1396p, section 6021 of the federal deficit reduction act of 2005, public law 109-171, and any applicable federal regulations or guidelines.
(e) "Medicaid" means the program of medical assistance operated by the state under title XIX of the federal social security act, 42 U.S.C. §§ 1396 et seq., and amendments thereto.
(f) "State plan amendment" means the amendment to the state's medicaid state plan implementing the state qualified long-term care insurance partnership program authorized in section 6020 of the federal deficit reduction act of 2005, public law 109-171, and any applicable federal regulations or guidelines.
History: L. 2008, ch. 51, § 2; July 1.
(a) Subject to the provisions of subsection (e), the department of health and environment in conjunction with the Kansas department of insurance shall establish a long-term care partnership program in Kansas to provide for the financing of long-term care through a combination of private insurance and medical assistance. The long-term care partnership program shall:
(1) Provide incentives for individuals to insure against the costs of providing for their long-term care needs;
(2) provide a mechanism for individuals to qualify for coverage under medical assistance while having certain assets disregarded for eligibility determinations and recovery; and
(3) reduce the financial burden on the state's medical assistance program by encouraging the pursuit of private initiatives using qualified long-term care partnership insurance policies.
(b) An individual who is a beneficiary of a Kansas long-term care partnership program policy shall be eligible for assistance under the state's medical assistance program using the asset disregard as provided under subsection (e).
(c) The department of health and environment shall pursue reciprocal agreements with other states to extend the asset disregard to Kansas residents who purchased long-term care partnership policies in other states that are compliant with title VI, section 6021 of the federal deficit reduction act of 2005, public law 109-171, and any applicable federal regulations or guidelines.
(d) As provided under subsection (e), certain assets of an individual who has received benefits from a qualified long-term care partnership policy shall not be considered when determining:
(1) The individual's medical assistance eligibility; and
(2) any subsequent recovery by the state for a payment for medical services or long-term care services made by the medical assistance program on behalf of the individual.
(e) Under the individual's long-term care insurance policy if the individual is a beneficiary of a qualified long-term care partnership program policy at the time the individual applies for benefits under the Kansas medical assistance program, the assets an individual may own and retain under Kansas medical assistance program and still qualify for benefits under the program shall be increased dollar-for-dollar for each dollar paid out after the effective date of the state plan amendment, or after the issue date of a policy exchanged, whichever is later.
(f) If the long-term care partnership program established by this act is discontinued, any individual who purchased a Kansas long-term care partnership program policy before the date the program was discontinued shall be eligible to receive asset disregard if allowed as provided by title VI, section 6021 of the federal deficit reduction act of 2005, public law 109-171.
(g) The department of health and environment, the Kansas department for children and families, the Kansas department for aging and disability services and the department of insurance shall post, on their respective websites, information on how to access the national clearinghouse established under the federal deficit reduction act of 2005, public law 109-171, when the national clearinghouse becomes available to consumers.
History: L. 2008, ch. 51, § 3; L. 2012, ch. 102, § 16; L. 2014, ch. 115, § 187; July 1.
The commissioner of insurance shall: (a) Determine the level of inflation protection reasonably necessary to protect individuals who purchase a Kansas long-term care partnership program policy.
(b) Not impose any requirement affecting the terms or benefits of qualified long-term partnership program policies other than the requirements of section 1917 (b) of the social security act, 42 U.S.C. § 1396p, section 6021 of the federal deficit reduction act of 2005, public law 109-171, or any applicable federal regulation or guidelines unless the commissioner imposes such a requirement on all long-term care insurance policies sold in this state without regard to whether the policy is covered under the partnership or is offered in connection with such partnership.
History: L. 2008, ch. 51, § 4; July 1.
Each issuer of qualified long-term care partnership program policies in this state shall: (a) Provide regular reports to both the secretary of the United States department of human services in accordance with federal law and regulations and to the secretary of health and environment and the commissioner of insurance as provided in section 6021 of the federal deficit reduction act of 2005, public law 109-171.
(b) Provide to consumers a notice explaining the benefits associated with a partnership policy and indicating that at the time issued, the policy is a qualified state long-term care insurance partnership policy at a time and in a manner to be determined by the commissioner of insurance.
(c) Submit a partnership certification form signed by an officer of the company with all policies submitted for certification as partnership policies.
(d) Obtain verification that producers receive training required by the commissioner of insurance before a producer is permitted to sell, solicit or negotiate the insurer's long-term care insurance products, maintain records of compliance, and make the verification available to the commissioner of insurance upon request.
(e) Maintain records with respect to the training of its producers concerning the distribution of its partnership policies that will allow the department of insurance to provide assurance to the department of health and environment that producers have received the training required by the commissioner of insurance and that producers have demonstrated an understanding of the partnership policies and their relationship to public and private coverage of long-term care, including medical assistance in this state. These records shall be maintained and made available to the commissioner of insurance upon request.
(f) (1) Offer, on a one-time basis, in writing, to all existing policyholders that were issued long-term care coverage of the type certified by the insurer on or after February 8, 2006, the option to exchange their existing long-term care coverage for coverage that is intended to qualify under Kansas' long-term care partnership program. The mandatory offer of an exchange shall only apply to products issued by the insurer that are comparable to the type of policy form, such as group policies and individual policies and on the policy series that the company has certified as partnership qualified;
(2) the offer shall remain open for a minimum of 45 days from the date of mailing by the insurer;
(3) the offer shall be made on a nondiscriminatory basis without regard to the age or health status of the insured. However, the insurer may underwrite if the policy is amended to provide additional benefits or the exchange would require the issuance of a new policy. Any portion of the policy that was issued prior to the exchange date shall be priced based on the policyholder's age when the policy was originally issued. Any portion of the policy that is added as a result of the exchange may be priced based on the policyholder's age at the time of the exchange;
(4) if there is no change in coverage material to the risk, policies exchanged under this provision shall not be subject to any medical underwriting;
(5) notwithstanding paragraphs (1) and (3), an insurer is not required to offer an exchange to an individual who is eligible for benefits within an elimination period, who is, or who has been in claim status or who would not be eligible to apply for coverage due to issue age or plan design limitations under the new policy. The insurer may require that policyholders meet all eligibility requirements, including plan design, underwriting, if applicable and payment of the required premium;
(6) policies issued pursuant to this section shall be considered exchanges and not replacements and are not subject to K.A.R. 40-4-37i; and
(7) a policy received in an exchange after the effective date of the long-term care partnership program act is treated as newly issued and is eligible for partnership policy status. For purposes of applying the medicaid rules relating to Kansas' long-term care partnership program, the addition of a rider, endorsement or change in schedule page for a policy may be treated as giving rise to an exchange.
History: L. 2008, ch. 51, § 5; L. 2009, ch. 83, § 25; L. 2012, ch. 102, § 17; July 1.
The commissioner of insurance may promulgate rules and regulations as necessary to carry out the provisions of this act.
History: L. 2008, ch. 51, § 6; July 1.
(a) For insurance policies issued or renewed on or after July 1, 2010, a property insurer shall transmit claims payments directly to the primary policyholder by check or other allowable payment method, payable to the primary policyholder only, without requiring dual endorsement from any mortgageholder or lienholder for amounts payable under the insurance policy for personal property and contents, additional living expenses and other covered items that are not subject to a recorded security interest.
(b) This section shall be a part of and supplemental to the insurance code of the state of Kansas.
History: L. 2010, ch. 103, § 2; July 1.
(a) Any portion of the health insurance premiums paid by consumers that are in fact passed through as commissions shall not be considered a part of administrative expenses and shall be excluded from all determinations of the medical loss ratio calculations when totaling the ratio of premiums paid by a consumer used for claims versus administrative expenses for a policy. Any portion of premiums identified as commissions must be paid to a nonemployee in order to be excluded. Any portion of the premiums retained by the insurance company or its employees must be considered as a part of the calculation of the medical loss ratio as administrative related income.
(b) For the purposes of this section, "commission" means commissions to agents, consultation fees, counseling fees, consultant fees, and similar advising or sales compensation to a nonemployee licensed agent.
History: L. 2013, ch. 97, § 13; July 1.
(a) (1) Except as provided in paragraph (2), whenever a state agency or municipality provides for the payment of premiums for any health benefit plan for law enforcement officers employed by such state agency or such municipality, the state agency or municipality shall pay premiums for the continuation of coverage under COBRA for the surviving spouse and eligible dependent children under the age of 26 years of a law enforcement officer who dies in the line of duty. Premiums for continuation of coverage under COBRA shall be paid for 18 months.
(2) Neither the state agency nor the municipality may be required to pay the premiums described in paragraph (1) for a surviving spouse:
(A) On or after the end of the 18th calendar month after the date of death of the deceased law enforcement officer;
(B) upon the remarriage of the deceased law enforcement officer's surviving spouse; or
(C) upon the deceased law enforcement officer's surviving spouse reaching the age of 65.
(b) For the purposes of this section:
(1) "Health benefit plan" shall have the meaning ascribed to such term in K.S.A. 40-4602, and amendments thereto.
(2) "Law enforcement officer" means an employee employed by:
(A) A law enforcement agency whose principal duties are engagement in the enforcement of law and maintenance of order within this state and its political subdivisions and who is certified pursuant to the provisions of the Kansas law enforcement training act, K.S.A. 74-5601 et seq., and amendments thereto; or
(B) the Kansas department of corrections.
(3) "Municipality" means a city, county or township.
(4) "State agency" shall have the meaning ascribed to such term in K.S.A. 75-3701, and amendments thereto.
History: L. 2013, ch. 109, § 2; L. 2014, ch. 101, § 4; July 1.
(a) (1) Except as provided in paragraph (2), whenever a municipality provides for the payment of premiums for any health benefit plan for its emergency personnel, it shall pay premiums for the continuation of coverage under COBRA for the surviving spouse and eligible dependent children under the age of 26 years of any emergency personnel who dies in the line of duty. Premiums for continuation of coverage under COBRA shall be paid for 18 months.
(2) A municipality may not be required to pay the premiums described in paragraph (1) for a surviving spouse:
(A) On or after the end of the 18th calendar month after the date of death of the deceased emergency personnel;
(B) upon the remarriage of the deceased emergency personnel's surviving spouse; or
(C) upon the deceased emergency personnel's surviving spouse reaching the age of 65.
(b) For the purposes of this section:
(1) "Emergency personnel" means an emergency medical service provider as such term is defined in K.S.A. 65-6112, and amendments thereto.
(2) "Health benefit plan" shall have the meaning ascribed to it in K.S.A. 40-4602, and amendments thereto.
(3) "Municipality" means a city or county.
History: L. 2014, ch. 101, § 3; L. 2019, ch. 64, § 6; June 6.
(a) This act shall be known and may be cited as the fair access to insurance requirements plan act, or the FAIR plan act.
(b) The purpose of this act is to make available basic property and casualty insurance to persons having property interests in this state who are in good faith entitled to, but who are unable to, procure such coverage through the voluntary market. The FAIR plan shall provide for the equitable distribution and placement of risks among all member insurers who have voluntarily elected to participate and shall operate subject to the provisions and conditions of this act. This act supersedes the prior authority of the FAIR plan to act under K.S.A. 40-2101, and amendments thereto.
(c) All policies shall be issued on the forms and in accordance with the reasonable rates and rating procedures approved by the commissioner of insurance.
(d) All policies shall be issued for a term of one year.
(e) Within 60 days of the filing of the proposed rates, the commissioner of insurance shall enter an order either approving or disapproving, in whole or in part, the rate plan filed. The commissioner of insurance may, upon notice to the facility, extend the period for entering an order for an additional 30 days. No policies or endorsements shall be issued applying the proposed rates until such time as the commissioner of insurance approves such rates. An order disapproving a rate shall state the grounds for the disapproval and the findings in support thereof.
(f) The commissioner of insurance may adopt rules and regulations to administer the provisions of this act. Any such rules and regulations deemed necessary shall be promulgated no later than January 1, 2018.
History: L. 2017, ch. 6, § 1; July 1.
(a) This section shall be known as and may be cited as the predetermination of health care benefits act.
(b) (1) Health plans that receive an electronic health care predetermination request consistent with the requirements set forth in subsection (c) shall provide to the requesting healthcare provider information on the amounts of expected benefits coverage on the procedures specified in the request that is accurate at the time of the health plan's response.
(2) Any predetermination request provided under this section in good faith shall be deemed to be an estimate only and shall not be binding upon the health plan with regard to the final amount of benefits actually provided by the health plan.
(c) The amounts for the referenced services in subsection (b) shall include:
(1) The amount the patient will be expected to pay, clearly identifying any deductible amount, coinsurance and copayment;
(2) the amount the healthcare provider will be paid;
(3) the amount the institution will be paid; and
(4) whether any payments will be reduced, but not to $0, or increased from the agreed fee schedule amounts, and if so, the health care policy that identifies why the payments will be reduced or increased.
(d) This electronic request and response transaction shall be known as the health care predetermination request and response. The health care predetermination request and response shall be conducted in accordance with the transactions and code sets standards promulgated pursuant to the health insurance portability and accountability act of 1996 (HIPAA) public law 104-191, and 45 code of federal regulations, parts 160 and 162 or later versions, specifically, the ASC X12 837 health care predetermination: Professional transaction or the ASC X12 837 healthcare predetermination; institutional and any of their respective successors, without regard to whether this transaction is mandated by HIPAA. It shall also comply with any operating rules that may be adopted with respect to this transaction or any of its successors, without regard to whether these operating rules are mandated by HIPAA.
(e) The health plan's response to the health care predetermination request shall be returned using the same transmission method as that of the submission.
(f) For purposes of this section:
(1) "Health plan" shall have the same meaning as that term is defined in K.S.A. 40-4602, and amendments thereto;
(2) "healthcare provider" shall have the same meaning as the term "provider" as such term is defined in K.S.A. 40-4602, and amendments thereto. Healthcare provider shall also include:
(A) An advanced practice registered nurse as defined in K.S.A. 65-1113, and amendments thereto; and
(B) a physician assistant as defined in K.S.A. 65-28a02, and amendments thereto; and
(3) "payment" means only a deductible or coinsurance payment and does not include a copayment.
(g) This act precludes the collection of any payment prior to or as a condition of receiving the health benefit services that are the subject of a predetermination request, unless this practice is not prohibited by the provider agreement with the health plan.
(h) The commissioner of insurance shall adopt rules and regulations necessary to carry out the provisions of this section.
History: L. 2014, ch. 109, § 1; July 1, 2017.
(a) The term "policy of accident and sickness insurance" as used herein includes any policy or contract insuring against loss resulting from sickness or bodily injury or death by accident, or both, issued by a stock, or mutual company or association or any other insurer.
(b) The term "policy of stop loss or excess loss insurance coverage" means a policy, contract, endorsement, attachments, amendments or other modifications that insure against losses of the policyholder issued by a stock, or mutual company or association or any other insurer.
History: L. 1951, ch. 296, § 1; L. 1997, ch. 190, § 24; July 1.
(a) No policy of accident and sickness insurance shall be delivered or issued for delivery to any person in this state unless:
(1) The entire money and other considerations therefor are expressed therein;
(2) the time at which the insurance takes effect and terminates is expressed therein;
(3) it purports to insure only one person, except that a policy may insure, originally or by subsequent amendment, upon the application of an adult member of a family who shall be deemed the policyholder, any two or more eligible members of such family, including husband, wife, dependent children or any children under a specified age which shall not exceed nineteen years and any other person dependent upon the policyholder;
(4) the style, arrangement and over-all appearance of the policy give no undue prominence to any portion of the text, and unless every printed portion of the text of the policy and of any endorsements or attached papers is plainly printed in lightfaced type of a style in general use, the size of which shall be uniform and not less than 10-point with a lower-case unspaced alphabet length not less than 120-point (the "text" shall include all printed matter except the name and address of the insurer, name or title of the policy, the brief description if any, and captions and subcaptions);
(5) the exceptions and reductions of indemnity are set forth in the policy and, except those which are set forth in K.S.A. 40-2203, and amendments thereto, are printed, at the insurer's option, either included with the benefit provision to which they apply, or under an appropriate caption such as "Exceptions," or "Exceptions and reductions," provided, that if an exception or reduction specifically applies only to a particular benefit of the policy, a statement of such exception or reduction shall be included with the benefit provision to which it applies;
(6) each such form, including riders and endorsements, shall be identified by a form number in the lower left-hand corner of the first page thereof;
(7) it contains no provision purporting to make any portion of the charter, rules, constitution, or bylaws of the insurer a part of the policy unless such portion is set forth in full in the policy, except in the case of the incorporation of, or reference to, a statement of rates or classification of risks, or short-rate table filed with the commissioner of insurance; and
(8) any provision purporting to base the payment of benefits on "usual, customary and reasonable charges" or a standard of similar import is specifically defined and the determination of payable benefits is developed from a statistically valid sample which: (A) Equitably recognizes geographic variations; (B) is produced at least every six months; and (C) is collected on the basis of the most current codes and nomenclature developed and maintained by recognized authorities.
(b) If any policy is issued by an insurer domiciled in this state for delivery to a person residing in another state, and if the official having responsibility for the administration of the insurance laws of such other state shall have advised the commissioner of insurance that any such policy is not subject to approval or disapproval by such official, the commissioner of insurance may by ruling require that such policy meet the standards set forth in subsection (a) of this section and in K.S.A. 40-2203, and amendments thereto.
History: L. 1951, ch. 296, § 2; L. 1994, ch. 16, § 1; L. 2004, ch. 128, § 5; July 1.
(A) Required provisions. Except as provided in paragraph (C) of this section every such policy delivered or issued for delivery to any person in this state shall contain the provisions specified in this subsection in the words in which the same appear in this section, but the insurer, at its option, may substitute for one or more of such provisions corresponding provisions of different wording approved by the commissioner of insurance which are in each instance not less favorable in any respect to the insured or the beneficiary. Such provisions shall be preceded individually by the caption appearing in this subsection or at the option of the insurer, by such appropriate individual or group captions or subcaptions as the commissioner of insurance may approve.
(1) A provision as follows:
"Entire contract; changes:
This policy, including the endorsement and the attached papers, if any, constitutes the entire contract of insurance. No change in this policy shall be valid until approved by an executive officer of the insurer and unless such approval be endorsed hereon or attached hereto. No agent has authority to change this policy or to waive any of its provisions."
(2) A provision as follows:
"Time limit on certain defenses:
(a) After two years from the date of issue of this policy no misstatements, except fraudulent misstatement, made by the applicant in the application for such policy shall be used to void the policy or to deny a claim for loss incurred or disability (as defined in the policy) commencing after the expiration of such two-year period."
The foregoing policy provision shall not be so construed as to affect any legal requirement for avoidance of a policy or denial of a claim during such initial two year period, nor to limit the application of subsections (B)(1), (2), (3), (4) and (5) in the event of misstatement with respect to age or occupation or other insurance.
A policy which the insured has the right to continue in force subject to its terms by the timely payment of premium (1) until at least age 50, or (2) in the case of a policy issued after age 44, for at least five years from its date of issue, may contain in lieu of the foregoing the following provision (from which the clause in parentheses may be omitted at the insurer's option) under the caption
"Incontestable":
"After this policy has been in force for a period of two years during the lifetime of the insured (excluding any period during which the insured is disabled), it shall become incontestable as to the statements contained in the application."
(b) "No claim for loss incurred or disability (as defined in the policy) commencing after two years from the date of issue of this policy shall be reduced or denied on the ground that a disease or physical condition not excluded from coverage by name or specific description effective on the date of loss has existed prior to the effective date of coverage of this policy."
(3) A provision as follows:
"Grace period:
A grace period of __________" (insert a number not less than "7" for weekly premium policies, "10" for monthly premium policies and "31" for all other policies) "days will be granted for the payment of each premium falling due after the first premium, during which grace period the policy shall continue in force." A policy which contains a cancellation provision may add, at the end of the above provision, "subject to the right of the insurer to cancel in accordance with the cancellation provision hereof." A policy in which the insurer reserves the right to refuse any renewal shall have, at the beginning of the above provision, "Unless not less than five days prior to the premium due date the insurer has delivered to the insured or has mailed to the last address as shown by the records of the insurer written notice of its intention not to renew this policy beyond the period for which the premium has been accepted."
(4) A provision as follows:
"Reinstatement:
If any renewal premium be not paid within the time granted the insured for payment, a subsequent acceptance of premium by the insurer or by any agent duly authorized by the insurer to accept such premium without requiring in connection therewith an application for reinstatement shall reinstate the policy. If the insurer or such agent requires an application for reinstatement and issues a conditional receipt for the premium tendered, the policy will be reinstated upon approval of such application by the insurer or, lacking such approval, upon the 45th
day following the date such conditional receipt unless the insurer has previously notified the insured in writing of its disapproval of such application. The reinstated policy shall cover only loss resulting from such accidental injury as may be sustained after the date of reinstatement and loss due to such sickness as may begin more than ten days after such date. In all other respects the insured and insurer shall have the same rights thereunder as they had under the policy immediately before the due date of the defaulted premium, subject to any provisions endorsed hereon or attached hereto in connection with the reinstatement. Any premium accepted in connection with a reinstatement shall be applied to a period for which premium has not been previously paid, but not to any period more than 60 days prior to the date of reinstatement." The last sentence of the above provision may be omitted from any policy which the insured has the right to continue in force subject to its terms by the timely payment of premiums (1) until at least age 50 or, (2) in the case of a policy issued after age 44, for at least five years from its date of issue.
(5) A provision as follows:
"Notice of claim:
Written notice of claim must be given to the insurer within 20 days after the occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible. Notice given by or on behalf of the insured or the beneficiary to the insurer at ______________" (insert the location of such office as the insurer may designate for the purpose), "or to any authorized agent of the insurer, with information sufficient to identify the insured, shall be deemed notice to the insurer." In a policy providing a loss-of-time benefit which may be payable for at least two years, an insurer may at its option insert the following between the first and second sentences of the above provisions: "Subject to the qualification set forth below, if the insured suffers loss of time on account of disability for which indemnity may be payable for at least two years, he shall, at least once in every six months after having given notice of claim, give to the insurer notice of continuance of said disability, except in the event of legal incapacity. The period of six months following any filing of proof by the insured or any payment by the insurer on account of such claim or any denial of liability in whole or in part by the insurer shall be excluded in applying this provision. Delay in the giving of such notice shall not impair the insured's right to any indemnity which would otherwise have accrued during the period of six months preceding the date on which such notice is actually given.
(6) A provision as follows:
"Claim forms:
The insurer, upon receipt of a notice of claim, will furnish to the claimant such forms as are usually furnished by it for filing proofs of loss. If such forms are not furnished within 15 days after the giving of such notice the claimant shall be deemed to have complied with the requirements of this policy as to proof of loss upon submitting within the time fixed in the policy for filing proofs of loss, written proof covering the occurrence, the character and the extent of the loss for which claim is made."
(7) A provision as follows:
"Proofs of loss:
Written proof of loss must be furnished to the insurer at its said office in case of claim for loss for which this policy provides any periodic payment contingent upon continuing loss within 90 days after the termination of the period for which the insurer is liable and in case of claim for any other loss within 90 days after the date of such loss. Failure to furnish such proof within the time required shall not invalidate nor reduce any claim if it was not reasonably possible to give proof within such time, provided such proof is furnished as soon as reasonably possible and in no event, except in the absence of legal capacity, later than one year from the time proof is otherwise required."
(8) A provision as follows:
"Time of payment of claims:
Indemnities payable under this policy for any loss other than loss for which this policy provides any periodic payment will be paid immediately upon receipt of due written proof of such loss. Subject to due written proof of loss, all accrued indemnities for loss for which this policy provides periodic payment will be paid ______" (insert period for payment which must not be less frequently than monthly) "and any balance remaining unpaid upon the termination of liability will be paid immediately upon receipt of due written proof."
(9) A provision as follows:
"Payment of claims:
Indemnity for loss of life will be payable in accordance with the beneficiary designation and the provisions respecting such payment which may be prescribed herein and effective at the time of payment. If no such designation or provision is then effective, such indemnity shall be payable to the estate of the insured. Any other accrued indemnities unpaid at the insured's death, at the option of the insurer, may be paid either to such beneficiary or to such estate. All other indemnities will be payable to the insured." The following provisions, or either of them, may be included with the foregoing provision at the option of the insurer: "If any indemnity of this policy shall be payable to the estate of the insured, or to an insured or beneficiary who is a minor or otherwise not competent to give a valid release, the insurer may pay such indemnity, up to an amount not exceeding $______" (insert an amount which shall not exceed $1,000), "to any relative by blood or connection by marriage of the insured or beneficiary who is deemed by the insurer to be equitably entitled thereto. Any payment made by the insurer in good faith pursuant to this provision shall fully discharge the insurer to the extent of such payment. Subject to any written direction of the insured in the application or otherwise all or a portion of any indemnities provided by this policy on account of hospital, nursing, medical, or surgical services may, at the insurer's option and unless the insured requests otherwise in writing not later than the time of filing proofs of such loss, be paid directly to the hospital or person rendering such services; but it is not required that the service be rendered by a particular hospital or person."
(10) A provision as follows:
"Physical examinations and autopsy:
The insurer at its own expense shall have the right and opportunity to examine the person of the insured when and as often as it may reasonably require during the pendency of a claim hereunder and to make an autopsy in case of death where it is not forbidden by law."
(11) A provision as follows:
"Legal actions:
No action at law or in equity shall be brought to recover on this policy prior to the expiration of 60 days after written proof of loss has been furnished in accordance with the requirements of this policy. No such action shall be brought after the expiration of five years after the time written proof of loss is required to be furnished."
(12) A provision as follows:
"Change of beneficiary:
Unless the insured makes an irrevocable designation of beneficiary, the right to change of beneficiary is reserved to the insured and the consent of the beneficiary or beneficiaries shall not be requisite to surrender or assignment of this policy or to any change of beneficiary or beneficiaries, or to any other changes in this policy."
The first clause of this provision, relating to the irrevocable designation of beneficiary, may be omitted at the insurer's option.
(13) A provision as follows:
"Cancellation by insured:
The insured may cancel this policy at any time by written notice delivered or mailed to the insurer, effective upon receipt of such notice or on such later date as may be specified in such notice. In the event of cancellation or death of the insured, the insurer will promptly return the unearned portion of any premium paid. The earned premium shall be computed by the use of the short-rate table last filed with the state official having supervision of insurance in the state where the insured resided when the policy was issued. Cancellation shall be without prejudice to any claim originating prior to the effective date of cancellation." When approved by the commissioner, the "cancellation" provision appearing in subsection (B)(8) may be substituted for the above.
(B)
Other provisions:
Except as provided in paragraph (C) of this section, no such policy delivered or issued for delivery to any person in this state shall contain provisions respecting the matters set forth below unless such provisions are in the words in which the same appear in this section, but the insurer may, at its option, use in lieu of any such provision a corresponding provision of different wording approved by the commissioner of insurance which is not less favorable in any respect to the insured or the beneficiary. Any such provision contained in the policy shall be preceded individually by the appropriate caption appearing in this subsection or, at the option of the insurer, by such appropriate individual or group captions or subcaptions as the commissioner of insurance may approve.
(1) A provision as follows:
"Change of occupation:
If the insured be injured or contract sickness after having changed his occupation to one classified by the insurer as more hazardous than that stated in this policy or while doing for compensation anything pertaining to an occupation so classified, the insurer will pay only such portion of the indemnities provided in this policy as the premium paid would have purchased at the rates and within the limits fixed by the insurer for such more hazardous occupation. If the insured changes his occupation to one classified by the insurer as less hazardous than that stated in this policy, the insurer, upon receipt of proof of such change of occupation, will reduce the premium rate accordingly, and will return the excess pro rata unearned premium from the date of change of occupation or from the policy anniversary date immediately preceding receipt of such proof, whichever is the more recent. In applying this provision, the classification of occupational risk and the premium rates shall be such as have been last filed by the insurer prior to the occurrence of the loss for which the insurer is liable or prior to date of proof of change in occupation with the state official having supervision of insurance in the state where the insured resided at the time this policy was issued; but if such filing was not required, then the classification of occupational risk and the premium rates shall be those last made effective by the insurer in such state prior to the occurrence of the loss or prior to the date of proof of change in occupation."
(2) A provision as follows:
"Misstatement of age:
If the age of the insured has been misstated, all amounts payable under this policy shall be such as the premium paid would have purchased at the correct age."
(3) A provision as follows:
"Other insurance in this insurer:
If an accident or sickness or accident and sickness policy or policies previously issued by the insurer to the insured be in force concurrently herewith, making the aggregate indemnity for __________" (insert type of coverage or coverages) "in excess of _______" (insert maximum limit of indemnity or indemnities) "the excess insurance shall be void and all premiums paid for such excess shall be returned to the insured or to his estate"; or, in lieu thereof: "Insurance effective at any one time on the insured under a like policy or policies in this insurer is limited to one such policy elected by the insured, his beneficiary or his estate, as the case may be, and the insurer will return all premiums paid for all other such policies."
(4) A provision as follows:
"Insurance with other insurers:
If there be other valid coverage, not with this insurer, providing benefits for the same loss on a provision of service basis or on an expense incurred basis and of which this insurer has not been given written notice prior to the occurrence or commencement of loss, the only liability under any expense incurred coverage of this policy shall be for such proportion of the loss as the amount which would otherwise have been payable hereunder plus the total of the like amounts under all such other valid coverages for the same loss of which this insurer had notice bears to the total like amounts under all valid coverages for such loss, and for the return of such portion of the premiums paid as shall exceed the pro rata portion for the amount so determined. For the purpose of applying this provision when other coverage is on a provision of service basis, the 'like amount' of such other coverage shall be taken as the amount which the services rendered would have cost in the absence of such coverage." If the foregoing policy provision is included in a policy which also contains the next following policy provision there shall be added to the caption of the foregoing provision the phrase "__________ expense incurred benefits." The insurer, at its option, may include in this provision a definition of "other valid coverage," approved as to form by the commissioner of insurance, which definition shall be limited in subject matter to coverage provided by organizations subject to regulation by insurance law or by insurance authorities of this or any other state of the United States or any province of Canada, and by hospital or medical service organizations, and to any other coverage the inclusion of which may be approved by the commissioner of insurance. In the absence of such definition such term shall not include group insurance, automobile medical payments insurance, or coverage provided by hospital or medical service organizations or by union welfare plans or employer or employee benefit organizations. For the purpose of applying the foregoing policy provision with respect to any insured, any amount of benefit provided for such insured pursuant to any compulsory benefit statute (including any workmen's compensation or employer's liability statute) whether provided by a governmental agency or otherwise shall in all cases be deemed to be "other valid coverage" of which the insurer has had notice. In applying the foregoing policy provision no third party liability coverage shall be included as "other valid coverage." The provisions of this paragraph shall not apply to any individual policy of accident and sickness insurance, as defined in K.S.A. 40-2201, and amendments thereto.
(5) A provision as follows:
"Insurance with other insurers:
If there be other valid coverage, not with this insurer, providing benefits for the same loss on other than an expense incurred basis and of which this insurer has not been given written notice prior to the occurrence or commencement of loss, the only liability for such benefits under this policy shall be for such proportion of the indemnities otherwise provided hereunder for such loss as the like indemnities of which the insurer had notice (including the indemnities under this policy) bear to the total amount of all like indemnities for such loss, and the return of such portion of the premium paid as shall exceed the pro rata portion for the indemnities thus determined." If the foregoing policy provision is included in a policy which also contains the next preceding policy provision there shall be added to the caption of the foregoing provision the phrase "__________ other benefits." The insurer, at its option, may include in this provision a definition of "other valid coverage," approved as to form by the commissioner of insurance, which definition shall be limited in subject matter to coverage provided by organizations subject to regulation by insurance law or by insurance authorities of this or any other state of the United States or any province of Canada, and to any other coverage the inclusion of which may be approved by the commissioner of insurance. In the absence of such definition such term shall not include group insurance, or benefits provided by union welfare plans or by employer or employee benefit organizations. For the purpose of applying the foregoing policy provision with respect to any insured, any amount of benefit provided for such insured pursuant to any compulsory benefit statute (including any workers compensation or employer's liability statute) whether provided by a governmental agency or otherwise shall in all cases be deemed to be "other valid coverage" of which the insurer has had notice. In applying the foregoing policy provision no third-party liability coverage shall be included as "other valid coverage." The provisions of this paragraph shall not apply to any individual policy of accident and sickness insurance, as defined in K.S.A. 40-2201, and amendments thereto.
(6) A provision as follows:
"Relation of earnings to insurance:
If the total monthly amount of loss of time benefits promised for the same loss under all valid loss of time coverage upon the insured, whether payable on a weekly or monthly basis, shall exceed the monthly earnings of the insured at the time disability commenced or the average monthly earnings for the period of two years immediately preceding a disability for which claim is made, whichever is the greater, the insurer will be liable only for such proportionate amount of such benefits under this policy as the amount of such monthly earnings or such average monthly earnings of the insured bears to the total amount of monthly benefits for the same loss under all such coverage upon the insured at the time such disability commences and for the return of such part of the premiums paid during such two years as shall exceed the pro rata amount of the premiums for the benefits actually paid hereunder; but this shall not operate to reduce the total monthly amount of benefits payable under all such coverage upon the insured below the sum of $200 or the sum of the monthly benefits specified in such coverages, whichever is the lesser, nor shall it operate to reduce benefits other than those payable for loss of time." The foregoing policy provision may be inserted only in a policy which the insured has the right to continue in force subject to its terms by the timely payment of premiums (1) until at least age 50, or (2) in the case of a policy issued after age 44, for at least five years from its date of issue. The insurer, at its option, may include in this provision a definition of "valid loss of time coverage," approved as to form by the commissioner of insurance, which definition shall be limited in subject matter to coverage provided by governmental agencies or by organizations subject to regulation by insurance law or by insurance authorities of this or any other state of the United States or any province of Canada, or to any other coverage the inclusion of which may be approved by the commissioner of insurance or any combination of such coverages. In the absence of such definition such term shall not include any coverage provided for such insured pursuant to any compulsory benefit statute (including any workers compensation or employer's liability statute), or benefits provided by union welfare plans or by employer or employee benefit organizations.
(7) A provision as follows:
"Unpaid premium:
Upon the payment of a claim under this policy, any premium then due and unpaid or covered by any note or written order may be deducted therefrom."
(8) A provision as follows:
"Cancellation:
The insurer may cancel this policy at any time by written notice delivered to the insured, or mailed to his last address as shown by the records of the insurer, stating when, not less than five days thereafter, such cancellation shall be effective; and after the policy has been continued beyond its original term the insured may cancel this policy at any time by written notice delivered or mailed to the insurer, effective upon receipt or on such later date as may be specified in such notice. In the event of cancellation, the insurer will return promptly the unearned portion of any premium paid. If the insured cancels, the earned premium shall be computed by the use of the short-rate table last filed with the state official having supervision of insurance in the state where the insured resided when the policy was issued. If the insurer cancels, the earned premium shall be computed pro rata. Cancellation shall be without prejudice to any claim originating prior to the effective date of cancellation."
(9) A provision as follows:
"Conformity with state statutes:
Any provision of this policy which, on its effective date, is in conflict with the statutes of the state in which the insured resides on such date is hereby amended to conform to the minimum requirements of such statutes."
(10) A provision as follows:
"Illegal occupation:
The insurer shall not be liable for any loss to which a contributing cause was the insured's commission of or attempt to commit a felony or to which a contributing cause was the insured's being engaged in an illegal occupation."
(11) A provision as follows:
"Intoxicants and narcotics:
The insurer shall not be liable for any loss sustained or contracted in consequence of the insured's being intoxicated or under the influence of any narcotic unless administered on the advice of a physician."
(C)
Inapplicable or inconsistent provisions:
If any provision of this section is in whole or in part inapplicable to or inconsistent with the coverage provided by a particular form of policy the insurer, with the approval of the commissioner of insurance, shall omit from such policy any inapplicable provision or part of a provision, and shall modify any inconsistent provision or part of the provision in such manner as to make the provision as contained in the policy consistent with the coverage provided by the policy.
(D)
Order of certain policy provisions:
The provisions which are the subject of subsection (A) and (B) of this section, or any corresponding provisions which are used in lieu thereof in accordance with such subsections, shall be printed in the consecutive order of the provisions in such subsections or, at the option of the insurer, any such provision may appear as a unit in any part of the policy, with other provisions to which it may be logically related, provided the resulting policy, shall not be in whole or in part unintelligible, uncertain, ambiguous, abstruse, or likely to mislead a person to whom the policy is offered, delivered or issued.
(E)
Third-party ownership:
The word "insured," as used in this act, shall not be construed as preventing a person other than the insured with a proper insurable interest from making application for and owning a policy covering the insured or from being entitled under such a policy to any indemnities, benefits and rights provided therein.
(F)
Requirements of other jurisdictions:
(1) Any policy of a foreign or alien insurer, when delivered or issued for delivery to any person in this state, may contain any provision which is not less favorable to the insured or the beneficiary than the provisions of this act and which is prescribed or required by the law of the state under which the insurer is organized.
(2) Any policy of a domestic insurer, when issued for delivery in any other state or country, may contain any provision permitted or required by the laws of such other state or country.
(G)
Filing procedure:
The commissioner of insurance may make such reasonable rules and regulations concerning the procedure for the filing or submission of policies subject to this act as are necessary, proper or advisable to the administration of this act. This provision shall not abridge any other authority granted the commissioner of insurance by law.
(H) (1) No policy issued by an insurer to which this section applies shall contain a provision which excludes, limits or otherwise restricts coverage because medicaid benefits as permitted by title XIX of the social security act of 1965 are or may be available for the same accident or illness.
(2) Violation of this subsection shall be subject to the penalties prescribed by K.S.A. 40-2407 and 40-2411, and amendments thereto.
History: L. 1951, ch. 296, § 3; L. 1965, ch. 304, § 1; L. 1989, ch. 138, § 1; L. 1993, ch. 132, § 6; L. 2015, ch. 45, § 6; July 1.
(A) Other policy provisions: No policy provision which is not subject to K.S.A. 40-2203 shall make a policy, or any portion thereof, less favorable in any respect to the insured or the beneficiary than the provisions thereof which are subject to this act.
(B)
Policy conflicting with this act.
A policy delivered or issued for delivery to any person in this state in violation of this act shall be held valid but shall be construed as provided in this act. When any provision in a policy subject to this act is in conflict with any provision of this act, the rights, duties and obligations of the insurer, the insured and the beneficiary shall be governed by the provisions of this act.
History: L. 1951, ch. 296, § 4; June 30.
(A) The insured shall not be bound by any statement made in an application for a policy unless a copy of such application is attached to or endorsed on the policy when issued as a part thereof. If any such policy delivered or issued for delivery to any person in this state shall be reinstated or renewed, and the insured or the beneficiary or assignee of such policy shall make written request to the insurer for a copy of the application, if any, for such reinstatement or renewal, the insurer shall within fifteen (15) days after the receipt of such request at its home office or any branch office of the insurer, deliver or mail to the person making such request, a copy of such application. If such copy shall not be so delivered or mailed, the insurer shall be precluded from introducing such application as evidence in any action or proceeding based upon or involving such policy or its reinstatement or renewal.
(B) No alteration of any written application for any such policy shall be made by any person other than the applicant without his written consent, except that insertions may be made by the insurer, for administrative purposes only, in such manner as to indicate clearly that such insertions are not to be ascribed to the applicant.
(C) The falsity of any material statement in the application for any policy covered by this act may not bar the right to recovery thereunder unless the false statement has actually contributed to the contingency or event on which the policy is to become due and payable: Provided, however, That any recovery resulting from the operation of this section shall not bar the right to render the policy void in accordance with its provisions.
History: L. 1951, ch. 296, § 5; L. 1963, ch. 264, § 1; L. 1965, ch. 305, § 1; June 30.
The acknowledgment by any insurer of the receipt of notice given under any policy covered by this act, or the furnishing of forms for filing proofs of loss, or the acceptance of such proofs, or the investigation of any claim thereunder shall not operate as a waiver of any of the rights of the insurer in defense of any claim arising under such policy.
History: L. 1951, ch. 296, § 6; June 30.
If any such policy contains a provision establishing, as an age limit or otherwise, a date after which the coverage provided by the policy will not be effective, and if such date falls within a period for which premium is accepted by the insurer or if the insurer accepts a premium after such date, the coverage provided by the policy will continue in force subject to any right of cancellation until the end of the period for which premium has been accepted. In the event the age of the insured has been misstated and if, according to the correct age of the insured, the coverage provided by the policy would not have become effective, or would have ceased prior to the acceptance of such premium or premiums, then the liability of the insurer shall be limited to the refund, upon request, of all premiums paid for the period not covered by the policy.
History: L. 1951, ch. 296, § 7; June 30.
Nothing in this act shall apply to or affect: (1) Any policy or contract of reinsurance; (2) life insurance, endowment or annuity contracts, or contracts supplemental thereto which contain only such provisions relating to accident and sickness insurance as (a) provide additional benefits in case of death or dismemberment or loss of sight by accident, or by as (b) operate to safeguard such contracts against lapse; or to give a special surrender value or special benefit or an annuity in the event that the insured or annuitant shall become totally and permanently disabled, as defined by the contract or supplemental contract; (3) fraternal benefit societies; or (4) endorsements or supplemental coverages, as authorized by K.S.A. 40-1110; (5) except as to K.S.A. 40-2209 and 40-2210, or any amendments thereto, any blanket or group policies of sickness and accident insurance; and (6) except as to K.S.A. 40-2211 and 40-2212, or any amendments thereto, any policy or workmen's compensation insurance or liability insurance with or without supplementary expense coverage therein.
History: L. 1951, ch. 296, § 8; L. 1957, ch. 284, § 2; June 29.
(a) (1) Group sickness and accident insurance is declared to be that form of sickness and accident insurance covering groups of persons, with or without one or more members of their families or one or more dependents. Except at the option of the employee or member and except employees or members enrolling in a group policy after the close of an open enrollment opportunity, no individual employee or member of an insured group and no individual dependent or family member may be excluded from eligibility or coverage under a policy providing hospital, medical or surgical expense benefits both with respect to policies issued or renewed within this state and with respect to policies issued or renewed outside this state covering persons residing in this state. For purposes of this section, an open enrollment opportunity shall be deemed to be a period no less favorable than a period beginning on the employee's or member's date of initial eligibility and ending 31 days thereafter.
(2) An eligible employee, member or dependent who requests enrollment following the open enrollment opportunity or any special enrollment period for dependents as specified in paragraph (3) shall be considered a late enrollee. An accident and sickness insurer may exclude a late enrollee, except during an open enrollment period. However, an eligible employee, member or dependent shall not be considered a late enrollee if:
(A) The individual:
(i) Was covered under another group policy which provided hospital, medical or surgical expense benefits or was covered under section 607(1) of the employee retirement income security act of 1974 (ERISA) at the time the individual was eligible to enroll;
(ii) states in writing, at the time of the open enrollment period, that coverage under another group policy that provided hospital, medical or surgical expense benefits was the reason for declining enrollment, but only if the group policyholder or the accident and sickness insurer required such a written statement and provided the individual with notice of the requirement for a written statement and the consequences of such written statement;
(iii) has lost coverage under another group policy providing hospital, medical or surgical expense benefits or under section 607(1) of the employee retirement income security act of 1974 (ERISA) as a result of the termination of employment, reduction in the number of hours of employment, termination of employer contributions toward such coverage, the termination of the other policy's coverage, death of a spouse or divorce or legal separation or was under a COBRA continuation provision and the coverage under such provision was exhausted; and
(iv) requests enrollment within 30 days after the termination of coverage under the other policy; or
(B) a court has ordered coverage to be provided for a spouse or minor child under a covered employee's or member's policy.
(3) (A) If an accident and sickness insurer issues a group policy providing hospital, medical or surgical expenses and makes coverage available to a dependent of an eligible employee or member and such dependent becomes a dependent of the employee or member through marriage, birth, adoption or placement for adoption, then such group policy shall provide for a dependent special enrollment period as described in subsection (3)(B) of this section during which the dependent may be enrolled under the policy and in the case of the birth or adoption of a child, the spouse of an eligible employee or member may be enrolled if otherwise eligible for coverage.
(B) A dependent special enrollment period under this subsection shall be a period of not less than 30 days and shall begin on the later of: (i) The date such dependent coverage is made available; or (ii) the date of the marriage, birth or adoption or placement for adoption.
(C) If an eligible employee or member seeks to enroll a dependent during the first 30 days of such a dependent special enrollment period, the coverage of the dependent shall become effective: (i) In the case of marriage, not later than the first day of the first month beginning after the date the completed request for enrollment is received; (ii) in the case of the birth of a dependent, as of the date of such birth; or (iii) in the case of a dependent's adoption or placement for adoption, the date of such adoption or placement for adoption.
(4) (A) No group policy providing hospital, medical or surgical expense benefits issued or renewed within this state or issued or renewed outside this state covering residents within this state shall limit or exclude benefits for specific conditions existing at or prior to the effective date of coverage thereunder. Such policy may impose a preexisting conditions exclusion, not to exceed 90 days following the date of enrollment for benefits for conditions whether mental or physical, regardless of the cause of the condition for which medical advice, diagnosis, care or treatment was recommended or received in the 90 days prior to the effective date of enrollment. Any preexisting conditions exclusion shall run concurrently with any waiting period.
(B) Such policy may impose a waiting period after full-time employment starts before an employee is first eligible to enroll in any applicable group policy.
(C) A health maintenance organization that offers such policy that does not impose any preexisting conditions exclusion may impose an affiliation period for such coverage, provided that: (i) Such application period is applied uniformly without regard to any health status related factors; and (ii) such affiliation period does not exceed two months. The affiliation period shall run concurrently with any waiting period under the plan.
(D) A health maintenance organization may use alternative methods from those described in this subsection to address adverse selection if approved by the commissioner.
(E) For the purposes of this section, the term "preexisting conditions exclusion" shall mean, with respect to coverage, a limitation or exclusion of benefits relating to a condition based on the fact that the condition was present before the date of enrollment for such coverage whether or not any medical advice, diagnosis, care or treatment was recommended or received before such date.
(F) For the purposes of this section, the term "date of enrollment" means the date the individual is enrolled under the group policy or, if earlier, the first day of the waiting period for such enrollment.
(G) For the purposes of this section, the term "waiting period" means with respect to a group policy the period that must pass before the individual is eligible to be covered for benefits under the terms of the policy.
(5) Genetic information shall not be treated as a preexisting condition in the absence of a diagnosis of the condition related to such information.
(6) A group policy providing hospital, medical or surgical expense benefits may not impose any preexisting condition exclusion relating to pregnancy as a preexisting condition.
(7) A group policy providing hospital, medical or surgical expense benefits may not impose any preexisting condition waiting period in the case of a child who is adopted or placed for adoption before attaining 18 years of age and who, as of the last day of a 30-day period beginning on the date of the adoption or placement for adoption, is covered by a policy specified in subsection (a). This subsection shall not apply to coverage before the date of such adoption or placement for adoption.
(8) Such policy shall waive such a preexisting conditions exclusion to the extent the employee or member or individual dependent or family member was covered by: (A) A group or individual sickness and accident policy; (B) coverage under section 607(1) of the employees retirement income security act of 1974 (ERISA); (C) a group specified in K.S.A. 40-2222, and amendments thereto; (D) part A or part B of title XVIII of the social security act; (E) title XIX of the social security act, other than coverage consisting solely of benefits under section 1928; (F) a state children's health insurance program established pursuant to title XXI of the social security act; (G) chapter 55 of title 10 United States code; (H) a medical care program of the Indian health service or of a tribal organization; (I) the Kansas uninsurable health plan act pursuant to K.S.A. 40-2217 et seq., and amendments thereto, or a similar health benefits risk pool of another state; (J) a health plan offered under chapter 89 of title 5, United States code; (K) a health benefit plan under section 5(e) of the peace corps act (22 U.S.C. § 2504(e)); or (L) a group subject to K.S.A. 12-2616 et seq., and amendments thereto, that provided hospital, medical and surgical expense benefits within 63 days prior to the effective date of coverage with no gap in coverage. A group policy shall credit the periods of prior coverage specified in subsection (a)(7) without regard to the specific benefits covered during the period of prior coverage. Any period that the employee or member is in a waiting period for any coverage under a group health plan or is in an affiliation period shall not be taken into account in determining the continuous period under this subsection.
(b) (1) An accident and sickness insurer which offers group policies providing hospital, medical or surgical expense benefits shall provide a certification as described in subsection (b)(2): (A) At the time an eligible employee, member or dependent ceases to be covered under such policy or otherwise becomes covered under a COBRA continuation provision; (B) in the case of an eligible employee, member or dependent being covered under a COBRA continuation provision, at the time such eligible employee, member or dependent ceases to be covered under a COBRA continuation provision; and (C) on the request on behalf of such eligible employee, member or dependent made not later than 24 months after the date of the cessation of the coverage described in paragraph (1)(A) or (1)(B), whichever is later.
(2) The certification described in this subsection is a written certification of: (A) The period of coverage under a policy specified in subsection (a) and any coverage under such COBRA continuation provision; and (B) any waiting period imposed with respect to the eligible employee, member or dependent for any coverage under such policy.
(c) Any group policy may impose participation requirements, define full-time employees or members and otherwise be designed for the group as a whole through negotiations between the group sponsor and the insurer to the extent such design is not contrary to or inconsistent with this act.
(d) (1) An accident and sickness insurer offering a group policy providing hospital, medical or surgical expense benefits must renew or continue in force such coverage at the option of the policyholder or certificateholder except as provided in paragraph (2).
(2) An accident and sickness insurer may nonrenew or discontinue coverage under a group policy providing hospital, medical or surgical expense benefits based only on one or more of the following circumstances:
(A) If the policyholder or certificateholder has failed to pay any premium or contributions in accordance with the terms of the group policy providing hospital, medical or surgical expense benefits or the accident and sickness insurer has not received timely premium payments;
(B) if the policyholder or certificateholder has performed an act or practice that constitutes fraud or made an intentional misrepresentation of material fact under the terms of such coverage;
(C) if the policyholder or certificateholder has failed to comply with a material plan provision relating to employer contribution or group participation rules;
(D) if the accident and sickness insurer is ceasing to offer coverage in such group market in accordance with subsection (d)(3) or (4);
(E) in the case of accident and sickness insurer that offers coverage under a policy providing hospital, medical or surgical expense benefits through an enrollment area, there is no longer any eligible employee, member or dependent in connection with such policy who lives, resides or works in the medical service enrollment area of the accident and sickness insurer or in the area for which the accident and sickness insurer is authorized to do business; or
(F) in the case of a group policy providing hospital, medical or surgical expense benefits that is offered through an association or trust pursuant to subsection (f)(3) or (5), the membership of the employer in such association or trust ceases but only if such coverage is terminated uniformly without regard to any health status related factor relating to any eligible employee, member or dependent.
(3) In any case in which an accident and sickness insurer that offers a group policy providing hospital, medical or surgical expense benefits decides to discontinue offering such type of group policy, such coverage may be discontinued only if:
(A) The accident and sickness insurer notifies all policyholders and certificateholders and all eligible employees or members of such discontinuation at least 90 days prior to the date of the discontinuation of such coverage;
(B) the accident and sickness insurer offers to each policyholder who is provided such group policy providing hospital, medical or surgical expense benefits that is being discontinued the option to purchase any other group policy providing hospital, medical or surgical expense benefits currently being offered by such accident and sickness insurer; and
(C) in exercising the option to discontinue coverage and in offering the option of coverage under subparagraph (B), the accident and sickness insurer acts uniformly without regard to the claims experience of those policyholders or certificateholders or any health status related factors relating to any eligible employee, member or dependent covered by such group policy or new employees or members who may become eligible for such coverage.
(4) If the accident and sickness insurer elects to discontinue offering group policies providing hospital, medical or surgical expense benefits or group coverage to a small employer pursuant to K.S.A. 40-2209f, and amendments thereto, such coverage may be discontinued only if:
(A) The accident and sickness insurer provides notice to the insurance commissioner, to all policyholders or certificateholders and to all eligible employees and members covered by such group policy providing hospital, medical or surgical expense benefits at least 180 days prior to the date of the discontinuation of such coverage;
(B) all group policies providing hospital, medical or surgical expense benefits offered by such accident and sickness insurer are discontinued and coverage under such policies are not renewed; and
(C) the accident and sickness insurer may not provide for the issuance of any group policies providing hospital, medical or surgical expense benefits in the discontinued market during a five year period beginning on the date of the discontinuation of the last such group policy which is nonrenewed.
(e) An accident and sickness insurer offering a group policy providing hospital, medical or surgical expense benefits may not establish rules for eligibility (including continued eligibility) of any employee, member or dependent to enroll under the terms of the group policy based on any of the following factors in relation to the eligible employee, member or dependent: (A) Health status; (B) medical condition, including both physical and mental illness; (C) claims experience; (D) receipt of health care; (E) medical history; (F) genetic information; (G) evidence of insurability, including conditions arising out of acts of domestic violence; or (H) disability. This subsection shall not be construed to require a policy providing hospital, medical or surgical expense benefits to provide particular benefits other than those provided under the terms of such group policy or to prevent a group policy providing hospital, medical or surgical expense benefits from establishing limitations or restrictions on the amount, level, extent or nature of the benefits or coverage for similarly situated individuals enrolled under the group policy.
(f) Group accident and health insurance may be offered to a group under the following basis:
(1) Under a policy issued to an employer or trustees of a fund established by an employer, who is the policyholder, insuring at least two employees of such employer, for the benefit of persons other than the employer. The term "employees" shall include the officers, managers, employees and retired employees of the employer, the partners, if the employer is a partnership, the proprietor, if the employer is an individual proprietorship, the officers, managers and employees and retired employees of subsidiary or affiliated corporations of a corporation employer, and the individual proprietors, partners, employees and retired employees of individuals and firms, the business of which and of the insured employer is under common control through stock ownership contract, or otherwise. The policy may provide that the term "employees" may include the trustees or their employees, or both, if their duties are principally connected with such trusteeship. A policy issued to insure the employees of a public body may provide that the term "employees" shall include elected or appointed officials.
(2) Under a policy issued to a labor union that shall have a constitution and bylaws insuring at least 25 members of such union.
(3) Under a policy issued to the trustees of a fund established by two or more employers or business associations or by one or more labor unions or by one or more employers and one or more labor unions, which trustees shall be the policyholder, to insure employees of the employers or members of the union or members of the association for the benefit of persons other than the employers or the unions or the associations. The term "employees" shall include the officers, managers, employees and retired employees of the employer and the individual proprietor or partners if the employer is an individual proprietor or partnership. The policy may provide that the term "employees" shall include the trustees or their employees, or both, if their duties are principally connected with such trusteeship.
(4) A policy issued to a creditor, who shall be deemed the policyholder, to insure debtors of the creditor, subject to the following requirements: (A) The debtors eligible for insurance under the policy shall be all of the debtors of the creditor whose indebtedness is repayable in installments, or all of any class or classes determined by conditions pertaining to the indebtedness or to the purchase giving rise to the indebtedness; and (B) the premium for the policy shall be paid by the policyholder, either from the creditor's funds or from charges collected from the insured debtors, or from both.
(5) A policy issued to an association that has been organized and is maintained for the purposes other than that of obtaining insurance, insuring members, employees, or employees of members of the association for the benefit of persons other than the association or its officers. The term "employees" shall include retired employees. The premiums for the policies shall be paid by the policyholder, either wholly from association funds or funds contributed by the members of such association, or by employees of such members or any combination thereof.
(6) Under a policy issued to any other type of group which the commissioner of insurance may find is properly subject to the issuance of a group sickness and accident policy or contract.
(g) Each such policy shall contain in substance: (1) A provision that a copy of the application, if any, of the policyholder shall be attached to the policy when issued, that all statements made by the policyholder or by the persons insured shall be deemed representations and not warranties, and that no statement made by any person insured shall be used in any contest unless a copy of the instrument containing the statement is or has been furnished to such person or the insured's beneficiary.
(2) A provision setting forth the conditions under which an individual's coverage terminates under the policy, including the age, if any, to which an individual's coverage under the policy shall be limited, or, the age, if any, at which any additional limitations or restrictions are placed upon an individual's coverage under the policy.
(3) Provisions setting forth the notice of claim, proofs of loss and claim forms, physical examination and autopsy, time of payment of claims, to whom benefits are payable, payment of claims, change of beneficiary, and legal action requirements. Such provisions shall not be less favorable to the individual insured or the insured's beneficiary than those corresponding policy provisions required to be contained in individual accident and sickness policies.
(4) A provision that the insurer will furnish to the policyholder, for the delivery to each employee or member of the insured group, an individual certificate approved by the commissioner of insurance setting forth in summary form a statement of the essential features of the insurance coverage of such employee or member, the procedure to be followed in making claim under the policy and to whom benefits are payable. Such certificate shall also contain a summary of those provisions required under paragraphs (2) and (3) in addition to the other essential features of the insurance coverage. If dependents are included in the coverage, only one certificate need be issued for each family unit.
(h) No group disability income policy that integrates benefits with social security benefits, shall provide that the amount of any disability benefit actually being paid to the disabled person shall be reduced by changes in the level of social security benefits resulting either from changes in the social security law or due to cost of living adjustments which become effective after the first day for which disability benefits become payable.
(i) A group policy of insurance delivered or issued for delivery or renewed that provides hospital, surgical or major medical expense insurance, or any combination of these coverages, on an expense incurred basis, shall provide that an employee or member or such employee's or member's covered dependents whose insurance under the group policy has been terminated for any reason, including discontinuance of the group policy in its entirety or with respect to an insured class, and who has been continuously insured under the group policy or under any group policy providing similar benefits that it replaces for at least three months immediately prior to termination, shall be entitled to have such coverage nonetheless continued under the group policy for a period of 18 months and have issued to the employee or member or such employee's or member's covered dependents by the insurer, at the end of such eighteen-month period of continuation, a policy of health insurance that conforms to the applicable requirements specified in this subsection. This requirement shall not apply to a group policy which provides benefits for specific diseases or for accidental injuries only or a group policy issued to an employer subject to the continuation and conversion obligations set forth at title I, subtitle B, part 6 of the employee retirement income security act of 1974 or at title XXII of the public health service act, as each act was in effect on January 1, 1987, to the extent federal law provides the employee or member or such employee's or member's covered dependents with equal or greater continuation or conversion rights; or an employee or member or such employee's or member's covered dependents shall not be entitled to have such coverage continued or a converted policy issued to the employee or member or such employee's or member's covered dependents if termination of the insurance under the group policy occurred because:
(1) The employee or member or such employee's or member's covered dependents failed to pay any required contribution after receiving reasonable notice of such required contribution from the insurer in accordance with rules and regulations adopted by the commissioner of insurance; (2) any discontinued group coverage was replaced by similar group coverage within 31 days; (3) the employee or member is or could be covered by medicare (title XVIII of the United States social security act as added by the social security amendments of 1965 or as later amended or superseded); (4) the employee or member is or could be covered to the same extent by any other insured or lawful self-insured arrangement which provides expense incurred hospital, surgical or medical coverage and benefits for individuals in a group under which the person was not covered prior to such termination; or (5) coverage for the employee or member, or any covered dependent thereof, was terminated for cause as permitted by the group policy or certificate of coverage approved by the commissioner. In the event the group policy is terminated and not replaced the insurer may issue an individual policy or certificate in lieu of a conversion policy or the continuation of group coverage required herein if the individual policy or certificate provides substantially similar coverage for the same or less premium as the group policy. In any event, the employee or member shall have the option to be issued a conversion policy that meets the requirements set forth in this subsection in lieu of the right to continue group coverage.
(j) The continued coverage and the issuance of a converted policy shall be subject to the following conditions:
(1) Written application for the converted policy shall be made and the first premium paid to the insurer not later than 31 days after termination of coverage under the group policy or not later than 31 days after notice is received pursuant to paragraph (20) of this subsection.
(2) The converted policy shall be issued without evidence of insurability.
(3) The employer shall give the employee and such employee's covered dependents reasonable notice of the right to continuation of coverage. The terminated employee or member shall pay to the insurance carrier the premium for the eighteen-month continuation of coverage and such premium shall be the same as that applicable to members or employees remaining in the group. Failure to pay such premium shall terminate coverage under the group policy at the end of the period for which the premium has been paid. The premium rate charged for converted policies issued subsequent to the period of continued coverage shall be such that can be expected to produce an anticipated loss ratio of not less than 80% based upon conversion, morbidity and reasonable assumptions for expected trends in medical care costs. In the event the group policy is terminated and is not replaced, converted policies may be issued at self-sustaining rates that are not unreasonable in relation to the coverage provided based on conversion, morbidity and reasonable assumptions for expected trends in medical care costs. The frequency of premium payment shall be the frequency customarily required by the insurer for the policy form and plan selected, provided that the insurer shall not require premium payments less frequently than quarterly.
(4) The effective date of the converted policy shall be the day following the termination of insurance under the group policy.
(5) The converted policy shall cover the employee or member and the employee's or member's dependents who were covered by the group policy on the date of termination of insurance. At the option of the insurer, a separate converted policy may be issued to cover any dependent.
(6) The insurer shall not be required to issue a converted policy covering any person if such person is or could be covered by medicare (title XVIII of the United States social security act as added by the social security amendments of 1965 or as later amended or superseded). Furthermore, the insurer shall not be required to issue a converted policy covering any person if:
(A) (i) Such person is covered for similar benefits by another hospital, surgical, medical or major medical expense insurance policy or hospital or medical service subscriber contract or medical practice or other prepayment plan or by any other plan or program, or
(ii) such person is eligible for similar benefits (whether or not covered therefor) under any arrangement of coverage for individuals in a group, whether on an insured or uninsured basis, or
(iii) similar benefits are provided for or available to such person, pursuant to or in accordance with the requirements of any state or federal law, and
(B) the benefits provided under the sources referred to in subparagraph (A)(i) for such person or benefits provided or available under the sources referred to in subparagraphs (A)(ii) and (iii) for such person, together with the benefits provided by the converted policy, would result in over-insurance according to the insurer's standards. The insurer's standards must bear some reasonable relationship to actual health care costs in the area in which the insured lives at the time of conversion and must be filed with the commissioner of insurance prior to their use in denying coverage.
(7) A converted policy may include a provision whereby the insurer may request information in advance of any premium due date of such policy of any person covered as to whether:
(A) Such person is covered for similar benefits by another hospital, surgical, medical or major medical expense insurance policy or hospital or medical service subscriber contract or medical practice or other prepayment plan or by any other plan or program;
(B) such person is covered for similar benefits under any arrangement of coverage for individuals in a group, whether on an insured or uninsured basis; or
(C) similar benefits are provided for or available to such person, pursuant to or in accordance with the requirements of any state or federal law.
(8) The converted policy may provide that the insurer may refuse to renew the policy and the coverage of any person insured for the following reasons only:
(A) Either the benefits provided under the sources referred to in paragraph (6)(A)(i) and (ii) for such person or benefits provided or available under the sources referred to in paragraph (6)(A)(iii) for such person, together with the benefits provided by the converted policy, would result in over-insurance according to the insurer's standards on file with the commissioner of insurance, or the converted policyholder fails to provide the requested information;
(B) fraud or material misrepresentation in applying for any benefits under the converted policy; or
(C) other reasons approved by the commissioner of insurance.
(9) An insurer shall not be required to issue a converted policy that provides coverage and benefits in excess of those provided under the group policy from which conversion is made.
(10) If the converted policy provides that any hospital, surgical or medical benefits payable may be reduced by the amount of any such benefits payable under the group policy after the termination of the individual's insurance or the converted policy includes provisions so that during the first policy year the benefits payable under the converted policy, together with the benefits payable under the group policy, shall not exceed those that would have been payable had the individual's insurance under the group policy remained in force and effect, the converted policy shall provide credit for deductibles, copayments and other conditions satisfied under the group policy.
(11) Subject to the provisions and conditions of this act, if the group insurance policy from which conversion is made insures the employee or member for major medical expense insurance, the employee or member shall be entitled to obtain a converted policy providing catastrophic or major medical coverage under a plan meeting the following requirements:
(A) A maximum benefit at least equal to either, at the option of the insurer, the amount described in clause (i) or (ii):
(i) The smaller of the following amounts:
The maximum benefit provided under the group policy or a maximum payment of $250,000 per covered person for all covered medical expenses incurred during the covered person's lifetime.
(ii) The smaller of the following amounts:
The maximum benefit provided under the group policy or a maximum payment of $250,000 for each unrelated injury or sickness.
(B) Payment of benefits at the rate of 80% of covered medical expenses that are in excess of the deductible, until 20% of such expenses in a benefit period reaches $1,000, after which benefits will be paid at the rate of 100% during the remainder of such benefit period. Payment of benefits for outpatient treatment of mental illness, if provided in the converted policy, may be at a lesser rate but not less than 50%.
(C) A deductible for each benefit period which, at the option of the insurer, shall be: (i) The sum of the benefits deductible and $100; or (ii) the corresponding deductible in the group policy. The term "benefits deductible," as used herein, means the value of any benefits provided on an expense incurred basis that are provided with respect to covered medical expenses by any other hospital, surgical, or medical insurance policy or hospital or medical service subscriber contract or medical practice or other prepayment plan, or any other plan or program whether on an insured or uninsured basis, or in accordance with the requirements of any state or federal law and, if pursuant to the conditions of paragraph (13), the converted policy provides both basic hospital or surgical coverage and major medical coverage, the value of such basic benefits.
If the maximum benefit is determined by subparagraph (A)(ii), the insurer may require that the deductible be satisfied during a period of not less than three months if the deductible is $100 or less, and not less than six months if the deductible exceeds $100.
(D) The benefit period shall be each calendar year when the maximum benefit is determined by subparagraph (A)(i) or 24 months when the maximum benefit is determined by subparagraph (A)(ii).
(E) The term "covered medical expenses," as used above, shall include at least, in the case of hospital room and board charges 80% of the average semiprivate room and board rate for the hospital in which the individual is confined and twice such amount for charges in an intensive care unit. Any surgical schedule shall be consistent with those customarily offered by the insurer under group or individual health insurance policies and must provide at least a $1,200 maximum benefit.
(12) The conversion privilege required by this act shall, if the group insurance policy insures the employee or member for basic hospital or surgical expense insurance as well as major medical expense insurance, make available the plans of benefits set forth in paragraph (11). At the option of the insurer, such plans of benefits may be provided under one policy.
The insurer may also, in lieu of the plans of benefits set forth in paragraph (11), provide a policy of comprehensive medical expense benefits without first dollar coverage. The policy shall conform to the requirements of paragraph (11). An insurer electing to provide such a policy shall make available a low deductible option, not to exceed $100, a high deductible option between $500 and $1,000, and a third deductible option midway between the high and low deductible options.
(13) The insurer, at its option, may also offer alternative plans for group health conversion in addition to those required by this act.
(14) In the event coverage would be continued under the group policy on an employee following the employee's retirement prior to the time the employee is or could be covered by medicare, the employee may elect, in lieu of such continuation of group insurance, to have the same conversion rights as would apply had such person's insurance terminated at retirement by reason of termination of employment or membership.
(15) The converted policy may provide for reduction of coverage on any person upon such person's eligibility for coverage under medicare (title XVIII of the United States social security act as added by the social security amendments of 1965 or as later amended or superseded) or under any other state or federal law providing for benefits similar to those provided by the converted policy.
(16) Subject to the conditions set forth above, the continuation and conversion privileges shall also be available:
(A) To the surviving spouse, if any, at the death of the employee or member, with respect to the spouse and such children whose coverage under the group policy terminates by reason of such death, otherwise to each surviving child whose coverage under the group policy terminates by reason of such death, or, if the group policy provides for continuation of dependents' coverage following the employee's or member's death, at the end of such continuation;
(B) to the spouse of the employee or member upon termination of coverage of the spouse, while the employee or member remains insured under the group policy, by reason of ceasing to be a qualified family member under the group policy, with respect to the spouse and such children whose coverage under the group policy terminates at the same time; or
(C) to a child solely with respect to such child upon termination of such coverage by reason of ceasing to be a qualified family member under the group policy, if a conversion privilege is not otherwise provided above with respect to such termination.
(17) The insurer may elect to provide group insurance coverage that complies with this act in lieu of the issuance of a converted individual policy.
(18) A notification of the conversion privilege shall be included in each certificate of coverage.
(19) A converted policy that is delivered outside this state must be on a form that could be delivered in such other jurisdiction as a converted policy had the group policy been issued in that jurisdiction.
(20) The insurer shall give the employee or member and such employee's or member's covered dependents: (A) Reasonable notice of the right to convert at least once during the eighteen-month continuation period; or (B) for persons covered under 29 U.S.C. §§ 1161 et seq., notice of the right to a conversion policy required by this subsection (d) shall be given at least 30 days prior to the end of the continuation period provided by 29 U.S.C. §§ 1161 et seq. or from the date the employer ceases to provide any similar group health plan to any employee. Such notices shall be provided in accordance with rules and regulations adopted by the commissioner of insurance.
(k) (1) No policy issued by an insurer to which this section applies shall contain a provision that excludes, limits or otherwise restricts coverage because medicaid benefits as permitted by title XIX of the social security act of 1965 are or may be available for the same accident or illness.
(2) Violation of this subsection shall be subject to the penalties prescribed by K.S.A. 40-2407 and 40-2411, and amendments thereto.
(l) The commissioner is hereby authorized to adopt such rules and regulations as may be necessary to carry out the provisions of this section.
History: L. 1951, ch. 296, § 9; L. 1965, ch. 306, § 1; L. 1967, ch. 273, § 1; L. 1977, ch. 162, § 1; L. 1978, ch. 181, § 1; L. 1980, ch. 138, § 1; L. 1981, ch. 195, § 1; L. 1984, ch. 172, § 4; L. 1987, ch. 169, § 2; L. 1988, ch. 160, § 1; L. 1991, ch. 134, § 1; L. 1992, ch. 196, § 2; L. 1993, ch. 132, § 7; L. 1994, ch. 81, § 1; L. 1994, ch. 355, § 3; L. 1996, ch. 182, § 6; L. 1997, ch. 190, § 1; L. 1998, ch. 174, § 5; L. 1999, ch. 15, § 1; L. 2004, ch. 159, § 11; L. 2008, ch. 164, § 5; L. 2009, ch. 136, § 10; L. 2019, ch. 54, § 8; May 9.
The amendments in this act to K.S.A. 40-1805, 40-1905 and 40-2209 shall be applicable only to policy contracts delivered or issued for delivery in this state on or after the effective date of this act.
History: L. 1978, ch. 181, § 4; November 1.
(a) The provisions of K.S.A. 40-2209b through 40-2209j and 40-2209m through 40-2209o, and amendments thereto, shall be known and may be cited as the small employer health insurance availability act.
(b) The purpose and intent of the small employer health insurance availability act are to promote the availability of health insurance coverage to small employers regardless of their health status or claims experience, to prevent abusive rating practices, to require disclosure of rating practices to purchasers, to establish rules regarding renewability of coverage, to establish limitations on the use of pre-existing condition exclusions, to provide for development of "basic" and "standard" health benefit plans to be offered to all small employers, to provide for establishment of a reinsurance program, and to improve the overall fairness and efficiency of the small group health insurance market.
History: L. 1992, ch. 200, § 1; L. 2019, ch. 54, § 9; May 9.
The provisions of this act shall apply to health benefit plans covering small employers as defined herein. Where the provisions of K.S.A. 40-2209, and amendments thereto, are not inconsistent with these provisions, they shall be construed as supplemental to and not in derogation or limitation of any requirements, prohibitions or restrictions contained herein.
History: L. 1992, ch. 200, § 2; July 1.
As used in the small employer health insurance availability act:
(a) "Actuarial certification" means a written statement by a member of the American academy of actuaries or other individual acceptable to the commissioner that a small employer carrier is in compliance with the provisions of K.S.A. 40-2209h, and amendments thereto, based upon the person's examination, including a review of the appropriate records and of the actuarial assumptions and methods used by the small employer carrier in establishing premium rates for applicable health benefit plans.
(b) "Approved service area" means a geographical area, as approved by the commissioner to transact insurance in this state, within which the carrier is authorized to provide coverage.
(c) "Base premium rate" means, for each class of business as to a rating period, the lowest premium rate charged or that could have been charged under the rating system for that class of business, by the small employer carrier to small employers with similar case characteristics for health benefit plans with the same or similar coverage.
(d) "Carrier" or "small employer carrier" means any insurance company, nonprofit medical and hospital service corporation, nonprofit optometric, dental, and pharmacy service corporations, municipal group-funded pool, fraternal benefit society or health maintenance organization, as these terms are defined in chapter 40 of the Kansas Statutes Annotated, and amendments thereto, that offers health benefit plans covering eligible employees of one or more small employers in this state.
(e) "Case characteristics" means, with respect to a small employer, the geographic area in which the employees reside; the age and sex of the individual employees and their dependents; the appropriate industry classification as determined by the carrier, and the number of employees and dependents and such other objective criteria as may be approved family composition by the commissioner. "Case characteristics" shall not include claim experience, health status and duration of coverage since issue.
(f) "Class of business" means all or a separate grouping of small employers established pursuant to K.S.A. 40-2209g, and amendments thereto.
(g) "Commissioner" means the commissioner of insurance.
(h) "Department" means the insurance department.
(i) "Dependent" means the spouse or child of an eligible employee, subject to applicable terms of the health benefits plan covering such employee and the dependent eligibility standards established by the board.
(j) "Eligible employee" means an employee who works on a full-time basis, with a normal work week of 30 or more hours, and includes a sole proprietor, a partner of a partnership or an independent contractor, provided such sole proprietor, partner or independent contractor is included as an employee under a health benefit plan of a small employer but does not include an employee who works on a part-time, temporary or substitute basis.
(k) "Financially impaired" means a member which, after the effective date of this act, is not insolvent but is:
(1) Deemed by the commissioner to be in a hazardous financial condition pursuant to K.S.A. 40-222d, and amendments thereto; or
(2) placed under an order of rehabilitation or conservation by a court of competent jurisdiction.
(l) "Health benefit plan" means any hospital or medical expense policy, health, hospital or medical service corporation contract, a plan provided by a municipal group-funded pool, or health maintenance organization contract offered by an employer or any certificate issued under any such policies, contracts or plans. "Health benefit plan" also includes a cafeteria plan authorized by 26 U.S.C. § 125 that offers the option of receiving health insurance coverage through a high deductible health plan and the establishment of a health savings account. In order for an eligible individual to obtain a high deductible health plan through the cafeteria plan, such individual shall present evidence to the employer that such individual has established a health savings account in compliance with 26 U.S.C. § 223, and any regulations promulgated thereunder. "Health benefit plan" does not include policies or certificates covering only accident, credit, dental, disability income, long-term care, hospital indemnity, medicare supplement, specified disease, vision care, coverage issued as a supplement to liability insurance, insurance arising out of a workers compensation or similar law, automobile medical-payment insurance, or insurance under which benefits are payable with or without regard to fault and which is statutorily required to be contained in any liability insurance policy or equivalent self-insurance.
(m) "Health savings account" means the same as in 26 U.S.C. § 223(d).
(n) "High deductible health plan" means a policy or contract of health insurance or health care plan that meets the criteria established in 26 U.S.C. § 223(c) and any regulations promulgated thereunder.
(o) "Index rate" means, for each class of business as to a rating period for small employers with similar case characteristics, the arithmetic average of the applicable base premium rate and the corresponding highest premium rate.
(p) "Initial enrollment period" means the period of time specified in the health benefit plan during which an individual is first eligible to enroll in a small employer health benefit plan. Such period shall be no less favorable than a period beginning on the employee's or member's date of initial eligibility and ending 31 days thereafter.
(q) "Late enrollee" means an eligible employee or dependent who requests enrollment in a small employer's health benefit plan following the initial enrollment period provided under the terms of the first plan for which such employee or dependent was eligible through such small employer, however an eligible employee or dependent shall not be considered a late enrollee if:
(1) The individual:
(A) Was covered under another employer-provided health benefit plan or was covered under section 607(1) of the employee retirement income security act of 1974 (ERISA) at the time the individual was eligible to enroll;
(B) states in writing, at the time of the initial eligibility, that coverage under another employer health benefit plan was the reason for declining enrollment but only if the group policyholder or the accident and sickness issuer required such a written statement and provided the individual with notice of the requirement for a written statement and the consequences of such written statement;
(C) has lost coverage under another employer health benefit plan or under section 607(1) of the employee retirement income security act of 1974 (ERISA) as a result of the termination of employment, reduction in the number of hours of employment, termination of employer contributions toward such coverage, the termination of the other plan's coverage, death of a spouse, or divorce or legal separation; and
(D) requests enrollment within 63 days after the termination of coverage under another employer health benefit plan; or
(2) the individual is employed by an employer who offers multiple health benefit plans and the individual elects a different health benefit plan during an open enrollment period; or
(3) a court has ordered coverage to be provided for a spouse or minor child under a covered employee's plan.
(r) "New business premium rate" means, for each class of business as to a rating period, the lowest premium rate charged or offered, or which could have been charged or offered, by the small employer carrier to small employers with similar case characteristics for newly issued health benefit plans with the same or similar coverage.
(s) "Preexisting conditions exclusion" means a policy provision which excludes or limits coverage for charges or expenses incurred during a specified period not to exceed 90 days following the insured's effective date of enrollment as to a condition, whether physical or mental, regardless of the cause of the condition for which medical advice, diagnosis, care or treatment was recommended or received in the six months immediately preceding the effective date of enrollment.
(t) "Premium" means moneys paid by a small employer or eligible employees or both as a condition of receiving coverage from a small employer carrier, including any fees or other contributions associated with the health benefit plan.
(u) "Rating period" means the calendar period for which premium rates established by a small employer carrier are assumed to be in effect but any period of less than one year shall be considered as a full year.
(v) "Waiting period" means a period of time after full-time employment begins before an employee is first eligible to enroll in any applicable health benefit plan offered by the small employer.
(w) "Small employer" means any person, firm, corporation or partnership eligible for group sickness and accident insurance pursuant to K.S.A. 40-2209, and amendments thereto, actively engaged in business whose total employed work force consisted of, on at least 50% of its working days during the preceding year, of at least two and no more than 50 eligible employees, the majority of whom were employed within the state. In determining the number of eligible employees, employees participating in an association health plan shall be counted in the aggregate at the association level. Also in determining the number of eligible employees companies that are affiliated companies or that are eligible to file a combined tax return for purposes of state taxation, shall be considered one employer. Except as otherwise specifically provided, the provisions of the small employer health insurance availability act apply to a small employer that has a health benefit plan shall continue to apply until the plan anniversary following the date the employer no longer meets the requirements of this definition.
(x) "Affiliate" or "affiliated" means an entity or person who directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, a specified entity or person.
(y) "Association health plan" or "AHP" means a coverage for the payment of expenses described in K.S.A. 40-2222, and amendments thereto, offered by a qualified trade, merchant, retail or professional association or business league that complies with the provisions of K.S.A. 40-2222a and 40-2222b, and amendments thereto.
(z) "Qualified trade, merchant, retail or professional association or business league" means any bona fide trade merchant, retail or professional association or business league that: (1) Has been in existence for at least five calendar years; (2) is comprised of five or more employers; and (3) is incorporated in this state, has a principal office located in this state, or has a principal office within a metropolitan area that has boundaries within this state.
History: L. 1992, ch. 200, § 3; L. 1994, ch. 355, § 4; L. 1996, ch. 182, § 7; L. 1997, ch. 190, § 2; L. 1998, ch. 174, § 6; L. 2008, ch. 164, § 6; L. 2019, ch. 54, § 10; May 9.
(a) Any individual or group health benefit plan issued to a group authorized by K.S.A. 40-2209(a), and amendments thereto, shall be subject to the provisions of this act if it provides health care benefits covering employees of a small employer and if it meets any one of the following conditions:
(1) Any portion of the premium is paid by a small employer, or any covered individual, whether through wage adjustments, reimbursement, withholding or otherwise;
(2) the health benefit plan is treated by the employer or any of the covered individuals as part of a plan or program for the purposes of section 106 or section 162 of the United States internal revenue code; or
(3) with the permission of the board, the carrier elects to renew or continue a health benefit plan covering employees of an employer who no longer meets the definition of a "small employer."
(b) Except as expressly provided in this act, no health benefit plan offered to a small employer shall be subject to:
(1) Any law that would inhibit any carrier from contracting with providers or groups of providers with respect to health care services or benefits;
(2) any law that would impose any restriction on the ability to negotiate with providers regarding the level or method of reimbursing care or services provided under the health benefit plan.
(c) Individual policies of accident and sickness insurance issued to individuals and their dependents totally independent of any group, association or trust arrangement permitted under K.S.A. 40-2209, and amendments thereto, shall not be subject to the provisions of this act.
History: L. 1992, ch. 200, § 4; L. 1994, ch. 355, § 5; L. 1998, ch. 174, § 7; L. 2019, ch. 54, § 11; May 9.
Health benefit plans covering small employers that are issued or renewed within this state or outside this state covering persons residing in this state shall be subject to the following provisions, as applicable:
(a) Such policy may impose a preexisting conditions exclusion, not to exceed 90 days following the date of enrollment, for conditions whether physical or mental, regardless of the cause of the condition for which medical advice, diagnosis, care or treatment was recommended or received in the six months prior to the effective date of enrollment. Any preexisting conditions exclusion shall run concurrently with any waiting period.
(b) Such policy shall waive such a preexisting conditions exclusion to the extent the employee or member or individual dependent or family member was covered by (1) a group or individual sickness and accident policy, (2) coverage under section 607(1) of the employees retirement income security act of 1974 (ERISA), (3) a group specified in K.S.A. 40-2222, and amendments thereto, (4) part A or part B of title XVIII of the social security act, (5) title XIX of the social security act, other than coverage consisting solely of benefits under section 1928, (6) chapter 55 of title 10 United States code, (7) a state children's health insurance program established pursuant to title XXI of the social security act, (8) medical care program of the Indian health service or of a tribal organization, (9) the Kansas uninsurable health plan act pursuant to K.S.A. 40-2217 et seq., and amendments thereto or similar health benefits risk pool of another state, (10) a health plan offered under chapter 89 of title 5, United States code, (11) a health benefit plan under section 5(e) of the peace corps act (22 U.S.C. § 2504 (e) or (12) a group subject to K.S.A. 12-2616 et seq., and amendments thereto which provided hospital, medical and surgical expense benefits within 63 days prior to the effective date of coverage under a health benefit plan with no gap in coverage. A group policy shall credit the periods of prior coverage specified in this subsection without regard to the specific benefits covered during the period of prior coverage. Any period that the employee or member is in a waiting period for any coverage under a group health plan or is in an affiliation period shall be taken into account in determining the continuous period under this subsection.
(c) A carrier may exclude a late enrollee except during an open enrollment period.
(d) Except as expressly provided by this act, every carrier doing business in the small employer market retains the authority to underwrite and rate individual accident and sickness insurance policies, and to rate small employer groups using generally accepted actuarial practices.
(e) No health benefit plan issued by a carrier may limit or exclude, by use of a rider or amendment applicable to a specific individual, coverage by type of illness, treatment, medical condition or accident, except for preexisting conditions as permitted under subsection (a).
(f) In the absence of the small employer's decision to the contrary, all health benefit plans shall make coverage available to all the eligible employees of a small employer without a waiting period. The decision of whether to impose a waiting period for eligible employees of a small employer shall be made by the small employer, who may only choose from the waiting periods offered by the carrier. No waiting period shall be greater than 90 days and shall permit coverage to become effective no later than the first day of the month immediately following completion of the waiting period.
(g) (1) Except as provided in subsection (f), requirements used by a small employer carrier in determining whether to provide coverage to a small employer, including requirements for minimum participation of eligible employees and minimum employer contributions, shall be applied uniformly among all small employers with the same number of eligible employees applying for coverage or receiving coverage from the small employer carrier.
(2) A small employer carrier may vary application of minimum participation requirements and minimum employer contribution requirements only by the size of the small employer group.
(3) (A) Except as provided in provision (B), in applying minimum participation requirements with respect to a small employer, a small employer carrier shall not consider employees or dependents who have qualifying existing coverage in a health benefit plan sponsored by another employer in determining whether the applicable percentage of participation is met.
(B) With respect to a small employer, a small employer carrier may consider employees or dependents who have coverage under another health benefit plan sponsored by such small employer in applying minimum participation requirements.
(h) For the purposes of this section, the term "preexisting conditions exclusion" shall mean, with respect to coverage, a limitation or exclusion of benefits relating to a condition based on the fact that the condition was present before the date of enrollment for such coverage whether or not any medical advice, diagnosis, care or treatment was recommended or received before such date.
(i) For the purposes of this section, the term "date of enrollment" means the date the individual is enrolled under the group policy or, if earlier, the first day of the waiting period for such enrollment.
(j) For the purposes of this section, the term "waiting period" means with respect to a group policy the period which must pass before the individual is eligible to be covered for benefits under the terms of the policy.
History: L. 1992, ch. 200, § 5; L. 1994, ch. 355, § 6; L. 1997, ch. 190, § 3; L. 1998, ch. 174, § 8; L. 2000, ch. 34, § 2; July 1.
From and after January 1, 1993: (a) A small employer carrier may establish a class of business only to reflect substantial differences in expected claims experience or administrative costs related to the following reasons:
(1) The small employer carrier uses more than one type of system for the marketing and sale of health benefit plans to small employers;
(2) the small employer carrier has acquired a class of business from another small employer carrier; or
(3) the small employer carrier provides coverage to one or more association groups that meet the requirements of subsection (f)(5) of K.S.A. 40-2209, and amendments thereto.
(b) A small employer carrier may establish up to nine separate classes of business under subsection (a).
(c) The commissioner may adopt rules and regulations to provide for a period of transition in order for a small employer carrier to come into compliance with subsection (b) in the instance of acquisition of an additional class of business from another small employer carrier.
(d) The commissioner may approve the establishment of additional classes of business upon application to the commissioner and a finding by the commissioner that such action would enhance the efficiency and fairness of the small employer marketplace.
History: L. 1992, ch. 200, § 6; L. 1998, ch. 174, § 9; July 1.
From and after January 1, 1993: (a) Premium rates applicable to Kansas residents for health benefit plans subject to this act shall be subject to the following provisions:
(1) The index rate for a rating period for any class of business shall not exceed the index rate for any other class of business by more than 20%.
(2) For a class of business, the premium rates charged during a rating period to small employers with similar case characteristics for the same or similar coverage, or the rates that could be charged to such employers under the rating system for that class of business, shall not vary from the index rate by more than 25% of the index rate.
(3) The percentage increase in the premium rate charged to a small employer for a new rating period may not exceed the sum of the following:
(A) The percentage change in the new business premium rate measured from the first day of the prior rating period to the first day of the new rating period. In the case of a health benefit plan into which the small employer carrier is no longer enrolling new small employers, the small employer carrier shall use the percentage change in the base premium rate, if such change does not exceed, on a percentage basis, the change in the new business premium rate for the most similar health benefit plan into which the small employer carrier is actively enrolling new small employers;
(B) any adjustment, not to exceed 15% annually and adjusted pro rata for rating periods of less than one year, due to the claim experience, health status or duration of coverage of the employees or dependents of the small employer as determined from the small employer carrier's rate manual for the class of business; and
(C) any adjustment due to change in coverage or change in the case characteristics of the small employer, as determined from the small employer carrier's rate manual for the class of business.
(4) Adjustments in rates for claim experience, health status and duration of coverage shall not be charged to individual employees or dependents. Any such adjustment shall be applied uniformly to the rates charged for all employees and dependents of the small employer.
(5) A small employer carrier may utilize industry as a case characteristic in establishing premium rates, if the highest rate factor associated with any industry classification does not exceed the lowest rate factor associated with any industry classification by more than 30% for each year until the earlier of the first acquisition of coverage from a small employer carrier which did not previously provide coverage to that small employer or the first renewal date on or after December 31, 1996, and 15% each year thereafter.
(6) A premium rate for a rating period may exceed the ranges set forth in paragraphs (1) and (2) until the earlier of the first acquisition of coverage from a small employer carrier which did not previously provide coverage to that small employer or the first renewal date on or after December 31, 1996. If premium rates for a small employer covered by a small employer carrier prior to January 1, 1993, are below the lowest range as set forth in paragraphs (1) and (2), such small employer carrier must at least increase that small employer's rates commencing with renewals on or after December 31, 1995, to equally distribute the needed increase to get that small employer's rates within the range over the renewal opportunities remaining so that the small employer's renewal rates on or after December 31, 1999, would be within the ranges. In such case, the percentage increase in the premium rate charged to a small employer for a new rating period shall not exceed the sum of the following:
(A) The percentage change in the new business premium rate measured from the first day of the prior rating period to the first day of the new rating period. In the case of a health benefit plan into which the small employer carrier is no longer enrolling new small employers, the small employer carrier shall use the percentage change in the base premium rate, if such change does not exceed, on a percentage basis, the change in the new business premium rate for the most similar health benefit plan into which the small employer carrier is actively enrolling new small employers.
(B) Any adjustment due to change in coverage or change in the case characteristics of the small employer, as determined from the carrier's rate manual for the class of business.
(7) (A) Small employer carriers shall apply rating factors, including case characteristics, consistently with respect to all small employers in a class of business. Rating factors shall produce premiums for identical groups which differ only by amounts attributable to plan design and do not reflect differences due to the nature of the groups assumed to select particular health benefit plans.
(B) A small employer carrier shall treat all health benefit plans issued or renewed in a class of business in the same calendar month as having the same rating period.
(8) For the purposes of this subsection, a health benefit plan that utilizes a restricted provider network shall not be considered similar coverage to a health benefit plan that does not utilize such a network, if utilization of the restricted provider network results in substantial differences in claims costs.
(9) A small employer carrier shall not use case characteristics, other than age, gender, industry, geographic area, family composition, and group size without prior approval of the commissioner.
(10) The commissioner may establish regulations to implement the provisions of this section and to assure that rating practices used by small employer carriers are consistent with the purposes of this act, including:
(A) Assuring that differences in rates charged for health benefit plans by small employer carriers are reasonable and reflect objective differences in plan design, not including differences due to the nature of the groups assumed to select particular health benefit plans; and
(B) prescribing the manner in which case characteristics may be used by small employer carriers.
(b) A small employer carrier shall not transfer a small employer involuntarily into or out of a class of business. A small employer carrier shall not offer to transfer a small employer into or out of a class of business unless such offer is made to transfer all small employers in the class of business without regard to case characteristics, claim experience, health status or duration of coverage.
(c) The commissioner may suspend for a specified period the application of subsection (a)(1) as to the premium rates applicable to one or more small employers included within a class of business of a small employer carrier for one or more rating periods upon a filing by the small employer carrier and a finding by the commissioner either that the suspension is reasonable in light of the financial condition of the small employer carrier or that the suspension would enhance the efficiency and fairness of the marketplace for small employer health insurance.
(d) Upon written application of the group policyholders, the commissioner may suspend the application of K.S.A. 40-2209g and 40-2209h, and amendments thereto, to any group whose fundamental structure or composition would otherwise be adversely affected.
History: L. 1992, ch. 200, § 7; L. 1994, ch. 355, § 7; L. 1995, ch. 183, § 8; July 1.
From and after January 1, 1993: In connection with the offering for sale of any health benefit plan to a small employer, each carrier shall make a reasonable disclosure as part of its solicitation and sales materials, of:
(a) The extent to which premium rates for a specific small employer are established or adjusted in part based upon the actual or expected variation in claims costs or actual or expected variation in health condition of the employees and dependents of such small employer;
(b) the provisions concerning such carrier's right to change premium rates and the factors other than claims experience which affect changes in premium rates; and
(c) provisions relating to renewability of policies and contracts; and
(d) the provision relating to any pre-existing condition provision.
History: L. 1992, ch. 200, § 8; July 1.
From and after January 1, 1993: Compliance with the underwriting and rating requirements contained in this act shall be demonstrated through actuarial certification. Carriers offering health benefit plans to small employers shall on or before March 15 file annually with the commissioner an actuarial certification stating that the underwriting and rating methods of the carrier:
(a) Comply with accepted actuarial practices;
(b) are uniformly applied to health benefit plans covering small employers; and
(c) comply with the provisions of this act.
History: L. 1992, ch. 200, § 9; July 1.
History: L. 1992, ch. 200, §§ 10, 11; Repealed, L. 1998, ch. 174, § 33; July 1.
(a) Each small employer carrier shall actively market health benefit plan coverage to eligible small employers in the state.
(b) (1) Except as provided in paragraph (2), no small employer carrier, agent or broker shall, directly or indirectly, engage in the following activities:
(A) Encouraging or directing small employers to refrain from filing an application for coverage with the small employer carrier because of the health status, claims experience, industry, occupation or geographic location of the small employer;
(B) encouraging or directing small employers to seek coverage from another carrier because of the health status, claims experience, industry, occupation or geographic location of the small employer.
(2) The provisions of paragraph (1) shall not apply with respect to information provided by a small employer carrier or producer to a small employer regarding the established geographic service area or a restricted network provision of a small employer carrier.
(c) (1) Except as provided in paragraph (2), no small employer carrier shall, directly or indirectly, enter into any contract, agreement or arrangement with an agent or broker that provides for or results in the compensation paid to such person for the sale of a health benefit plan to be varied because of the health status, claims experience, industry, occupation or geographic location of the small employer.
(2) Paragraph (1) shall not apply with respect to a compensation arrangement that provides compensation to an agent or broker on the basis of percentage of premium, provided that the percentage shall not vary because of the health status, claims experience, industry, occupation or geographic area of the small employer.
(d) No small employer carrier shall terminate, fail to renew or limit its contract or agreement of representation with an agent or broker for any reason related to the health status, claims experience, occupation, or geographic location of the small employers placed by the agent or broker with the small employer carrier.
(e) No small employer carrier, agent or broker shall induce or otherwise encourage a small employer to separate or otherwise exclude an employee from health coverage or benefits provided in connection with the employee's employment.
(f) Denial by a small employer carrier of an application for coverage from a small employer shall be in writing and shall state the reason or reasons for the denial.
(g) The commissioner may adopt rules and regulations setting forth additional standards to provide for the fair marketing and broad availability of health benefit plans to small employers in this state.
(h) If a small employer carrier enters into a contract, agreement or other arrangement with a third-party administrator to provide administrative, marketing or other services related to the offering of health benefit plans to small employers in this state, the third-party administrator shall be subject to this section as if it were a small employer carrier.
(i) Except as provided in paragraph (l)*, for the purposes of this act, carriers that are affiliated companies or that are eligible to file a consolidated tax return shall be treated as one carrier and any restrictions or limitations imposed by this act shall apply as if all health benefit plans issued to small employers in this state by such affiliated carriers were issued by one carrier.
(j) An affiliated carrier that is a health maintenance organization having a certificate of authority under K.S.A.
40-3201
et seq., and amendments thereto, may be considered to be a separate carrier for the purpose of this act.
History: L. 1992, ch. 200, § 12; L. 1998, ch. 174, § 10; L. 2000, ch. 34, § 3; July 1.
The commissioner may adopt rules and regulations necessary to carry out the provisions of this act.
History: L. 1992, ch. 200, § 13; July 1.
Violations of this act shall be treated as violations of the unfair trade practices act and subject to the penalties prescribed by K.S.A. 40-2407 and 40-2411 and amendments thereto.
History: L. 1992, ch. 200, § 14; July 1.
(a) On and after July 1, 1997, and subject to any exclusions set out in subsections (b) through (e), each accident and sickness insurer that offers or renews policies providing hospital, medical or surgical expense benefits to a small employer must: (1) Accept every small employer that applies for such coverage; and (2) accept for enrollment all eligible employees or dependents under such policy who apply for enrollment during the period in which the eligible employee or dependent first becomes eligible to enroll under the terms of the policy.
(b) (1) In the case of an accident and health insurer that offers a policy providing hospital, medical or surgical expense benefits to a small employer through a medical service enrollment area the accident and health insurer may:
(A) Limit the small employers that may apply for such coverage to those with eligible employees or dependents who live, work or reside in the medical service enrollment area for such policy; and
(B) within the medical service enrollment area of such policy, deny coverage to such small employer if the accident and sickness insurer has demonstrated to the commissioner that: (i) It will not have the capacity to deliver services adequately to small employees and dependents of any additional small employers because of its obligations to existing small employer group policyholders or certificateholders and to eligible employees and dependents; and (ii) it will apply this paragraph uniformly to all small employers without regard to the claims experience of those small employers and their employees and dependents and without regard to the health status factors of any employees or dependents.
(2) An accident and sickness insurer which denies coverage to a small employer under any policy providing hospital, medical or surgical expense benefits in any medical service enrollment area in accordance with subsection (b)(1)(B) may not offer such policies to small employers within such medical service enrollment area for a period of 180 days after coverage is denied.
(c) (1) An accident and sickness insurer may deny coverage to a small employer under a policy providing hospital, medical or surgical expense benefits if the accident and sickness insurer has demonstrated to the commissioner that:
(A) It does not have the financial reserves necessary to underwrite additional coverage; and
(B) it is applying this paragraph uniformly to all small employers in this state without regard to the claims experience of the small employers and their employees and dependents and without regard to any health status factors of any employees or dependents.
(2) An accident and health insurer upon denying coverage to small employers under policies providing hospital, medical or surgical expense benefits in accordance with subsection (c)(1) may not offer any policies providing hospital, medical or surgical expense benefits to any small employer for a period of 180 days after the date such policies are denied or until the accident and health insurer has demonstrated to the commissioner that it has sufficient financial reserves to underwrite additional coverage, whichever is later.
(d) The requirements of subsection (a) shall not be construed to preclude an accident and health insurer from establishing employer contribution rules or group participation rules for the offering of policies providing hospital, medical or surgical expense benefits to small employers.
(e) The requirements of subsection (a) shall not apply to small employer group policies offered by an accident and health insurer if such coverage is made available only through one or more associations.
(f) As used in this subsection the following mean:
(1) "Dependent" means those persons as defined in subsection (k) of K.S.A. 40-2209d, and amendments thereto;
(2) "employee" means those persons as defined in subsection (1) of K.S.A. 40-2209d, and amendments thereto;
(3) "employer contribution rule" means a requirement relating to the minimum level or amount of employer contribution toward the premium for enrollment of employees and dependents;
(4) "group participation rule" means a requirement relating to the minimum number of employees and dependents that must be enrolled in relation to a specified percentage or number of eligible employees or dependents;
(5) "health status related factors" means: (A) a physical or mental illness medical condition, (B) claims experience, (C) receipt of health care, (D) medical history, (E) genetic information, (F) evidence of insurability including conditions arising out of acts of domestic violence and (H) disability; and
(6) "small employer" means those employers as defined by subsection (z) of K.S.A. 40-2209d, and amendments thereto.
History: L. 1997, ch. 190, § 6; July 1.
(A) Blanket sickness and accident insurance is hereby declared to be that form of sickness and accident insurance covering special groups of persons as enumerated in one of the following paragraphs (1) to (8) inclusive: (1) Under a policy or contract issued to any common carrier, or to any operator, owner or lessee of a means of transportation, who or which shall be deemed the policyholder, covering a group defined as all persons who may become passengers on such common carrier or such means of transportation.
(2) Under a policy or contract issued to a college, school or other institutions of learning, a school district or districts, or school jurisdictional unit, or to the head, or principal; or governing board of any such educational unit, who or which shall be deemed the policyholder, covering students, teachers or other employees.
(3) Under a policy or contract issued to any volunteer fire department, first aid, civil defense, or other such volunteer organization, which shall be deemed the policyholder, covering all the members of such department or group, defined by reference to specified hazards incident to an activity or activities or operations sponsored or supervised by such policyholder.
(4) Under a policy or contract issued to a sports team, camp or sponsor thereof, which shall be deemed the policyholder, covering ten (10) or more members, campers, employees, officials or supervisors.
(5) Under a policy or contract issued to an employer, who shall be deemed the policyholder, covering any group of employees, dependents or guests, defined by reference to specified hazards incident to an activity or activities or operations of the policyholder.
(6) Under a policy or contract issued to any religious, charitable, recreational, educational, or civic organization, or branch thereof, which shall be deemed the policyholder, covering any group of members or participants defined by reference to specified hazards incident to an activity or activities or operations sponsored or supervised by such policyholder.
(7) Under a policy or contract issued to a newspaper or other publisher, which shall be deemed the policyholder, covering its carriers.
(8) Under a policy or contract issued to any other type of group which the commissioner of insurance may find properly subject to the issuance of blanket sickness and accident policy or contract.
(B) Every such blanket policy shall contain provisions which in the opinion of the commissioner are not less favorable to the policyholder and the individual insured than the following:
(1) A provision that the policy, including endorsements and a copy of the application, if any, of the policyholder and the persons insured shall constitute the entire contract between the parties, and that any statement made by the policyholder or by a person insured shall in absence of fraud, be deemed a representation and not a warranty, and that no such statements shall be used in defense to a claim under the policy, unless contained in a written application. Such person, his or her beneficiary, or assignee, shall have the right to make written request to the insurer for a copy of such application and the insurer shall, within fifteen (15) days after the receipt of such request at its home office or any branch office of the insurer, deliver or mail to the person making such request a copy of such application. If such copy shall not be so delivered or mailed, the insurer shall be precluded from introducing such application as evidence in any action based upon or involving any statements contained therein.
(2) A provision that written notice of sickness or of injury must be given to the insurer within twenty (20) days after the date when such a sickness or injury occurred. Failure to give notice within such time shall not invalidate nor reduce any claim if it shall be shown not to have been reasonably possible to give such notice and that notice was given as was reasonably possible.
(3) A provision that the insurer will furnish either to the claimant or to the policyholder for delivery to the claimant such forms as are usually furnished by it for filing proof of loss. If such forms are not furnished before the expiration of fifteen (15) days after giving of such notice, the claimant shall be deemed to have complied with the requirements of the policy as to proof of loss upon submitting, within the time fixed in the policy for filing proof of loss, written proof covering the occurrence, the character and the extent of the loss for which claim is made.
(4) A provision that in the case of claim for loss of time for disability, written proof of such loss must be furnished to the insurer within ninety (90) days after the commencement of the period for which the insurer is liable, and that subsequent written proofs of the continuance of such disability must be furnished to the insurer at such intervals as the insurer may reasonably require, and that in the case of claim for any other loss, written proof of such loss must be furnished to the insurer within ninety (90) days after the date of such loss. Failure to furnish such proof within such time shall not invalidate nor reduce any claim if it shall be shown not to have been reasonably possible to furnish such proof and that such proof was furnished as soon as was reasonably possible.
(5) A provision that all benefits payable under the policy other than benefits for loss of time will be payable immediately upon receipt of due written proof of such loss, and that, subject to due proof of loss, all accrued benefits payable under the policy for loss of time will be paid not less frequently than monthly during the continuance of the period for which the insurer is liable, and that any balance remaining unpaid at the termination of such period will be paid immediately upon receipt of such proof.
(6) A provision that the insurer at its own expense, shall have the right and opportunity to examine the person of the insured when and so often as it may reasonably require during the pendency of claim under the policy and also the right and opportunity to make an autopsy where it is not prohibited by law.
(7) A provision that no action at law or in equity shall be brought to recover under the policy prior to the expiration of sixty (60) days after written proof of loss has been furnished in accordance with the requirements of the policy and that no action shall be brought after the expiration of five (5) years after the time written proof of loss is required to be furnished.
(C) Each person insured under such blanket sickness and accident policy or contract shall, except where authorization is otherwise given by the commissioner of insurance, be furnished a memorandum approved by the commissioner of insurance setting forth the essential coverages of the contract, including the conditions under which an individual's coverage may be terminated under the policy and the age, if any, to which the coverage shall be limited, reduced, or restricted; the procedure to be followed in making claim under the policy; and, to whom benefits under the policy are payable. Such certificates shall also contain a summary of the provisions set forth in (B) of this subsection.
(D) All benefits under any blanket sickness and accident policy shall be payable to the person insured, or to his or her designated beneficiary or beneficiaries, or to his or her estate, except that if the person insured be a minor, such benefits may be made payable to his or her parents, guardian, or other person actually supporting him or her.
(E) No blanket disability income policy which integrates benefits with social security benefits, shall provide that the amount of any disability benefit actually being paid to the disabled person shall be reduced by changes in the level of social security benefits resulting either from changes in the social security law or due to cost of living adjustments which become effective after the first day for which disability benefits become payable.
History: L. 1951, ch. 296, § 10; L. 1965, ch. 306, § 2; L. 1977, ch. 162, § 2; July 1.
Every policy issued by any insurance corporation, association or organization to assure the payment of compensation under the workmen's compensation act, shall contain a provision to the effect that the insurance carrier shall not be relieved from the payment of compensation for injuries, or death sustained by injuries, if the insured becomes insolvent or is discharged in bankruptcy during the period that the policy is in operation, and the compensation, or any part of it, is due and unpaid.
History: L. 1951, ch. 296, § 11; June 30.
Every policy issued by any insurance corporation, association or organization to assure the payment of compensation, under the workmen's compensation act, shall contain a clause providing that between any employer and the insurer, notice to and knowledge of the occurrence of injury or death on the part of the insured shall be notice and knowledge on the part of the insurer; and jurisdiction of the insured shall be jurisdiction of the insurer and the insurer shall be bound by every agreement, adjudgment, award, or judgment rendered against the insured. Every such policy shall provide that the employee shall have first lien upon any amount becoming due on account of such policy to the insured from the insurer and that in case of the legal incapacity, inability, or disability of the insured to receive the amount due and pay it over to the insured employee, or his dependents, said insurer shall pay the same direct to such employee, his agent, or to a trustee for him or his dependents to the extent of discharging any obligation of the insured to said employee or his dependents.
History: L. 1951, ch. 296, § 12; June 30.
A policy, rider or endorsement, which could have been lawfully used or delivered or issued for delivery to any person in this state immediately before the effective date of this act may be used or delivered or issued for delivery to any such person during five (5) years after the effective date of this act without being subject to the provisions of K.S.A. 40-2202, 40-2203 or 40-2204.
History: L. 1951, ch. 296, § 13; June 30.
History: L. 1951, ch. 296, § 15; Repealed, L. 1997, ch. 24, § 7; July 1.
(a) No individual policy of accident and sickness insurance as defined in K.S.A. 40-2201, and amendments thereto, shall be issued or delivered to any person in this state nor shall any application, rider or endorsement be used in connection therewith, until a copy of the form thereof and of the classification of risks and the premium rates pertaining thereto, have been filed with the commissioner of insurance.
(b) No group or blanket policy or certificate of accident and sickness insurance providing hospital, medical or surgical expense benefits shall be issued or delivered to any person in this state, nor shall any application, rider or endorsement be used in connection therewith, until a copy of the form thereof and of the classification of risks and the premium rates pertaining thereto has been filed with the commissioner of insurance.
(c) (1) No such policy shall be issued, nor shall any application, rider or endorsement be used in connection therewith, until the expiration of 30 days after it has been filed unless the commissioner gives written approval thereof.
(2) (A) The commissioner shall create a requirements document containing filing requirements for each type of insurance. Such requirements document shall contain a list of all product filing requirements for each type of insurance that is required to be filed. For each type of insurance, such requirements document shall contain an appropriate citation to each requirement contained in any statute, rule and regulation and published bulletins in this state having the force and effect of law. Such requirements document shall be available on the insurance department internet website.
(B) The commissioner shall update the requirements document referred to in subparagraph (A) no less frequently than annually. The commissioner shall update the requirements document referred to in subparagraph (A) within 30 days after the effective date of any change in law, rule and regulation or bulletin published by the commissioner having the force and effect of law in this state.
(3) A filer shall submit with each policy form filing a document indicating the location within the policy form or any supplemental document for information establishing compliance with each requirement contained in the requirements documents referenced in subparagraph (A) of paragraph (2) of this subsection. A filer shall certify that the policy form, including any accompanying supplemental document, meets all requirements of state law.
(d) (1) Any risk classifications, premium rates, rating formulae, and all modifications thereof applicable to Kansas residents shall not establish an unreasonable, excessive or unfairly discriminatory rate or, with respect to group or blanket sickness and accident policies providing hospital, medical or surgical expense benefits issued pursuant to K.S.A. 40-2209 or 40-2210, and amendments thereto, discriminate against any individuals eligible for participation in a group, or establish rating classifications within a group that are based on medical conditions. In no event shall the rates charged to any group to which this subsection applies increase by more than 75% during any annual period unless the insurer can clearly document a material and significant change in the risk characteristics of the group.
(2) All rates for sickness and accident insurance providing hospital, medical or surgical expense benefits covering Kansas residents shall be made in accordance with the following provisions and due consideration shall be given to:
(A) Past and prospective loss experience;
(B) past and prospective expenses;
(C) adequate contingency reserves; and
(D) all other relevant factors within and without the state.
(3) Nothing in this act is intended to prohibit or discourage reasonable competition or discourage or prohibit uniformity of rates except to the extent necessary to accomplish the aforementioned purpose. The commissioner is hereby authorized to issue such rules and regulations as are necessary and not inconsistent with this act.
(e) All parties in the filing process shall act in good faith and with due diligence in performance of their duties pursuant to this section.
(f) (1) Within 30 days of receipt of the initial filing, the commissioner shall review and approve such filing or provide notice of any deficiency or disapprove the initial filing. Any notice of deficiency or disapproval shall be in writing and based only on the specific provisions of applicable statutes, regulations or bulletins published by the commissioner having the force and effect of law in this state and contained in the requirements document created by the commissioner pursuant to subparagraph (A) of paragraph (2) of subsection (c). The notice of deficiency or disapproval shall provide specific reasons for notice of deficiencies or disapproval. Such reasons shall contain sufficient detail for the filer to bring the policy form into compliance, and shall cite each specific statute, rule and regulation or bulletin having the force and effect of law in this state upon which the notice of deficiency or disapproval is based. Any notice of disapproval provided by the commissioner shall state that a hearing will be granted within 20 days after receipt of a written request therefor by the insurer. At the end of the 30 day period, the policy form shall be deemed approved if the commissioner has taken no action.
(2) In addition to the statutes, regulations or bulletins described in paragraph (2) of subsection (c), the commissioner may disapprove a filing or provide a notice of deficiency for any form for which the commissioner determines that the benefits provided therein are unreasonable in relation to the premium charged; or if such form contains any provisions which are unjust, unfair, inequitable, misleading, deceptive or encourage misrepresentation of such policy. Any notice of disapproval provided by the commissioner pursuant to this paragraph shall state that a hearing will be granted within 20 days after receipt of a written request therefor by the insurer.
(3) If the insurer has received a disapproval or notice of deficiency or disapproval regarding a policy form, it shall be unlawful for an insurer to issue such policy form or use such policy form in connection with any policy until that policy form has received a later approval by the commissioner.
(4) Within 30 days of receipt of the commissioner's notice of deficiency or disapproval, a filer may resubmit a policy form that corrects any deficiencies or resubmit a disapproved policy form and a revised certification. Any policy form not resubmitted to the commissioner within 30 days of the notice of deficiency shall be deemed withdrawn. Any disapproved policy form not resubmitted to the commissioner within 30 days of the notice of disapproval shall be deemed disapproved.
(5) (A) Within 30 days of receipt of a resubmitted filing and certification, the commissioner shall review the resubmitted filing and certification, and shall approve or disapprove such resubmitted filing and certification. Any notice of disapproval pertaining to the resubmitted filing and certification shall be in writing and provide a detailed description of the reasons for the disapproval in sufficient detail for the filer to bring the policy form into compliance. The notice of disapproval shall cite each specific statute, rule and regulation or bulletin having the force and effect of law in this state upon which the disapproval is based. No further extension of time may be taken unless the filer has introduced new provisions in the resubmitted filing and certification or the filer has materially modified any substantive provisions of the policy form, in which case the commissioner may extend the time for review by an additional 30 days. At the end of this 30 day review period, the policy form shall be deemed approved if the commissioner has taken no action.
(B) (i) Subject to clause (ii) of this subparagraph, the commissioner may not disapprove a resubmitted policy form for reasons other than those initially set forth in the original notice of deficiencies or disapproval sent pursuant to paragraph (1) of this subsection.
(ii) The commissioner may disapprove a resubmitted policy form for reasons other than those initially set forth in the original notice of deficiencies or disapproval sent pursuant to this subsection if:
(a) The filer has introduced new provisions in the resubmitted policy form and certification;
(b) the filer has materially modified any substantive provisions of the policy form;
(c) there has been a change in any statute, rule and regulation or published bulletin in this state having the force and effect of law; or
(d) there has been reviewer error and the written disapproval fails to state a specific provision of applicable statute, regulation or bulletin published by the commissioner having the force and effect of law in this state that is necessary to have the policy form conform to the requirements of law.
(6) At the end of the review period, the policy form shall be deemed approved if the commissioner has taken no action.
(7) Notwithstanding any other provision in this section, the commissioner may return a grossly inadequate filing to the filer without triggering any of the time deadlines set forth in this section. For purposes of this paragraph, the term "grossly inadequate filing" means a filing that fails to provide key information, including state-specific information, regarding a product, policy or rate, or that demonstrates an insufficient understanding of what is required to comply with state statutes or regulations.
(g) Except in cases of a material error or omission in a policy form that has been approved or deemed approved pursuant to the provisions of this act, the commissioner shall not:
(1) Retroactively disapprove that filing; or
(2) with respect to those policy forms, examine the filer during a routine or targeted market conduct examination for compliance with any later-enacted policy form filing requirements.
(h) If a rate filing or marketing material is required to be filed or approved by state law for a specific policy form, the time frames for review, approval or disapproval, resubmission, and re-review of those rate filings or marketing materials shall be the same as those provided for in subsection (f) for the review of policy forms.
(i) For purposes of this section:
(1) "Accident and sickness carrier" means an entity licensed to offer accident and sickness insurance in this state, or subject to the insurance laws and regulations of this state, or subject to the jurisdiction of the commissioner, that contracts or offers to contract to provide, deliver, arrange for, pay for or reimburse any of the costs of health care services or any insurer that provides policies of supplemental, disability income, medicare supplement or long-term care insurance.
(2) "Commissioner" means the commissioner of insurance.
(3) "Health care services" means services for the diagnosis, prevention, treatment, cure or relief of a health condition, illness or disease.
(4) "Policy form" means any policy, contract, certificate, rider, endorsement, evidence of coverage of any amendments thereto that are required by law to be filed with the commissioner for approval prior to their sale or issuance for sale in this state.
(5) "Supplemental documents" means any documents required to be filed in support of policy forms that may or may not be subject to approval.
(6) "Type of insurance" means any hospital or medical expense policy, health, hospital or medical service corporation contract, and a plan provided by a municipal group-funded pool, or a health maintenance organization contract offered by an employer or any certificate issued under any such policies, contracts or plans, policies or certificates covering only accident, credit, dental, disability income, long-term care, hospital indemnity, medicare supplement, specified disease, vision care, coverage issued as a supplement to liability insurance.
(j) This section shall apply to any individual or group policy form issued by an accident and health carrier required to be filed with the commissioner for review or approval.
(k) Violations of subsection (d) shall be treated as violations of the unfair trade practices act and subject to the penalties prescribed by K.S.A. 40-2407 and 40-2411, and amendments thereto.
(l) Hearings under this section shall be conducted in accordance with the provisions of the Kansas administrative procedure act.
History: L. 1965, ch. 304, § 2; L. 1986, ch. 318, § 36; L. 1988, ch. 356, § 108; L. 1991, ch. 134, § 2; L. 2008, ch. 38, § 1; July 1.
The purpose of this act shall be to provide reasonable standardization and simplification of terms and coverages of individual accident and sickness insurance policies and subscriber contracts of non-profit hospital, medical and dental service corporations to facilitate public understanding and comparison, to eliminate provisions contained in individual accident and sickness insurance policies and subscriber contracts of non-profit hospital, medical, and dental service corporations which may be misleading or unreasonably confusing in connection either with the purchase of such coverages or with the settlement of claims, and to provide for full disclosure in the sale of accident and sickness coverages.
History: L. 1976, ch. 218, § 1; July 1.
For the purposes of this act:
(a) The term "form" means policies, riders, endorsements, applications, subscriber contracts, or other documents required to be filed pursuant to K.S.A. 40-216 or 40-19a07, and amendments thereto.
(b) The term "accident and sickness insurance" means insurance written under K.S.A. 40-401, K.S.A. 40-1102(1)(a), other than credit insurance, and coverages written under K.S.A. 40-19a02, and amendments thereto. For purposes of this act nonprofit dental service corporations shall be deemed to be engaged in the business of insurance.
(c) The term "policy" means the entire contract between the insurer and the insured, including the policy, riders, endorsements, and the application if attached, and such term includes subscriber agreements issued by nonprofit dental service corporations.
History: L. 1976, ch. 218, § 2; L. 1997, ch. 8, § 8; July 1.
(a) The commissioner of insurance shall issue rules and regulations to establish standards for benefits under each of the following categories of coverage in individual policies, other than conversion policies issued pursuant to a contractual conversion privilege under a group policy, of accident and sickness insurance or subscriber contracts:
(1) Basic hospital expense coverage;
(2) basic medical-surgical expense coverage;
(3) hospital confinement indemnity coverage;
(4) major medical expense coverage;
(5) disability income protection coverage;
(6) accident only coverage; and
(7) specified disease or specified accident coverage.
(b) Nothing in this section shall preclude the issuance of any policy or contract which combines two (2) or more of the categories of coverage enumerated in paragraphs (1) through (6) of subsection (a).
(c) No policy or contract shall be delivered or issued for delivery in this state which does not meet the prescribed standards for the categories of coverage listed in paragraphs (1) through (7) of subsection (a) which are contained within the policy or contract unless the commissioner finds such policy or contract, including those affording supplemental coverage, will fulfill a reasonable public need and such policy or contract meets the requirements set forth in K.S.A. 40-2215 or unless the outline of coverage required by K.S.A. 40-2219 clearly sets forth wherein such policy does not provide the standards for benefits promulgated by the commissioner.
(d) The commissioner shall prescribe the method of identification of policies and contracts based upon coverages provided.
History: L. 1976, ch. 218, § 3; July 1.
(a) In order to provide for full and fair disclosure in the sale of individual accident and sickness insurance policies or subscriber contracts of a non-profit hospital, medical or dental service corporation, no such policy or contract shall be delivered or issued for delivery in this state unless: (1) The outline of coverage described in subsection (b) either accompanies the policy; or (2) in all other cases, the outline of coverage described in subsection (b) is delivered to the applicant at the time application is made and an acknowledgment of receipt or certificate of delivery of such outline is provided the insurer with the application. In the event the policy is issued on a basis other than that applied for, the outline of coverage properly describing the policy or contract must accompany the policy or contract when it is delivered and clearly state that it is not the policy or contract for which application was made.
(b) The commissioner shall prescribe the format and content of the outline of coverage required by subsection (a). "Format" means style, arrangement and overall appearance, including such items as the size, color, and prominence of type and the arrangement of text and captions. Such outline of coverage shall include:
(1) A statement identifying the applicable category or categories of coverage provided by the policy or contract as prescribed in K.S.A. 40-2218;
(2) a description of the principal benefits and coverage provided in the policy or contract;
(3) a statement of the exceptions, reductions and limitations contained in the policy or contract;
(4) a statement of the renewal provisions including any reservation by the insurer or non-profit hospital, medical, or dental service corporation of a right to change premiums;
(5) a statement that the outline is a summary of the policy or contract issued or applied for and that the policy or contract should be consulted to determine governing contractual provisions.
History: L. 1976, ch. 218, § 4; July 1.
Notwithstanding the provisions of K.S.A. 40-2203 (A) (2) (b), if an insurer or a non-profit hospital, medical, or dental service corporation elects to use a simplified application form, with or without a question as to the applicant's health at the time of application, but without any questions concerning the insured's health history or medical treatment history, the policy must cover any loss occurring after twelve (12) months from any pre-existing condition not specifically excluded from coverage by terms of the policy, and, except as so provided, the policy or contract shall not include wording that would permit a defense based upon pre-existing conditions.
History: L. 1976, ch. 218, § 5; July 1.
In addition to any other statutory authority not inconsistent herewith, the commissioner shall adopt rules and regulations establishing specific standards for medicare supplement policies delivered or issued for delivery in this state. The standards so established shall equal, or may exceed, the minimum standards and requirements permitted by section 1395SS(b)(B) of the federal social security act (42 U.S.C. § 1395 et seq.). In addition, an issuer of a medicare supplement policy: (a) Shall not deny coverage to an applicant under 65 years of age who becomes eligible for a medicare by reason of disability if such person makes application for medicare supplement policy within six months of the first day on which such person enrolls for benefits under medicare part B;
(b) may not condition the issuance or effectiveness of a medicare supplement policy issued to a person eligible for medicare by reason of disability because of the health status, claims experience, receipt of health care, or medical condition of such applicant if such applicant makes application for a medicare supplement policy during the six month period beginning with the first day of the month in which such applicant enrolls for benefits under medicare part B;
(c) shall make available to persons eligible for medicare by reason of disability each type of medicare supplement policy such issuer makes available to person eligible for medicare by reason of age; and
(d) shall not charge individuals who become eligible for medicare by reason of disability and who are under the age of 65 premium rates for any medical supplemental insurance benefit plan offered by the issuer that exceeds the issuer's premium rates charged for such plan to individuals who are age 65.
History: L. 1981, ch. 194, § 1; L. 1992, ch. 58, § 1; L. 1996, ch. 24, § 1; L. 1999, ch. 106, § 4; July 1.
(a) Except as otherwise provided in K.S.A. 40-2221b, no medicare supplement policy of insurance, as defined by the commissioner of insurance by rules and regulations, issued or delivered in this state shall be terminated for failure to pay premiums when due unless the insurer sends to the insured a notice, addressed to the insured's last address of record with such insurer, indicating the policy terminated due to failure to pay the required premium as of the premium due date. Such notice shall be enclosed in an envelope on the front of which the following language appears in bold-faced type in a conspicuous place:
IMPORTANT—-PREMIUM RENEWAL NOTICE ENCLOSED. Such notice shall be sent no later than 45 days following the date on which premium was due, and shall inform the insured of the amount of premium that would be required to reinstate the policy and of the time within which such premium must be remitted to the insurer to effect such reinstatement. Except as provided in subsection (b), upon payment of the required premium by the insured to the insurer within 45 days of the insurer's having mailed such notice, the policy shall be automatically reinstated as continuous coverage without lapse by the insurer without imposing upon the insured any new exclusions, reductions or waiting periods and without requiring of the insured proof of insurability.
(b) Medicare supplement policies of insurance, as defined by the commissioner of insurance by rules and regulations, shall be reinstated in the event of lapse if the insurer is provided proof of cognitive impairment or the loss of functional capacity within five months after termination and the insured requests such reinstatement. Collection of past due premium will be allowed, where appropriate. The standard of proof of cognitive impairment or loss of functional capacity shall be established by clinical diagnosis by a person licensed to practice medicine and surgery and qualified to make such diagnosis.
History: L. 1988, ch. 159, § 1; L. 1996, ch. 182, § 8; July 1.
The provisions of K.S.A. 40-2221a shall not apply to: (a) An insurance contract which is billed for by the insurer to other than the insured or a guardian, conservator or trustee of the insured;
(b) an insurance contract billed for by the insurer to the insured on a preauthorized check or bank draft basis; and
(c) an insurance contract for which the insurer has sent the proper notice as provided under this act more than twice in the preceding 12 months.
History: L. 1988, ch. 159, § 2; July 1.
(a) Any person or other entity that provides coverage in this state for medical, surgical, chiropractic, physical therapy, speech pathology, audiology, professional mental health, dental, hospital, or optometric expenses, whether such coverage is by direct payment, reimbursement, or otherwise, shall be presumed to be subject to the jurisdiction of the commissioner of insurance unless the person or other entity:
(1) Is a professional association of architects incorporated in Kansas on October 4, 1954, that provides coverage for the payment of expenses described herein to or for the members of the association or dependents through a trust established November 1, 1986, and complies with K.S.A. 40-2222a, and amendments thereto;
(2) is a professional association of dentists incorporated in Kansas on July 3, 1972, that provides coverage for the payment of expenses described herein to or for the members of the association or dependents through an established trust and complies with K.S.A. 40-2222a, and amendments thereto;
(3) (A) is a trade association of banks incorporated in Kansas on August 9, 1978, that provides coverage for the payment of expenses described herein to or for the members of the association or dependents through a trust established July 1, 1989, and complies with K.S.A. 40-2222a, and amendments thereto; or
(B) is a trade organization of banks incorporated in Kansas on June 1, 1982, that provides coverage for expenses described herein to or for members of the association or dependents, and complies with K.S.A. 40-2222a, and amendments thereto;
(4) is a trade association of truckers incorporated in Kansas on July 1, 1985, that provides coverage for the payment of expenses described herein to or for the members of the association or dependents through a trust established January 1, 1990, and complies with K.S.A. 40-2222a, and amendments thereto;
(5) is an association of physicians practicing in the Kansas City metropolitan area, incorporated in Missouri on March 5, 1891, and qualified as a foreign corporation in Kansas on May 19, 1987, that provides coverage for the payment of expenses described herein to or for the members of the association, their employees and dependents through a trust established November 1, 1984, and complies with K.S.A. 40-2222a, and amendments thereto;
(6) is organized as a farmers' cooperative under the Kansas cooperative marketing act, K.S.A. 17-1601 et seq., and amendments thereto, on January 13, 1983, and is an association of farmers' cooperatives and other like associations operated on a cooperative basis and their affiliated companies, that provides benefits for employees, and family members of such employees, of such associations, and complies with K.S.A. 40-2222a, and amendments thereto;
(7) is any other qualified trade, merchant, retail, or professional association or business league that provides coverage for the payment of expenses described herein to or for the members of the association, their employees and dependents and that complies with K.S.A. 40-2222a, and amendments thereto;
(8) conclusively shows by submission of an appropriate certificate, license, letter or other document issued by the United States department of labor that such person or entity is not subject to Kansas law; or*
(9) conclusively shows that it is subject to the jurisdiction of an agency of this state or the federal government. For purposes of this act, tax exempt status under section 501(c) of the federal internal revenue code of 1986 shall not be deemed to be jurisdiction of the federal government.*
(10) is a nonprofit agricultural membership organization incorporated in Kansas on June 23, 1931, or an affiliate thereof, that provides healthcare benefit coverage for the payment of expenses described herein to or for the members of the organization and their dependents. Notwithstanding any provision of law to the contrary, the healthcare benefit coverage described in this paragraph shall not be considered insurance. The risk under such coverage may be reinsured by a company authorized to conduct reinsurance in Kansas. Providers of healthcare benefit coverage shall file a signed, certified actuarial statement of plan reserves annually with the commissioner of insurance.
(b) For the purposes of this section, a qualified trade, merchant, retail or professional association or business league means the same as in K.S.A. 40-2209d, and amendments thereto.
History: L. 1983, ch. 150, § 1; L. 1991, ch. 135, § 1; L. 2013, ch. 27, § 1; L. 2014, ch. 44, § 1; L. 2019, ch. 54, § 12; L. 2019, ch. 54, § 13; July 1.
At the time the initial application for coverage is taken with respect to new applicants and upon the first renewal, reinstatement or extension of coverage following the effective date of this act with respect to persons previously covered, each person or entity described in K.S.A. 40-2222, and amendments thereto, shall provide a written notice stating that:
(a) The coverage is not provided by an insurance company;
(b) the plan is not subject to the laws and regulations relating to insurance companies;
(c) the plan is not under the jurisdiction of the commissioner of insurance; and
(d) if the plan does not pay medical expenses that are eligible for payment under the plan for any reason, the individuals covered by the plan may be liable for such expenses.
History: L. 1991, ch. 135, § 2; L. 2014, ch. 44, § 2; L. 2019, ch. 54, § 14; L. 2019, ch. 54, § 15; July 1.
(a) (1) Except as provided in subsection (b), as a condition precedent to continuation of the exemption provided by K.S.A. 40-2222, and amendments thereto, each person or entity described in K.S.A. 40-2222, and amendments thereto, shall, no later than May 1 of each year, pay a tax at the rate of 1% per annum upon the annual Kansas gross premium collected during the preceding calendar year. For persons or entities that have a principal office within a metropolitan area that has boundaries in Kansas and associations that have their principal office located within the borders of this state and offer policies to non-residents of Kansas, the tax owed under this section shall be based upon the gross premium collected during the preceding year relating to health benefit plans issued to members that have a principal place of business in Kansas. In the computation of the tax, such persons or entities shall be entitled to deduct any annual Kansas gross premiums returned on account of cancellation or dividends returned to members or expenditures used for the purchase of reinsurance or stop-loss coverage.
(2) Every person or entity subject to taxation under the provisions of this subsection shall pay the tax imposed and make a return under oath to the commissioner of insurance under such rules and regulations and in such form and manner as the commissioner may prescribe.
(b) A person or entity described in K.S.A. 40-2222, and amendments thereto, shall be exempt from subsection (a) if it provides health benefits through a self-funded health plan and is therefore exempt from the jurisdiction of the commissioner pursuant to the employee retirement income security act of 1974, as in effect on July 1, 2022.
History: L. 1991, ch. 135, § 3; L. 2014, ch. 44, § 3; L. 2019, ch. 54, § 16; L. 2019, ch. 54, § 17; L. 2022, ch. 10, § 1; July 1.
Any person or entity unable to show under K.S.A. 40-2222 that it is subject to the jurisdiction of an agency of this state or the federal government shall: (a) Submit to an examination by the insurance commissioner to determine the organization and solvency of the person or the entity; (b) be subject to all applicable provisions of chapter 40 of the Kansas Statutes Annotated. Any examination conducted under this section shall be performed in accordance with K.S.A. 40-222 and 40-223, and amendments thereto.
History: L. 1983, ch. 150, § 2; July 1.
Any person who advertises, sells, transacts or administers coverage in this state described in K.S.A. 40-2222, shall, if that coverage is not fully insured by an insurer authorized to transact insurance business in this state, advise any purchaser, prospective purchaser and covered person of such lack of insurance or other coverage.
History: L. 1983, ch. 150, § 3; July 1.
This act may be known and cited as the long-term care insurance act.
History: L. 1987, ch. 156, § 1; January 1, 1988.
The requirements of this act shall apply to policies delivered or issued for delivery in this state on or after the effective date of this act. This act is not intended to supersede the obligation of entities subject to this act to comply with the substance of other applicable insurance laws insofar as they do not conflict with this act, except that laws and rules and regulations designed and intended to apply to medicare supplement insurance policies shall not be applied to long-term care insurance. A policy which is not primarily advertised, marketed or offered as long-term care insurance need not meet the requirements of this act.
History: L. 1987, ch. 156, § 2; January 1, 1988.
As used in this act, unless the context requires otherwise:
(a) "Long-term care insurance" means any insurance policy primarily advertised, marketed, offered or designed to provide coverage for each covered person on an expense incurred, indemnity, prepaid, or other basis, for one or more necessary or diagnostic, preventive, therapeutic, rehabilitative, maintenance, custodial, residential or personal care services, provided in a setting other than an acute care unit of a hospital. "Long-term care insurance" includes group and individual policies or riders whether issued by insurers, fraternal benefit societies, nonprofit medical and hospital service corporations, prepaid health plans, health maintenance organizations, or any similar organization. "Long-term care insurance" shall not include any insurance policy that is offered primarily to provide basic medicare supplement coverage, basic hospital expense coverage, basic medical-surgical expense coverage, hospital confinement indemnity coverage, major medical expense coverage, disability income protection coverage, accident-only coverage, specified disease or specified accident coverage, or limited benefit health coverage, but the inclusion or attachment of long-term care insurance coverage to one of the foregoing products shall not exempt it from the requirements of this act.
(b) "Applicant" means:
(1) In the case of an individual long-term care insurance policy, the person who seeks to contract for such benefits; and
(2) in the case of a group long-term care insurance policy, the proposed certificateholder.
(c) "Certificate" means any certificate issued under a group long-term care insurance policy that has been delivered or issued for delivery in this state.
(d) "Commissioner" means the commissioner of insurance.
(e) "Group long-term care insurance" means a long-term care insurance policy delivered or issued for delivery in this state and issued to a group as defined in K.S.A. 40-2209, and amendments thereto. No group long-term care insurance coverage may be offered to a resident of this state under a group policy issued in another state to a group defined in K.S.A. 40-2209, and amendments thereto, unless this state, or another state having statutory and regulatory long-term care insurance requirements substantially similar to those adopted in this state, has made a determination that such requirements have been met.
(f) "Policy" means, except as otherwise provided in subsection (e), any individual or group policy, contract, subscriber agreement, rider or endorsement delivered or issued for delivery in this state by an insurer, fraternal benefit society, nonprofit medical and hospital service corporation, prepaid health plan, health maintenance organization or any similar organization.
History: L. 1987, ch. 156, § 3; L. 1997, ch. 8, § 9; L. 2020, ch. 10, § 6; June 11.
(a) The commissioner may adopt reasonable rules and regulations:
(1) To establish specific standards for policy provisions of long-term care insurance policies. Such standards shall be in addition to and in accordance with applicable laws of this state, and shall address terms of renewability, initial and subsequent conditions of eligibility, nonduplication of coverage provisions, coverage of dependents, preexisting conditions, termination of insurance, probationary periods, limitations, exceptions, reductions, elimination periods, requirements for replacement, recurrent conditions and definitions of terms, except that no regulation shall limit the number of days contained in an elimination period of confinement in a nursing facility or for all confinements in a nursing facility which are due to the same or related causes and separated from each other by less than 180 days; and
(2) to specify prohibited policy provisions not otherwise specifically authorized by statute which, in the opinion of the commissioner, are unjust, unfair or unfairly discriminatory to any person insured under a long-term care insurance policy.
(b) Rules and regulations adopted by the commissioner shall:
(1) Recognize the unique, developing and experimental nature of long-term care insurance; and
(2) recognize the appropriate distinctions necessary between group and individual long-term care insurance policies.
(c) The commissioner may adopt rules and regulations establishing loss-ratio standards for long-term care insurance policies if a specific reference to long-term care insurance policies is contained in the rules and regulations.
(d) No long-term care insurance policy may:
(1) Be canceled, nonrenewed, or otherwise terminated solely on the grounds of the age or the deterioration of the mental or physical health of the insured individual or certificateholder; or
(2) contain a provision establishing any new waiting period in the event existing coverage is converted to or replaced by a new or other form within the same company, except with respect to an increase in benefits voluntarily selected by the insured individual or group policyholder.
(e) (1) No long-term insurance policy or certificate shall use a definition of preexisting condition which is more restrictive than the following: "Preexisting condition" means a condition for which medical advice or treatment was recommended by, or received from a provider of health care services, within six months preceding the effective date of coverage of an insured person.
(2) No long-term care insurance policy shall exclude coverage for a loss or confinement which is the result of a preexisting condition unless such loss or confinement begins within six months following the effective date of coverage of an insured person.
(3) The commissioner may extend the limitation periods set forth in subsections (e)(1) and (e)(2) above as to specific age group categories or specific policy forms upon finding that the extension is not contrary to the best interest of the public.
(4) The definition of preexisting condition shall not prohibit an insurer from using an application form designed to elicit the complete health history of an applicant, and, on the basis of the answers on that application, from underwriting in accordance with that insurer's established underwriting standards.
(f) No long-term care insurance policy shall require prior institutionalization as a condition precedent to the payment of benefits.
(g) In order to provide for fair disclosure in the sale of long-term care insurance policies:
(1) An outline of coverage shall be delivered to an applicant for a long-term care insurance policy at the time of application. In the case of direct response solicitations, the insurer shall deliver the outline of coverage upon the applicant's request, but regardless of request, shall make such delivery no later than at the time of policy delivery. Such outline of coverage shall include:
(A) A description of the principal benefits and coverage provided in the policy;
(B) a statement of the principal exclusions, reductions and limitations contained in the policy;
(C) a statement of the renewal provisions, including any reservation in the policy of a right to change premiums; and
(D) a statement that the outline of coverage is a summary of the policy issued or applied for, and that the policy should be consulted to determine governing contractual provisions.
(2) A certificate issued pursuant to a group long-term care insurance policy which policy is delivered or issued for delivery in this state shall include the information required by subsection (g)(4) of K.S.A. 40-2209, and amendments thereto.
(h) No policy shall be advertised, marketed or offered as long-term care insurance unless it complies with the provisions of this act.
History: L. 1987, ch. 156, § 4; L. 1997, ch. 190, § 5; L. 1998, ch. 174, § 11; L. 2002, ch. 168, § 1; July 1.
The provisions of K.S.A. 40-2228a through 40-2228e shall apply to all individual and group long-term care policies or certificates that are issued to residents of this state on and after the effective date of this act.
History: L. 1996, ch. 182, § 1; July 1.
(a) No long-term care policy or certificate shall be issued until the insurer has received from the applicant either a written designation of at least one person, in addition to the applicant, who is to receive notice of lapse or termination of the policy or certificate for nonpayment of premium, or a written waiver dated and signed by the applicant electing not to designate additional persons to receive such notice.
(b) The applicant has the right to designate at least one person who is to receive the notice of termination, in addition to the insured. Designation of an additional person to receive notice of lapse or termination shall not constitute acceptance of any liability by such person for services provided to the insured. The designation shall include the full name and home address of such additional person.
(c) The policy or certificate shall include a waiver stated in clear terms in the case of an applicant who elects not to designate an additional person. The waiver shall state that the applicant has the right to designate at least one person other than the applicant who will receive notice of any lapse or termination of the long-term care policy or certificate and that the applicant elects not to designate an additional person to receive such notice.
(d) The insurer shall notify the insured of the right to change this written designation, no less often than once every two years.
History: L. 1996, ch. 182, § 2; July 1.
When the policyholder or certificateholder pays premiums for a long-term care insurance policy or certificate through a payroll or pension deduction plan, the requirements contained in K.S.A. 40-2228b need not be met until 60 days after the policyholder or certificateholder is no longer on such a payment plan. The application or enrollment form for such policies or certificates shall clearly indicate the payment plan selected by the applicant.
History: L. 1996, ch. 182, § 3; July 1.
No long-term care policy or certificate shall lapse or be terminated for nonpayment of premium unless the insurer, at least 30 days before the effective date of the lapse or termination, has given notice by first-class mail to the insured at the insured's last known address and to any person designated by the insured pursuant to K.S.A. 40-2228b to receive notice of lapse or termination. Notice shall not be given until 30 days after a premium is due and unpaid and will be deemed to have been given five days after the date of mailing.
History: L. 1996, ch. 182, § 4; July 1.
Long-term care insurance policies or certificates shall include a provision which provides for reinstatement of coverage, in the event of lapse if the insurer is provided proof of cognitive impairment or the loss of functional capacity. This option shall be available to the insured if requested within five months after termination and shall allow for the collection of past due premium, where appropriate. The standard of proof of cognitive impairment or loss of functional capacity shall not be more stringent than the benefit eligibility criteria for cognitive impairment or the loss of functional capacity contained in the policy or certificate.
History: L. 1996, ch. 182, § 5; July 1.
(a) K.S.A. 40-2228f through 40-2228h, and amendments thereto, shall be known as the Kansas long-term care insurance prompt payment act and shall apply to any policy of long-term care insurance issued or renewed in this state.
(b) The provisions of the Kansas long-term care prompt payment act shall take effect and be in force on and after January 1, 2008.
History: L. 2007, ch. 150, § 5; July 1.
As used in K.S.A. 40-2228f through 40-2228h, and amendments thereto:
(a) The term "clean claim" means a claim that has no defect or impropriety, including any lack of required substantiating documentation, or particular circumstance requiring special treatment that prevents timely payment from being made on the claim under the Kansas long-term care insurance prompt payment act.
(b) The term "claim" means a written proof of loss as defined in paragraph (7) of subsection (A) of K.S.A. 40-2203, and amendments thereto, or an electronic proof of loss which contains the information required by paragraph (7) of subsection (A) of K.S.A. 40-2203, and amendments thereto.
(c) The term "long-term care insurance" shall have the meaning ascribed to it in K.S.A. 40-2227, and amendments thereto.
History: L. 2007, ch. 150, § 6; July 1.
(a) Within 30 days after receipt of any claim, and amendments thereto, any insurer issuing a policy of long-term care insurance shall pay a clean claim for reimbursement in accordance with this section or send a written or electronic notice acknowledging receipt of and the status of the claim. Such notice shall include the date such claim was received by the insurer and state that:
(1) The insurer refuses to reimburse all or part of the claim and specify each reason for denial; or
(2) additional information is necessary to determine if all or any part of the claim will be reimbursed and what specific additional information is necessary.
(b) If any insurer issuing a policy of long-term care insurance fails to comply with subsection (a), such insurer shall pay interest at the rate of 1% per month on the amount of the claim that remains unpaid 30 days after the receipt of the claim. The interest paid pursuant to this subsection shall be included in any late reimbursement without requiring the person who filed the original claim to make any additional claim for such interest.
(c) After receiving a request for additional information, the person claiming reimbursement shall submit all additional information requested by the insurer within 30 days after receipt of the request for additional information. Failure to furnish such additional information within the time required shall not invalidate nor reduce the claim if it was not reasonably possible to give such information within such time, provided such proof is furnished as soon as possible as defined (within the time prescribed) in paragraph (7) of subsection (A) of K.S.A. 40-2203, and amendments thereto.
(d) Within 30 days after receipt of all the requested additional information, an insurer issuing a policy of long-term care insurance shall pay a clean claim in accordance with this section or send a written or electronic notice that states:
(1) Such insurer refuses to reimburse all or part of the claim; and
(2) specifies each reason for denial. Any insurer issuing a policy of long-term care insurance that fails to comply with this subsection shall pay interest on any amount of the claim that remains unpaid at the rate of 1% per month.
(e) The provisions of subsection (b) shall not apply when there is a good faith dispute about the legitimacy of the claim, or when there is a reasonable basis supported by specific information that such claim was submitted fraudulently.
(f) Any violation of this act by an insurer issuing a policy of long-term care insurance with flagrant and conscious disregard of the provisions of this act or with such frequency as to constitute a general business practice shall be considered a violation of the unfair trade practices act in K.S.A. 40-2401 et seq., and amendments thereto.
(g) The commissioner of insurance shall adopt rules and regulations necessary to carry out the provisions of the Kansas long-term care insurance prompt payment act.
History: L. 2007, ch. 150, § 7; July 1.
Except as otherwise provided, this act applies to any individual, group or blanket policy of accident and sickness, medical or surgical expense coverage and any provision of a policy, contract, plan or agreement for medical service including any contract of a health maintenance organization as defined by K.S.A. 40-3202, and amendments thereto, delivered, renewed or issued for delivery on or after the effective date of this act within or outside of this state or used within this state by or for an individual who resides or is employed in this state. The provisions of this act shall not apply to any medicare supplement policy of insurance, as defined by the commissioner of insurance by rule and regulation, any policy of long-term care insurance, as defined by K.S.A. 40-2227, and amendments thereto, any specified disease or specified accident coverage or any accident only coverage as defined by the commissioner of insurance by rule and regulation whether written on a group, blanket or individual basis.
History: L. 1988, ch. 158, § 1; July 1.
Notwithstanding any provision of any policy, provision, contract, plan or agreement to which this act applies, whenever reimbursement or indemnity for laboratory or x-ray services are covered, reimbursement or indemnification shall not be denied for mammograms or pap smears when performed at the direction of a person licensed to practice medicine and surgery by the board of healing arts within the lawful scope of such person's license, including services performed at a mobile facility certified by the federal health care financing administration and performing mammography testing by American cancer society guidelines. A policy, provision, contract, plan or agreement may apply to mammograms or pap smears the same deductibles, coinsurance and other limitations as apply to other covered services.
History: L. 1988, ch. 158, § 2; L. 1994, ch. 141, § 1; April 14.
As used in this act:
(a) "Continuing care" means the multiple levels of care provided as part of a continuing care retirement community, as defined in K.S.A. 39-923, and amendments thereto.
(b) "Continuing care contract" means an agreement pursuant to which a provider undertakes to furnish to a person, not related by consanguinity or affinity to the provider, shelter and medical or nursing services or other health-related benefits that require a present or deferred transfer of assets or an entrance fee in addition to or in lieu of periodic charges.
(c) "Entrance fee" means the total of any initial or deferred transfer to, or for the benefit of, a provider of a sum of money or other property made or promised to be made as full or partial consideration for acceptance of a person as a resident pursuant to a continuing care contract.
(d) "Home" means the facility or facilities occupied, or planned to be occupied, by five or more residents where the provider undertakes pursuant to the continuing care contract to provide continuing care to such residents.
(e) "Provider" or "continuing care provider" means the person, corporation, partnership, association or other legal entity that agrees to provide continuing care to residents in a home.
(f) "Resident" means an individual or individuals who have entered into an agreement with a provider for continuing care in a home.
(g) "Secretary" means the secretary for aging and disability services.
(h) "Act" means the provisions of K.S.A. 40-2231 through 40-2238, and amendments thereto.
History: L. 1989, ch. 73, § 1; L. 2024, ch. 103, § 9; July 1.
A provider shall be required to complete an annual disclosure statement prescribed by the secretary and shall be required to deliver the disclosure statement to individuals who are prospective residents, or current residents who request such disclosure statement. The text of the disclosure statement shall contain the following information:
(a) The name and business address of the provider and a statement of whether the provider is an individual, partnership, corporation or any other legal entity.
(b) The names of the individual or individuals who constitute the provider or, if the provider is a partnership, corporation or other legal entity, whether for profit or not for profit, the names of the officers, directors, trustees or managing or general partners of the provider. If the provider is a corporation, the name of any individual who owns 10% or more of the stock of such corporation shall also be disclosed.
(c) With respect to a provider that is either not incorporated or not established and operated on a not-for-profit basis, the names and business addresses of any individual having any ownership or any beneficial interest in the provider and a description of such individual's interest in or occupation with the provider.
(d) A statement as to whether or not the provider is, or is affiliated with, a religious, charitable or other nonprofit organization and the extent of the affiliation, if any, the extent to which any affiliate organization will be responsible for the financial and contractual obligations of the provider, the provision of the United States internal revenue code, if any, under which the provider or any of the provider's affiliates is or are exempt from the payment of federal income taxes and a statement of whether the home is exempt from local property taxation.
(e) A statement that the provider is required to have an annual certified audit by a certified public accountant and that a copy of such audit shall be made available upon request.
(f) If the operation of the home has not yet commenced, and with receipt of contract considerations as defined in K.S.A. 40-2231(b) and (c), and amendments thereto, the provider shall provide a statement of the anticipated source and application of the funds used or to be used in the purchase or construction of the facility, including but not limited to:
(1) An estimate of such costs as financing expense, legal expense, land costs, marketing costs and other similar costs that the provider expects to incur or become obligated for prior to the commencement of operations;
(2) a description of any mortgage loan or any other financing intended to be used for the financing of the facility, including the anticipated terms and costs of such financing;
(3) an estimate of the total entrance fee to be received from or on behalf of residents at or prior to commencement of operation; and
(4) an estimate of the funds, if any, that are anticipated to be necessary to fund start-up losses and provide reserve funds to assure full performance of the obligations of the provider under continuing care contracts.
(g) A statement as to whether the manager or any official or director of the provider, has been convicted of a crime or been a party of any civil action claiming fraud, embezzlement, fraudulent conversion or misappropriation of property that resulted in a judgment against such person and whether any such person has had any state or federal license or permits related to care and housing suspended or revoked.
(h) A statement of the years of experience of the provider and manager in the operation of homes providing continuing care.
(i) A statement of the fiscal year of the provider.
History: L. 1989, ch. 73, § 2; L. 2024, ch. 103, § 10; July 1.
A provider shall file with the secretary within four months of completion of such provider's fiscal year the annual disclosure statement referred to in K.S.A. 40-2232, and amendments thereto, the continuing care contract referred to in K.S.A. 40-2234, and amendments thereto, and an annual audit certified by a certified public accountant.
History: L. 1989, ch. 73, § 3; L. 2024, ch. 103, § 11; July 1.
The provider shall provide the secretary a copy of any continuing care contract form entered into on or after the effective date of this act or entered into between the provider and any resident, which shall include or have attached thereto:
(a) A description of all fees and or charges required of residents, a description of all services to be provided or committed to providing in the future in compliance with the definitions in K.S.A. 39-923, and amendments thereto, and a description of any services for which an extra charge is made over and above entrance fees and periodic charges that are provided for in the contract;
(b) a listing of the terms and conditions under which the agreement may be cancelled by either party to the agreement or by which any or all of the entrance fee or transfer of assets would be refunded, less the value of any services received; and
(c) a statement describing health and financial conditions required to continue as a resident, including any changes in either health or financial conditions of the resident.
History: L. 1989, ch. 73, § 4; L. 2024, ch. 103, § 12; July 1.
No provider shall act as or hold themselves out to be a continuing care provider, as defined in this act, in this state, unless the provider shall hold a certificate of registration as a continuing care provider issued by the secretary. Application for such certificate shall be made to the secretary on a form prescribed by such secretary and shall be accompanied by a filing fee of $50. Such certificate may be continued for successive annual periods by notifying the secretary of such intent and payment of a $25 continuation fee. Such certificate shall be issued or renewed to a continuing care provider by the secretary if the secretary determines that the continuing care provider is in compliance with this act within four months of completion of such provider's fiscal year. If certification is not issued or renewed, the provider may appeal such decision in accordance with the Kansas administrative procedure act. Judicial review under this act shall be in accordance with the Kansas judicial review act.
History: L. 1989, ch. 73, § 5; L. 2024, ch. 103, § 13; July 1.
History: L. 1989, ch. 73, § 6; Repealed, L. 1997, ch. 24, § 7; July 1.
If there is a change of ownership, or management of the provider or home, the new owners must file all required documents of this act within 90 days of change.
History: L. 1989, ch. 73, § 7; July 1.
The secretary shall adopt any rules and regulations necessary to carry out the provisions of this act.
History: L. 1989, ch. 73, § 8; L. 2024, ch. 103, § 14; July 1.
As used in this act, unless the context requires otherwise:
(a) "Carrier" means an insurance company, medical or hospital service corporation, medical and hospital service corporation or health maintenance organization which holds a valid certificate of authority from the insurance commissioner.
(b) "Commissioner" means the commissioner of insurance.
(c) "Eligible employee" means an employee who is employed by the employer for an average of at least 30 hours per week and who elects to participate in one of the benefit plans provided under this act, and includes individuals who are sole proprietors, business partners and limited partners. The term "eligible employee" does not include individuals:
(1) Engaged as independent contractors;
(2) whose periods of employment are on an intermittent or irregular basis; or
(3) who have been employed by the employer for fewer than 90 days.
(d) "Family member" means an eligible employee's spouse and any unmarried dependent child or stepchild.
(e) "Health benefit plan" means a contract for group medical, surgical, hospital or any other remedial care recognized by state law and related services and supplies.
(f) "Health savings account" means a trust created or organized in the United States as a health savings account exclusively for the purpose of paying the qualified medical expenses of the account beneficiary, but only if the written governing instrument creating the trust meets the requirements specified by the medicare, prescription drug, improvement and modernization act of 2003, Pub. L. No. 108-173, 117 Stat. 2067.
(g) "Premium" means the monthly or other periodic charge for a health benefit plan.
(h) "Small employer health benefit plan" means an arrangement providing a health benefit plan for the purpose described in K.S.A. 40-2240, and amendments thereto.
History: L. 1990, ch. 157, § 1; L. 1999, ch. 110, § 1; L. 2005, ch. 118, § 1; July 1.
(a) Any small employer as defined in subsection (4) of K.S.A. 40-2209d, and amendments thereto, may establish a small employer health benefit plan for the purpose of providing a health benefit plan as described in subsection (u) of K.S.A. 40-2209d, and amendments thereto, covering such employers' eligible employees and such employees' family members. If an association or trust is used for such purposes, the association or trust may not condition eligibility or membership on the health status of members or employees.
(b) The commissioner shall provide assistance to employers desiring to organize and maintain any such benefit plan and may aid in the acquisition of the health care insurance by the small employer health benefit plan.
History: L. 1990, ch. 157, § 2; L. 1999, ch. 110, § 2; L. 2002, ch. 158, § 18; L. 2005, ch. 118, § 2; July 1.
(a) Any small employer health benefit plan organized for the purposes described in K.S.A. 40-2240 and amendments thereto shall be authorized to enter into contracts with carriers for the health care insurance described in K.S.A. 40-2209d, and amendments thereto, or health care providers for services on behalf of its member employees. A small employer health benefit plan may contract with more than one carrier to provide insurance.
(b) Where appropriate, the small employer health benefit plan shall provide options under which eligible employees may arrange coverage for their family members. Options for additional coverage for employees and their family members at an additional cost or premium may be provided.
(c) The provisions of K.S.A. 40-2209 and 40-2215, and amendments thereto, shall apply to all contracts issued under this section or the act of which this section is a part and to health benefit plans as defined in K.S.A. 40-2239, and amendments thereto, and the provisions of such sections shall apply to small employer health benefit plans.
History: L. 1990, ch. 157, § 3; L. 1991, ch. 134, § 9; L. 1998, ch. 174, § 12; L. 1999, ch. 110, § 5; July 1.
As a condition to participation as a member of any small employer health benefit plan as provided in K.S.A. 40-2240, and amendments thereto, an employer shall have not contributed within the preceding two years to any health insurance premium or health savings account on behalf of an employee who is to be covered by the employer's contribution other than a contribution by an employer to a health insurance premium or health savings account within the preceding two years solely for the benefit of the employer or the employer's dependents.
History: L. 1990, ch. 157, § 4; L. 1992, ch. 56, § 1; L. 1999, ch. 110, § 3; L. 2005, ch. 118, § 3; July 1.
(a) The monthly contribution of each eligible employee for health benefit plan coverage under this act shall be the total cost per month of the benefit coverage afforded under the plan or plans, for which the employee exercises the option, including the administrative expenses therefor less the portion thereof contributed by the employer. An employee may enroll in more than one option at a time so long as such options do not offer overlapping services.
(b) The employer contribution shall be the amount necessary to pay the cost of the health benefit plan covering the employer's covered employees for which the employer does not require the employee to pay, including the administrative expenses therefor. An employer is not required to enroll an employee who is already enrolled in a health benefit plan other than the small employer health benefit plan.
(c) Payroll deductions for such costs payable by the employee shall be made by the employer upon receipt of a signed authorization from the employee indicating an election to participate in the small employer health benefit plan.
History: L. 1990, ch. 157, § 5; July 1.
History: L. 1990, ch. 157, §§ 6, 7; Repealed, L. 1999, ch. 110, § 9; July 1.
(a) A credit against the taxes otherwise due under the Kansas income tax act shall be allowed to an employer for amounts paid during the taxable year for purposes of this act on behalf of an eligible employee as defined in K.S.A. 40-2239, and amendments thereto, to provide health insurance or care and amounts contributed to health savings accounts of eligible covered employees, except that for taxable years commencing after December 31, 2013, no credit shall be allowed pursuant to this section for that portion of any amounts paid by an employer for healthcare expenditures, a health benefit plan, as defined in K.S.A. 65-6731, and amendments thereto, or amounts contributed to health savings accounts for the purchase of an optional rider for coverage of abortion in accordance with K.S.A. 40-2,190, and amendments thereto.
(b) (1) For employers that have established a small employer health benefit plan after December 31, 1999, but prior to January 1, 2005, the amount of the credit allowed by subsection (a) shall be $35 per month per eligible covered employee or 50% of the total amount paid by the employer during the taxable year, whichever is less, for the first two years of participation. In the third year, the credit shall be equal to 75% of the lesser of $35 per month per employee or 50% of the total amount paid by the employer during the taxable year. In the fourth year, the credit shall be equal to 50% of the lesser of $35 per month per employee or 50% of the total amount paid by the employer during the taxable year. In the fifth year, the credit shall be equal to 25% of the lesser of $35 per month per employee or 50% of the total amount paid by the employer during the taxable year. For the sixth and subsequent years, no credit shall be allowed.
(2) For employers that have established a small employer health benefit plan or made contributions to a health savings account of an eligible covered employee after December 31, 2004, the amount of credit allowed by subsection (a) shall be $70 per month per eligible covered employee for the first 12 months of participation, $50 per month per eligible covered employee for the next 12 months of participation and $35 per eligible covered employee for the next 12 months of participation. After 36 months of participation, no credit shall be allowed.
(c) If the credit allowed by this section is claimed, the amount of any deduction allowable under the Kansas income tax act for expenses described in this section shall be reduced by the dollar amount of the credit. The election to claim the credit shall be made at the time of filing the tax return in accordance with law. If the credit allowed by this section exceeds the taxes imposed under the Kansas income tax act for the taxable year, that portion of the credit which exceeds those taxes shall be refunded to the taxpayer.
(d) Any amount of expenses paid by an employer under this act shall not be included as income to the employee for purposes of the Kansas income tax act. If such expenses have been included in federal taxable income of the employee, the amount included shall be subtracted in arriving at state taxable income under the Kansas income tax act.
(e) The secretary of revenue shall promulgate rules and regulations to carry out the provisions of this section.
(f) This section shall apply to all taxable years commencing after December 31, 1999.
(g) For tax year 2013 and all tax years thereafter, the income tax credit provided by this section shall only be available to taxpayers subject to the income tax on corporations imposed pursuant to subsection (c) of K.S.A. 79-32,110, and amendments thereto, and shall be applied only against such taxpayer's corporate income tax liability.
History: L. 1990, ch. 157, § 8; L. 1999, ch. 110, § 4; L. 2005, ch. 118, § 4; L. 2012, ch. 135, § 2; L. 2013, ch. 119, § 11; July 1.
No premium tax shall be due or payable on a health benefit plan established under this act.
History: L. 1990, ch. 157, § 9; July 1.
Prior to the legislature's consideration of any bill that mandates health insurance coverage for specific health services, specific diseases, or for certain providers of health care services as part of individual, group or blanket health insurance policies, the person or organization which seeks sponsorship of such proposal shall submit to the legislative committees to which the proposal is assigned an impact report that assesses both the social and financial effects of the proposed mandated coverage. For purposes of this act, mandated health insurance coverage shall include mandated optional benefits. It shall be the duty of the commissioner of insurance to cooperate with, assist and provide information to any person or organization required to submit an impact report under the provisions of this act.
History: L. 1990, ch. 162, § 1; July 1.
The report required under K.S.A. 40-2248 for assessing the impact of a proposed mandate of health coverage shall include at the minimum and to the extent that information is available, the following:
(a) The social impact, including:
(1) The extent to which the treatment or service is generally utilized by a significant portion of the population;
(2) the extent to which such insurance coverage is already generally available;
(3) if coverage is not generally available, the extent to which the lack of coverage results in persons being unable to obtain necessary health care treatment;
(4) if the coverage is not generally available, the extent to which the lack of coverage results in unreasonable financial hardship on those persons needing treatment;
(5) the level of public demand for the treatment or service;
(6) the level of public demand for individual or group insurance coverage of the treatment or service;
(7) the level of interest of collective bargaining organizations in negotiating privately for inclusion of this coverage in group contracts; and
(8) the impact of indirect costs which are costs other than premiums and administrative costs, on the question of the costs and benefits of coverage.
(b) The financial impact, including:
(1) The extent to which insurance coverage of the kind proposed would increase or decrease the cost of the treatment or service;
(2) the extent to which the proposed coverage might increase the use of the treatment or service;
(3) the extent to which the mandated treatment or service might serve as an alternative for more expensive treatment or service;
(4) the extent to which insurance coverage of the health care service or provider can be reasonably expected to increase or decrease the insurance premium and administrative expenses of policyholders; and
(5) the impact of this coverage on the total cost of health care.
History: L. 1990, ch. 162, § 2; July 1.
(a) After July 1, 1999, in addition to the requirements of K.S.A. 40-2248 and 40-2249, and amendments thereto, any new mandated health insurance coverage for specific health services, specific diseases or for certain providers of health care services approved by the legislature shall apply only to the state health care benefits program, K.S.A. 75-6501 et seq., and amendments thereto, for a period of at least one year beginning with the first anniversary date of the state health care benefits program subsequent to approval of the mandate by the legislature. On or before March 1, after the one year period for which the mandate has been applied, the Kansas state employees health care commission shall submit to the president of the senate and to the speaker of the house of representatives, a report indicating the impact such mandated coverage has had on the state health care benefits program, including data on the utilization and costs of such mandated coverage. Such report shall also include a recommendation whether such mandated coverage should continue for the state health care benefits program or whether additional utilization and cost data is required.
(b) The legislature shall periodically review all health insurance coverages mandated by state law.
History: L. 1999, ch. 162, § 5; July 1.
Notwithstanding any provision of an individual or group policy or contract for health and accident insurance delivered within the state, whenever such policy or contract shall provide for reimbursement for any services within the lawful scope of practice of a licensed advanced practice registered nurse within the state of Kansas, the insured, or any other person covered by the policy or contract, shall be allowed and entitled to reimbursement for such service irrespective of whether it was provided or performed by a duly licensed physician or a licensed advanced practice registered nurse.
History: L. 1990, ch. 162, § 3; L. 1993, ch. 137, § 1; L. 2011, ch. 114, § 53; January 1, 2012.
(a) The commissioner of insurance shall develop or approve statistical plans which shall be used by each insurer in the recording and reporting of its premium, accident and sickness insurance loss and expense experience, in order that the experience of all insurers may be made available at least annually in such form and detail as may be necessary to aid the commissioner and other interested parties in determining whether rates and rating systems utilized by insurance companies, mutual nonprofit hospital and medical service corporations, health maintenance organizations and other entities designated by the commissioner produce premiums and subscriber charges for accident and sickness insurance coverage on Kansas residents, employers and employees that are reasonable in relation to the benefits provided and to identify any accident and sickness insurance benefits or provisions that may be unduly influencing the cost. Such plans may also provide for the recording and reporting of expense experience items which are specifically applicable to the state. In promulgating such plans, the commissioner shall give due consideration to the rating systems, classification criteria and insurance and subscriber plans on file with the commissioner and, in order that such plans may be as uniform as is practicable among the several states, to the form of the plans and rating systems in other states.
(b) The department of health and environment, as administrator of the health care database, pursuant to K.S.A. 65-6804, and amendments thereto, shall serve as the statistical agent for the purpose of gathering, receiving and compiling the data required by the statistical plan or plans developed or approved under this section. The commissioner of insurance shall make an assessment upon the reporting insurance companies, health maintenance organizations, group self-funded pools, and other reporting entities sufficient to cover the anticipated expenses to be incurred by the department of health and environment in gathering, receiving and compiling such data. Such assessment shall be in the form of an annual fee established by the department of health and environment and charged to each reporting entity in proportion to such entity's respective shares of total health insurance premiums, subscriber charges and member fees received during the preceding calendar year. Such assessments shall be paid to the department of health and environment and the department of health and environment shall remit such fees to the state treasurer in accordance with the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount in the state treasury to the credit of the insurance statistical plan fund. Compilations of aggregate data gathered under the statistical plan or plans required by this act shall be made available to insurers, trade associations and other interested parties.
(c) The department of health and environment, in writing, shall report to the commissioner of insurance any insurance company, health maintenance organization, group self-funded pool, nonprofit hospital and medical service corporation and any other reporting entity which fails to report the information required in the form, manner or time prescribed by the department of health and environment. Upon receipt of such report, the commissioner of insurance shall impose an appropriate penalty in accordance with K.S.A. 40-2,125, and amendments thereto.
History: L. 1990, ch. 170, § 1; L. 1994, ch. 238, § 13; L. 1995, ch. 260, § 1; L. 2001, ch. 5, § 117; L. 2006, ch. 156, § 1; L. 2012, ch. 102, § 18; July 1.
The commissioner and the secretary of health and environment, jointly, may adopt rules and regulations necessary to effect the purposes of K.S.A. 40-19c09 and 40-2251, and amendments thereto.
History: L. 1990, ch. 170, § 3; L. 1994, ch. 238, § 14; L. 2007, ch. 46, § 1; L. 2012, ch. 102, § 19; July 1.
(a) The commissioner of insurance shall devise universal forms to be utilized by every insurance company, including health maintenance organizations where applicable, offering any type of accident and sickness policy covering individuals residing in this state for the purpose of receiving every claim under such policy by persons covered thereunder. In the preparation of such forms, the commissioner may confer with representatives of insurance companies, health maintenance organizations, trade associations and other interested parties. Upon completion and final adoption of such forms by the commissioner, the commissioner shall notify those companies affected by sending them a copy of such forms and an explanation of the requirements of this section. Every such company shall implement utilization of such forms not later than six months following the date of the commissioner's notification.
(b) An accident and sickness insurer may not refuse to accept a claim submitted on duly promulgated uniform claim forms. An insurer may accept claims submitted on any other form.
(c) An accident and sickness insurer does not violate subsection (a) by using a document that the accident and sickness insurer has been required to use by the federal government or the state.
History: L. 1991, ch. 133, § 1; L. 1992, ch. 73, § 1; L. 2025, ch. 94, § 17; July 1.
Every issuer of a group policy and certificate of accident and sickness insurance providing inpatient hospital, medical-surgical benefits issued or renewed within this state or issued or renewed outside this state covering residents within this state shall:
(a) Include in its contracts a provision extending payment of such benefits until discharged or for a period not less than 31 days following the expiration date of the policy, whichever is earlier, for covered insureds confined in a hospital on the date of termination;
(b) not fail to enroll in a replacement group policy, contract or certificate without any gap in coverage any individual who is confined to a hospital or otherwise disabled at the time such individual's prior group policy, contract or certificate terminates;
(c) provide that payment of benefits under any subsequent replacement policy, contract or certificate that is intended to afford continuous coverage will commence immediately following expiration of any prior policy, contract or certificate.
History: L. 1993, ch. 231, § 1; L. 2001, ch. 40, § 1; July 1.
(a) This act shall apply to individual contracts covering hospital, medical or surgical expenses, providing long-term care coverage, and medicare supplement policies, which are issued, amended, delivered or renewed on or after the effective date of this act but shall not apply to any block of long-term care coverage or medicare supplement business already in force in Kansas on such effective date.
(b) As used in this act:
(1) "Block of business" means a particular individual policy form or contract providing hospital, medical or surgical expense, long-term care or medicare supplement coverage issued by a carrier to one or more individuals which includes distinct benefits, services and terms.
(2) "Closed block of business" means a block of business which a carrier ceases to actively offer or sell to new applicants.
(3) "Carrier" means any insurance company, nonprofit medical and hospital service corporation, municipal group-funded pool, fraternal benefit society or health maintenance organization, as these terms are defined by the Kansas Statutes Annotated, that offers any individual hospital, surgical or medical expense, long-term care or medicare supplement policy and which is authorized to do business in this state. "Carrier" does not include those entities identified above with respect to the sale or issuance of policies or certificates covering only accident, credit, dental, disability income, hospital indemnity, specified disease, vision care, coverage issued as a supplement to liability insurance, insurance arising out of a workers compensation or similar law, automobile medical payment insurance, or insurance under which benefits are payable with or without regard to fault and which is statutorily required to be contained in any liability insurance policy or equivalent self-insurance.
(4) "Commissioner" means the commissioner of insurance.
(c) No block of business shall be closed by a carrier unless:
(1) The carrier provides written notice of the carrier's decision to close a block of business to each existing policyholder or contract holder affected and offers each policyholder or contract holder affected an opportunity to purchase a policy or contract from any block of business that is not closed and which provides comparable benefits, services and terms, with no additional underwriting requirement or waiting period. Each policyholder or contract holder affected by the carrier's decision to close a block of business shall be permitted to purchase such policy or contract during the 30-day period commencing on the day following the date of the written notice;
(2) the carrier pools the experience of the closed block of business with all appropriate blocks of business that are not closed for the purpose of determining the premium rate of any contract within the closed block, with no rate penalty or surcharge beyond that which reflects the experience of the combined pool; and
(3) if a carrier does not offer or sell any block of business which provides comparable benefits, services and terms comparable to the closed block of business, paragraphs (1) and (2) shall not apply. If a block of business providing benefits, services and terms comparable to the closed block of business becomes available within 24 months of the notice to the commissioner, such block shall be open to any contract holder in accordance with the provisions of paragraphs (1) and (2). The carrier shall provide notice to the commissioner in writing within 30 days of its decision to close a block of business or, in the absence of an actual decision to close a block of business, within 30 days of its determination that a block of business is within one of the presumptions set forth in subsection (d).
(d) Unless an insurer presents evidence satisfactory to the commissioner that such a presumption is or would be incorrect, a block of business shall be presumed closed if either of the following circumstances exist:
(1) There has been an overall reduction in that block of 12% in the number of in-force contracts for a period of 12 months; or
(2) that block has less than 500 in-force contracts in this state.
The presumption that applies in the circumstances of subsection (d)(2) shall not apply to a block of business initiated within the previous 24 months, but notification of that block of business shall be provided to the commissioner pursuant to subsection (e).
The fact that a block of business does not meet one of the presumptions set forth in this subsection shall not preclude a determination that it is closed as defined in paragraph (2) of subsection (b).
(e) A carrier shall notify the commissioner in writing within 30 days of its decision to close a block of business or, in the absence of an actual decision to close a block of business, within 30 days of its determination that a block of business is within one of the presumptions set forth in subsection (d). When the carrier decides to close a block of business, the written notice shall fully disclose all information required for compliance with subsection (c). When the carrier determines that a block of business is within a presumption of subsection (c), the written notice shall fully disclose all information required for compliance with a presumption of subsection (c). In the case of either notice, the carrier shall provide additional information within 15 business days after a request by the commissioner. This subsection shall not apply to a carrier which does not have available a block of business which provides comparable benefits, services and terms comparable to the closed block of business and which has complied with the notice requirements pursuant to subsection (c)(3).
(f) A carrier shall preserve for a period of not less than five years in an identified location which is readily accessible for review by the commissioner, all books and records relating to any action taken by a carrier pursuant to subsection (c).
(g) No carrier shall offer or sell any contract, or provide misleading information about the active or closed status of a block of business, for the purpose of evading this act.
History: L. 1994, ch. 41, § 1; L. 1994, ch. 280, § 1; L. 2005, ch. 163, § 10; July 1.
(a) The provisions of this section and the income withholding act shall apply to all health benefit plans, as defined in this section, which are administered in this state, including, but not limited to, all health benefit plans governed by the federal employee retirement income security act, 29 U.S.C. § 1161 et seq., except to the extent specifically preempted by federal law, and to all employers, sponsors and other administrators of health benefit plans doing business in this state.
(b) As used in this section:
(1) "Health benefit plan" means any benefit plan, other than public assistance, which is able to provide hospital, surgical, medical, dental or any other health care or benefits for a child, whether through insurance or otherwise, and which is available through a parent's employment or other group plan.
(2) "Participating parent" means a parent who is eligible for single coverage under a health benefit plan as defined in this section, regardless of the type of coverage actually in effect, if any.
(3) "Nonparticipating parent" means, if one parent is a participating parent as defined in this section, the other parent.
(c) No employer, sponsor or other administrator of a health benefit plan shall deny enrollment of a child under the health coverage of the child's parent on the basis that: (1) The child was born out of wedlock; (2) the child is not claimed as a dependent on the parent's federal income tax return; (3) the child does not reside with the parent or in the plan's service area; or (4) the child is receiving, is eligible for or may become eligible for medical assistance.
(d) (1) A health benefit plan, in determining or making any payment for benefits of a child who is a participant or beneficiary under the plan, shall not take into account the fact that the child is receiving, is eligible for or may become eligible for medical assistance pursuant to Title XIX of the federal social security act.
(2) A health benefit plan shall pay for benefits with respect to a child who is a participant or beneficiary under the plan in accordance with any assignment of rights made by or on behalf of the child as required by K.S.A. 39-709, and amendments thereto, or by another state's plan for medical assistance pursuant to Title XIX of the federal social security act.
(3) A health benefit plan shall not impose requirements on an agency or official, assigned the rights of a child eligible for medical assistance under Title XIX of the federal social security act and covered by the health benefit plan, that are different from requirements applicable to an agent or assignee of any other individual covered by the health benefit plan.
(4) If payment has been made by the secretary for aging and disability services for medical assistance and a health benefit plan is liable to pay for any item or service constituting any part of the medical assistance, the health benefit plan shall make payment for benefits under the plan to the secretary for aging and disability services to the extent of the secretary's rights pursuant to K.S.A. 39-719a, and amendments thereto.
(e) In addition to other duties specified in a health benefit plan, when a child is covered by the health benefit plan of a participating parent the employer, sponsor or other administrator of the health benefit plan: (1) Shall provide information necessary for the child to obtain benefits to the nonparticipating parent or, upon request, to the nonparticipating parent's assignee or to a representative designated in a medical withholding order; (2) shall permit the nonparticipating parent, the nonparticipating parent's assignee, or a provider properly authorized by the nonparticipating parent or assignee to submit claims for covered services without the approval of the participating parent; and (3) shall make payment on claims submitted in accordance with subsection (e)(2) directly to the nonparticipating parent, assignee or provider.
(f) Nothing in this section or the income withholding act and amendments thereto shall limit alteration of a health benefit plan's coverage or terms, so long as the resulting plan meets the requirements of this section or the income withholding act and amendments thereto.
(g) Any amendment to a health benefit plan required to conform to the requirements of this section or the income withholding act and amendments thereto shall not be required to be effective before the first plan year beginning on or after July 1, 1994, if: (1) During the period from July 1, 1994, until the beginning of the first plan year, the plan is operated in accordance with the requirements of this section or the income withholding act and amendments thereto; and (2) the plan amendment applies retroactively to July 1, 1994, as well as prospectively. A plan shall not be treated as failing to be operated in accordance with the provisions of the plan merely because it operates in accordance with this subsection.
(h) This section shall be part of and supplemental to chapter 40 of the Kansas Statutes Annotated, and amendments thereto.
History: L. 1994, ch. 301, § 13; L. 2014, ch. 115, § 188; July 1.
(a) Except as provided in this section, an accident and sickness insurer which offers individual policies providing hospital, medical or surgical expense benefits shall renew or continue in force such coverage at the option of the individual.
(b) An accident and sickness insurer may nonrenew or discontinue an individual policy providing hospital, medical or surgical expense benefits based only on one or more of the following:
(1) If the individual has failed to pay premiums or contributions in accordance with the terms of the health insurance coverage or the accident and sickness insurer has not received timely premium payments;
(2) if the individual has performed an act or practice that constitutes fraud or made an intentional misrepresentation of material fact under the terms of the coverage;
(3) if the accident and sickness insurer is ceasing to offer individual policies providing hospital, medical or surgical expense benefits in accordance with subsection (c);
(4) in the case of accident and sickness insurer which offers individual policies providing hospital, medical or surgical expense benefits through enrollment area, if the individual no longer resides, lives or works in the medical service enrollment area (or in an area for which the accident and sickness insurer is authorized to do business) but only if such coverage is terminated under this paragraph uniformly without regard to any health status-related factor of covered individuals; or
(5) if the case of a policy providing hospital, medical or surgical expense benefits that is made available to individuals only through one or more bona fide associations, the membership of the individual in the association (on the basis of which the coverage is provided) ceases but only if such coverage is terminated under this paragraph uniformly without regard to any health status-related factor of covered individuals.
(c) If the accident and sickness insurer decides to discontinue offering a particular individual policy providing hospital, medical or surgical expense benefits such policy may only be discontinue if:
(1) The accident and sickness insurer provides notice to each covered individual who is provided such policy providing hospital, medical or surgical expense benefits at least 90 days prior to the date of the discontinuation of such coverage;
(2) the accident and sickness insurer offers to each covered individual who is provided such policy providing hospital, medical or surgical expense benefits the option to purchase any other individual policy providing hospital, medical or surgical expense benefits which is being sold by the accident and sickness insurer; and
(3) in exercising the option to discontinue coverage and in offering the option of coverage under subsection (b), the accident and sickness insurer acts uniformly without regard to any health status-related factor of enrolled individuals or individuals who may become eligible for coverage under the policy.
(d) Subject to subsection (c), if the accident and sickness insurer elects to discontinue offering any individual policies providing hospital, medical or surgical expense benefits in this state, such insurance coverage may be discontinued only if:
(1) The accident and sickness insurer provides notice to the commissioner and to each individual policyholder of such discontinuation at least 180 days prior to the date of the expiration of such coverage; and
(2) the accident and sickness insurer is prohibited from the issuance of any individual policies providing hospital, medical or surgical expense benefits in the state during a five-year period beginning on the date of the discontinuation of the last individual policy providing hospital, medical or surgical expense benefits which is not renewed.
(e) An accident and sickness insurer may modify the terms and conditions of the individual policy providing hospital, medical or surgical expense benefits so long as such modification is consistent with other provisions of the insurance code and is effective on a uniform basis among all individuals who are covered by such policy.
(f) In applying this section in the case of individual policies providing hospital, medical or surgical expense benefits that are made available by accident and sickness insurer to individuals only through one or more associations, a reference to an "individual" is deemed to include a reference to such an association of which the individual is a member.
(g) As used in this section, "health status-related factor" means: (1) A physical or mental illness medical condition; (2) claims experience; (3) receipt of health care; (4) medical history; (5) genetic information; (6) evidence of insurability including conditions arising out of acts of domestic violence; and (7) disability.
(h) As used in this section, "policies providing hospital, medical or surgical expense benefits" does not include short term, limited duration policies of insurance.
(i) The commissioner is hereby authorized to adopt such rules and regulations as may be necessary to carry out the provisions of this section.
History: L. 1997, ch. 190, § 12; July 1.
(a) An accident and sickness insurer which offers coverage through a group policy or certificate of coverage providing hospital, medical or surgical expense benefits pursuant to K.S.A. 40-2209, and amendments thereto, which includes mental illness or alcoholism, drug abuse or other substance use disorder benefits shall be subject to the following requirements:
(1) If the policy does not include an aggregate lifetime limit on substantially all hospital, medical and surgical expense benefits, the policy may not impose any aggregate lifetime limit on mental illness or alcoholism, drug abuse or other substance use disorder benefits;
(2) if the policy includes an aggregate lifetime limit on substantially all hospital, medical and surgical expense benefits the plan shall either: (A) Apply the applicable lifetime limit both to the hospital, medical and surgical expense benefits to which it otherwise would apply and to mental illness or alcoholism, drug abuse or other substance use disorder benefits and not distinguished in the application of such limit between such hospital, medical and surgical expense benefits and mental illness or alcoholism, drug abuse or other substance use disorder benefits; or (B) not include any aggregate lifetime limit on mental illness or alcoholism, drug abuse or other substance use disorder benefits that is less than the applicable lifetime limit on hospital, medical and surgical expense benefits;
(3) if the policy does not include an annual limit on substantially all hospital, medical and surgical expense benefits, the plan or coverage may not impose any annual limit on mental illness or alcoholism, drug abuse or other substance use disorder benefits; and
(4) if the policy includes an annual limit on substantially all hospital, medical and surgical expense benefits the policy shall either: (A) Apply the applicable annual limit both to hospital, medical and surgical expense benefits to which it otherwise would apply and to mental illness or alcoholism, drug abuse or other substance use disorder benefits and not distinguish in the application of such limit between such hospital, medical and surgical expense benefits and mental illness or alcoholism, drug abuse or other substance use disorder benefits; or (B) not include any annual limit on mental illness or alcoholism, drug abuse or other substance use disorder benefits that is less than the applicable annual limit.
(b) If the group policy providing hospital, medical or surgical expense benefits is not otherwise covered by subsection (a) and either does not apply a lifetime or annual benefit or applies different lifetime or annual benefits to different categories of hospital, medical and surgical expense benefits, the commissioner may adopt rules and regulations under which subsections (a)(2) and (a)(4) are applied to such policies with respect to mental illness or alcoholism, drug abuse or other substance use disorder benefits by substituting for the applicable lifetime or annual limits an average limit that is computed taking into account the weighted average of the lifetime or annual limits applicable to such categories.
(c) Nothing in this section shall be construed as either:
(1) Requiring an accident and sickness policy to offer mental illness or alcoholism, drug abuse or other substance use disorder benefits except as otherwise required by K.S.A. 40-2,105a, and amendments thereto; or
(2) affecting any terms and conditions of a policy which does include mental illness or alcoholism, drug abuse or other substance use disorder benefits including provisions regarding cost sharing, limits on the number of visits or days of coverage, requirements relating to medical necessity, requirements relating to the amount, duration or scope of mental illness or alcoholism, drug abuse or other substance use disorder benefits under the plan or coverage, except as specifically provided in subsection (a).
(d) This section shall not apply to any group accident and health insurance policy which is sold to a small employer as defined in K.S.A. 40-2209, and amendments thereto.
(e) This section shall not apply with respect to a group policy providing hospital, medical or surgical expense benefits if the application of this section will result in an increase in the cost under the plan of at least 2% in the case of the first plan year in which this section is applied and 1% in the case of each subsequent plan year. Determinations as to increases in actual costs under a plan shall be made and certified by a qualified and licensed actuary who is a member in good standing of the American academy of actuaries. All such determinations shall be in a written report prepared by the actuary.
(f) In the case of a group policy providing hospital, medical or surgical expense benefits that offers an eligible employee, member or dependent two or more benefit package options under the policy, subsections (a) and (b) shall be applied separately with respect to each such option.
(g) As used in this section:
(1) "Aggregate lifetime limit" means, with respect to benefits under a group policy providing hospital, medical or surgical expense benefits, a dollar limitation on the total amount that may be paid with respect to such benefits under the policy with respect to an eligible employee, member or dependent;
(2) "annual limit" means, with respect to benefits under a group policy providing hospital, medical or surgical expense benefits, a dollar limitation on the total amount of benefits that may be paid with respect to such benefits in a 12-month period under the policy with respect to an eligible employee, member or dependent;
(3) "hospital, medical or surgical expense benefits" means benefits with respect to hospital, medical or surgical services, as defined under the terms of the policy;
(4) "mental illness benefits" means benefits with respect to mental health services, as defined under the terms of the policy;
(5) "alcoholism, drug abuse or substance use disorder benefits" means benefits with respect to services for the treatment of alcoholism, drug abuse or other substance use disorders, as defined under the terms of the policy;
(6) "mental illness, alcoholism, drug abuse or substance use" means disorders specified in the diagnostic and statistical manual of mental disorders, fourth edition, (DSM-IV, 1994) of the American psychiatric association.
(h) This section shall be effective for group policies providing hospital, medical or surgical expense benefits which are entered into or renewed after January 1, 1998.
(i) The commissioner is hereby authorized to adopt such rules and regulations as may be necessary to carry out the provisions of this section.
History: L. 1997, ch. 190, § 13; L. 2002, ch. 158, § 19; L. 2003, ch. 88, § 1; L. 2004, ch. 157, § 1; L. 2005, ch. 163, § 11; L. 2006, ch. 123, § 1; L. 2007, ch. 25, § 1; L. 2008, ch. 13, § 1; L. 2009, ch. 136, § 9; November 1.
(a) As used in this section, "genetic screening or testing" means a laboratory test of a person's genes or chromosomes for abnormalities, defects or deficiencies, including carrier status, that are linked to physical or mental disorders or impairments, or that indicate a susceptibility to illness, disease or other disorders, whether physical or mental, which test is a direct test for abnormalities, defects or deficiencies, and not an indirect manifestation of genetic disorders.
(b) An insurance company, health maintenance organization, nonprofit medical and hospital, dental, optometric or pharmacy corporation, or a group subject to K.S.A. 12-2616 et seq., and amendments thereto, offering group policies and certificates of coverage or individual policies providing hospital, medical or surgical expense benefits, shall not:
(1) Require or request directly or indirectly any individual or a member of the individual's family to obtain a genetic test;
(2) require or request directly or indirectly any individual to reveal whether the individual or a member of the individual's family has obtained a genetic test or the results of the test, if obtained by the individual or a member of the individual's family;
(3) condition the provision of insurance coverage or health care benefits on whether an individual or a member of the individual's family has obtained a genetic test or the results of the test, if obtained by the individual or a member of the individual's family;
(4) consider in the determination of rates or any other aspect of insurance coverage or health care benefits provided to an individual whether an individual or a member of the individual's family has obtained a genetic test or the results of the test, if obtained by the individual or a member of the individual's family;
(5) require any individual, as a condition of enrollment or continued enrollment, to pay a premium or contribution which is greater than such premium or contribution for a similarly situated individual on the basis of whether the individual or a member of the individual's family has obtained a genetic test or the results of such test; or
(6) adjust premium or contribution amounts on the basis of whether the individual or a member of the individual's family has obtained a genetic test or the result of such test.
(c) Subsection (b) does not apply to an insurer writing life insurance, disability income insurance or long-term care insurance coverage.
(d) An insurer writing life insurance, disability income insurance or long-term care insurance coverage that obtains information under paragraphs (1) or (2) of subsection (b), shall not:
(1) Use the information contrary to paragraphs (3) or (4) of subsection (b) in writing a type of insurance coverage other than life for the individual or a member of the individual's family; or
(2) provide for rates or any other aspect of coverage that is not reasonably related to the risk involved.
History: L. 1997, ch. 190, § 14; L. 2010, ch. 108, § 4; July 1.
(a) An insurer shall provide, in conjunction with a group health benefit plan, the option of establishing a premium only cafeteria plan as permitted under federal law, 26 U.S.C. section 125.
(b) As used in this section "insurer" means any insurance company, fraternal benefit society, health maintenance organization and nonprofit hospital and medical service corporation authorized to transact health insurance business in this state.
(c) An insurer that establishes or facilitates the establishment of a premium only cafeteria plan or other payroll deduction program pursuant to 26 U.S.C. section 125 does not violate K.S.A. 40-2404, and amendments thereto.
(d) Nothing in this section shall be construed as prohibiting an insurer from:
(1) Charging a fee for establishing or facilitating the establishment of a premium only cafeteria plan pursuant to this section, and amendments thereto; or
(2) utilizing a vendor to facilitate the establishment of a premium only cafeteria plan pursuant to this section, and amendments thereto.
(e) The provisions of this section shall not take effect until July 1, 2008.
History: L. 2008, ch. 164, § 1; May 29.
(a) An employer that provides health insurance coverage for which any portion of the premium is payable by an employee may also offer a premium only cafeteria plan as permitted under 26 U.S.C. section 125. The provisions of this subsection shall not apply to any employer who offers health insurance through any self-insured or self-funded group health benefit plan of any type or description.
(b) No provision of this section shall prohibit or otherwise restrict an employer's ability to either provide a group health benefit plan or create a premium only cafeteria plan with defined contributions and in which the employee purchases the policy.
(c) For the purposes of this section:
(1) "Health benefit plan" means any hospital or medical expense policy, health, hospital or medical service corporation contract and a plan provided by a municipal group-funded pool or a health maintenance organization contract offered by an employer or any certificate issued under any such policies, contracts or plans. Health benefit plan also includes a cafeteria plan authorized by 26 U.S.C. section 125. The cafeteria plan may offer the option of paying all or any portion of the health insurance premium or the option of receiving health insurance coverage through a high deductible health plan and the establishment of a health savings account. In order for an eligible individual to obtain a high deductible health plan through the cafeteria plan, such individual shall present evidence to the employer that such individual has established a health savings account in compliance with 26 U.S.C. section 223 and any amendments and regulations. "Health benefit plan" does not include policies or certificates covering only accident, credit, dental, disability income, long-term care, hospital indemnity, medicare supplement, specified disease, vision care, coverage issued as a supplement to liability insurance, insurance arising out of a workers compensation or similar law, automobile medical-payment insurance or insurance under which benefits are payable with or without regard to fault and which is statutorily required to be contained in any liability insurance policy or equivalent self-insurance.
(2) "Health savings account" shall have the same meaning ascribed to it as in subsection (d) of 26 U.S.C. section 223.
(3) "High deductible health plan" shall mean a policy or contract of health insurance or health care plan that meets the criteria established in subsection (c) of 26 U.S.C. section 223 and any amendments and regulations.
(d) The provisions of this section shall not take effect until July 1, 2008.
History: L. 2008, ch. 164, § 2; May 29.
History: L. 2009, ch. 83, § 28; Expired, January 1, 2011.
This act shall be known and may be cited as the utilization review organization act.
History: L. 1994, ch. 238, § 1; July 1.
The legislature finds that in order to promote the delivery of quality health care services in a cost effective manner, it is necessary to encourage greater coordination between health care providers and those agencies performing utilization review of health care services. Effective standards for utilization review activities will protect patients while reducing administrative costs associated with the review and approval of health care services provided to patients.
History: L. 1994, ch. 238, § 2; July 1.
For the purposes of this act:
(a) "Commissioner" means the commissioner of insurance.
(b) "Utilization review" means the evaluation of the necessity, appropriateness and efficiency of the use of health care services, procedures and facilities.
(c) "Utilization review organization" means any entity which conducts utilization review and determines certification of an admission, extension of stay or other health care service.
(d) "Health care provider" means a licensed medical care facility, a licensed health maintenance organization, or a person licensed or registered to engage in an occupation which renders health care services.
History: L. 1994, ch. 238, § 3; July 1.
(a) The commissioner shall adopt rules and regulations establishing standards governing the conduct of utilization review activities performed in this state or affecting residents or healthcare providers of this state by utilization review organizations. Unless granted an exemption under K.S.A. 40-22a06, and amendments thereto, no utilization review organization may conduct utilization review services in this state or affecting residents of this state without first obtaining a certificate from the commissioner.
(b) The commissioner shall not issue a certificate to a utilization review organization until the applicant:
(1) Files a formal application for certification in such form and detail as required by the commissioner and such application has been executed under oath by the chief executive officer, president or other head official of the applicant;
(2) files with the commissioner a certified copy of its charter or articles of incorporation and bylaws, if any;
(3) states the location of the office or offices of the utilization review organization where utilization review affecting residents or health care providers of this state will be principally performed;
(4) provides a summary of the qualifications and experience of persons performing utilization review affecting the persons and at the locations identified pursuant to paragraph (3);
(5) makes payment of a certification fee not to exceed $100 to the commission; and
(6) provides such other information or documentation as the commissioner requires.
(c) Certificates issued by the commissioner pursuant to this act shall remain effective until suspended, surrendered or revoked subject to payment of an annual continuation fee not to exceed $50.
(d) The commissioner may suspend or revoke the certificate or any exemption from certification requirements upon determination that the interests of Kansas insureds are not being properly served under such certificate or exemption. Any such action shall be taken only after a hearing conducted in accordance with the provisions of the Kansas administrative procedure act.
(e) Not later than December 1 of each year, the commissioner shall set and cause to be published in the Kansas register the fee required pursuant to this paragraph for the next calendar year.
History: L. 1994, ch. 238, § 4; L. 2021, ch. 108, § 7; L. 2025, ch. 87, § 15; July 1.
The utilization review organization act shall not apply to:
(a) Utilization review of health care services provided to patients under the authority of the Kansas workers compensation act, K.S.A. 44-501 et seq., and amendments thereto;
(b) reviews conducted by any insurance company, health maintenance organization, prepaid service plan, group-funded self-insured plan or similar entity solely for the purpose of determining compliance with the specific terms and conditions of an insurance policy, agreement or contract as a part of the normal claim settlement process; or
(c) any medical programs operated by the secretary for aging and disability services or any entity to the extent it is acting under contract with the secretary.
History: L. 1994, ch. 238, § 5; L. 2014, ch. 115, § 189; L. 2021, ch. 108, § 8; July 1.
(a) No certificate shall be required for utilization review activities conducted by or on behalf of:
(1) An agency of the federal government;
(2) a person, agency or utilization review organization acting on behalf of the federal government, but only to the extent such person, agency or organization is providing services under federal regulation;
(3) a federally qualified health maintenance organization authorized to transact business in Kansas that is administering a quality assurance program and performing utilization review activities for its own members as required by 42 U.S.C. § 300e(c)(8) and 42 U.S.C. § 300e(c)(6) respectively;
(4) a person employed or used by a utilization review organization authorized to perform utilization review in Kansas, including, but not limited to, individual nurses and other health care providers. This exemption shall not apply with respect to individual persons performing utilization review activities in conjunction with any insurance contract or health benefit plan pursuant to a direct contractual relationship with a health maintenance organization, group-funded self-insurance plan or insurance company;
(5) a health benefit plan that is self-insured and qualified under the federal employee retirement income security act of 1974 as amended;
(6) hospitals, home health agencies, clinics, private health care provider offices or any other authorized health care facility or entity conducting general, in-house utilization review unless such review is for the purpose of approving or denying payment for hospital or medical services in a particular case; or
(7) utilization review organizations conducting utilization review only with respect to mental health, chemical dependency, chiropractic, optometric, podiatric, dental or any other health care service or services other than the practice of medicine and surgery, until utilization review standards governing such treatment or service are incorporated in rules and regulations adopted pursuant to K.S.A. 40-22a04, and amendments thereto.
(b) The provisions of K.S.A. 40-22a04(b)(2), (3), (4), (5) and (6) and (c), and amendments thereto, shall not apply to:
(1) Utilization review organizations accredited by and adhering to the national utilization review standards approved by URAC, an independent, nonprofit accreditation entity; or
(2) such other utilization review organizations the commissioner approves.
History: L. 1994, ch. 238, § 6; L. 1998, ch. 14, § 1; L. 2021, ch. 108, § 9; July 1.
(a) (1) It is unlawful for any person or utilization review organization to perform utilization review activities in this state except in accordance with this act.
(2) No utilization review organization nor any individual performing utilization review activities may agree to be compensated or receive compensation which is contingent in any way upon frequency of certification denials, costs avoided by denial or reduction in payment of claims or other results which may be adverse to the needs of the patient as determined by the attending health care provider.
(3) (A) A utilization review organization may establish prior notification requirements for inpatient and outpatient hospital admissions. A utilization review organization shall not require notification sooner than the next business day after any inpatient admission occurring on a weekend or holiday or any urgent or emergent inpatient or outpatient admission regardless of when the patient presents for services.
(B) For the purposes of this paragraph, a patient that is unstable or uncommunicative shall not be deemed to have presented to a health care facility until the patient is able to provide insurance information and the health care facility is permitted under state and federal law to inquire about insurance coverage.
(b) A utilization review organization may not reduce or deny payment to a provider for such provider's failure to comply with any utilization review organization's policy that conflicts with this act or any rules and regulations adopted pursuant to K.S.A. 40-22a11, and amendments thereto.
(c) When the commissioner has reason to believe a utilization review organization subject to this act has been or is engaged in any conduct which violates this act or any rules and regulations adopted pursuant to K.S.A. 40-22a11, the commissioner, after a hearing conducted in accordance with the Kansas administrative procedure act, may:
(1) Issue and cause to be served upon the utilization review organization an order requiring such organization to cease and desist from engaging in such violations;
(2) suspend or revoke the utilization review organization's certificate to perform utilization review affecting residents of this state;
(3) assess a monetary penalty of not less than $500 and not more than $1,000 for each violation; or
(4) apply any combination of the above provisions as the commissioner, by written order, deems appropriate.
History: L. 1994, ch. 238, § 7; L. 2008, ch. 134, § 7; July 1.
Whenever the insurance commissioner deems it to be prudent for the benefit of the insureds, health care providers or insurers, the commissioner or any person designated by the commissioner may visit and examine the affairs of any utilization review organization to determine if the organization is in compliance with this act or rules and regulations adopted under this act or orders issued by the commissioner pursuant to such act or rules and regulations.
Any person or entity examined pursuant to the provisions of this section shall pay the reasonable and proper charges incurred for such examination, including the actual expenses of the insurance commissioner or the expenses and compensation of the commissioner's authorized representative and the expenses and compensation of assistants and examiners employed therein.
History: L. 1994, ch. 238, § 8; July 1.
Each utilization review organization shall have written procedures for assuring that patient-specific information obtained during the process of utilization review will be:
(a) Kept confidential in accordance with applicable federal and state laws; and
(b) used solely for the purposes of utilization review, quality assurance, discharge planning and catastrophic case management.
History: L. 1994, ch. 238, § 9; July 1.
(a) Every health insurance plan for which utilization review is performed shall include a description of the health insurance plan's procedures for an insured to obtain an internal appeal or review of an adverse decision. This description shall include all applicable time periods, contact information, rights of the insured and available levels of appeal. If the health insurer uses a utilization review organization, the insured shall be notified of the name of such utilization review organization. The health insurance plan shall provide an insured with written or electronic notification of any adverse decision, and a description of the health insurance plan's internal appeal or review procedure, including the insured's right to external review as provided in K.S.A. 40-22a14, and amendments thereto. The health insurance plan also shall notify the insured of the insured's right to waive the second appeal or internal review and proceed directly to the external review as provided in K.S.A. 40-22a14, and amendments thereto.
(b) If the health insurance plan contains a provision for two levels of internal appeal or review of a health care decision which is adverse to the insured, the health insurance plan shall allow the insured to voluntarily waive such insured's right to the second internal appeal or review. Such waiver shall be made in writing to the health insurance plan and shall constitute the exhaustion of all available internal appeal or review procedures within the meaning of subsection (d) of K.S.A. 40-22a14, and amendments thereto.
(c) If an insured elects to request the second internal appeal or review of a health care decision which is adverse to the insured, the insured shall have the right to appear in person before a designated representative or representatives of the health insurance plan or utilization review organization at the second internal appeal or review meeting. If a majority of the designated representatives of the health plan or utilization review organization who will be deciding the second internal appeal or review cannot be present in person, by telephone or by other electronic means, at least one of those designated representatives who will be deciding the second internal appeal or review shall be a physician and shall be present in person, by telephone or by other electronic means. No physician or other health care provider serving as a reviewer in an internal appeal or review of an adverse decision shall be liable in damages to the insured or the health insurance plan for any opinion rendered as part of the internal appeal or review.
(d) All second internal appeals or reviews shall provide that the insured has a right to:
(1) Receive from the health insurance plan or utilization review organization, upon request, copies of all documents, records and other information that are not confidential or privileged relevant to the insured's request for benefits;
(2) have a reasonable and adequate amount of time to present the insured's case to a designated representative or representatives of the health insurance plan or utilization review organization who will be deciding the second internal appeal or review;
(3) submit written comments, documents, records and other material relating to the request for benefits for the second internal appeal or review panel to consider when conducting the second internal appeal or review both before and, if applicable, at the second internal appeal or review meeting;
(4) prior to or during the second internal appeal or review meeting ask questions relevant to the subject matter of the internal appeal or review of any representative of the health insurance plan or utilization review organization serving on the internal appeal or review panel provided that such representative may respond verbally if the question is asked in person during an insured's appearance before the internal appeal or review panel or in writing if the questions are asked in writing, not more than 30 days from receipt of such written questions;
(5) be assisted or represented at the second internal appeal or review meeting by an individual or individuals of the insured's choice; and
(6) record the proceedings of the second internal appeal or review meeting at the expense of the insured.
(e) An insured, or the insured's authorized representative, wishing to request to appear in person before the second internal appeal or review panel consisting of the health insurance plan's or utilization review organization's designated representative or representatives shall make the request to the health insurance plan or utilization review organization within five working days before the date of the scheduled review meeting except that in the case of an emergency medical condition, such request must be made no less than 24 hours prior to the scheduled review meeting.
(f) The health insurance plan or utilization review organization shall provide the insured a written decision setting forth the relevant facts and conclusions supporting its decision within:
(1) Seventy-two hours if the second internal appeal or review involves an emergency medical condition as defined by subsection (b) of K.S.A. 40-22a13, and amendments thereto;
(2) fifteen business days if the second internal appeal or review involves a pre-service claim; and
(3) thirty days if the second internal appeal or review involves a post-service claim.
(g) For the purposes of this section:
(1) "Health insurance plan" shall have the meaning ascribed to it in K.S.A. 40-22a13, and amendments thereto.
(2) "Insured" shall have the meaning ascribed to it in K.S.A. 40-22a13, and amendments thereto.
(3) "Insurer" shall have the meaning ascribed to it in K.S.A. 40-22a13, and amendments thereto.
(4) "Adverse decision" shall have the meaning ascribed to it in K.S.A. 40-22a13, and amendments thereto.
(5) "Pre-service claim" means a request for a claims decision when prior authorization of services is required.
(6) "Post-service claim" means a request for a claims decision for services that have already been provided.
(h) This section shall be a part of and supplemental to the utilization review act.
History: L. 2006, ch. 127, § 1; July 1.
Any records, charts or other information exchanged between a health care provider or patient and a utilization review organization shall not be subject to discovery, subpoena or other means of legal compulsion for their release to any person or entity and shall not be admissible in evidence in any judicial or administrative proceeding other than a disciplinary proceeding by the state board of healing arts or other agency of the state which regulates health care providers.
History: L. 1994, ch. 238, § 10; July 1.
The commissioner shall adopt necessary rules and regulations, not inconsistent with this act, for implementing the provisions of this act.
History: L. 1994, ch. 238, § 11; July 1.
If any provision or clause of this act or application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of this act that can be given effect without the invalid provision or application. To this end, the provisions of this act are declared to be severable.
History: L. 1994, ch. 238, § 12; July 1.
On and after July 1, 2011, for the purposes of K.S.A. 40-22a13 through 40-22a16, and amendments thereto:
(a) "Adverse decision" means a utilization review determination by a third-party administrator, a health insurance plan, an insurer or a health care provider acting on behalf of an insured that a proposed or delivered health care service which would otherwise be covered under an insured's contract is not or was not medically necessary or the health care treatment has been determined to be experimental or investigational and:
(1) If the requested service is provided in a manner that leaves the insured with a financial obligation to the provider or providers of such services; or
(2) the adverse decision is the reason for the insured not receiving the requested services.
(b) "Emergency medical condition" means:
(1) The sudden, and at the time, unexpected onset of a health condition that requires immediate medical attention, where failure to provide medical attention would result in a serious impairment to bodily functions, serious dysfunction of a bodily organ or part or would place a person's health in serious jeopardy;
(2) a medical condition where the time frame for completion of a standard external review would seriously jeopardize the life or health of the insured or would jeopardize the insured's ability to regain maximum function; or
(3) a medical condition for which coverage has been denied based on a determination that the recommended or requested health care service or treatment is experimental or investigational, if the insured's treating physician certifies, in writing, that the recommended or requested health care service or treatment for the medical condition would be significantly less effective if not promptly initiated.
(c) "External review organization" means an entity that conducts independent external reviews of adverse decisions pursuant to a contract with the commissioner. Such entity shall be a nationally accredited external review organization which utilizes health care providers actively engaged in the practice of their profession in the state of Kansas who are qualified and credentialed with respect to the health care service review. In the event the entity has no Kansas providers available who are qualified and credentialed with respect to the review of any case, the external review organization shall have the discretion to employ health care providers who actively engage in such health care provider's practice outside the state of Kansas.
(d) "Health insurance plan" means any hospital or medical expense policy, health, hospital or medical service corporation contract, and a plan provided by a municipal group-funded pool, or a health maintenance organization contract offered by an employer or any certificate issued under any such policies, contracts or plans.
(e) "Insured" means the beneficiary of any health insurance company, fraternal benefit society, health maintenance organization, nonprofit hospital and medical service corporation, municipal group-funded pool, and the self-funded coverage established by the state of Kansas, or any hospital or medical expense, health, hospital or medical service corporation contract or a plan provided by a municipal group-funded pool.
(f) "Insurer" means any health insurance company, fraternal benefit society, health maintenance organization, nonprofit hospital and medical service corporation, provider sponsored organizations, municipal group-funded pool and the self-funded coverage established by the state of Kansas for its employees.
History: L. 1999, ch. 162, § 6; L. 2011, ch. 111, § 2; L. 2015, ch. 45, § 5; July 1.
On and after July 1, 2011:
(a) The provisions of K.S.A. 40-22a13 through 40-22a16, and amendments thereto, shall not apply to any policy or certificate which provides coverage for any specified disease, specified accident or accident only coverage, credit, dental, disability income, hospital indemnity, long-term care insurance as defined by K.S.A. 40-227, and amendments thereto, vision care or any other limited supplemental benefit nor to any medicare supplement policy of insurance as defined by the commissioner of insurance by rule and regulation, coverage under a plan through medicare, medicaid, or the federal employees health benefits program, any coverage issues as a supplement to liability insurance, workers compensation or similar insurance, automobile medical-payment insurance or any insurance under which benefits are payable with or without regard to fault, whether written on a group, blanket or individual basis.
(b) The right to external review under K.S.A. 40-22a13 through 40-22a16, and amendments thereto, shall not be construed to change the terms of coverage under a health insurance plan or insurance policy.
(c) The insurer or health insurance plan shall provide written notice to the insured of a final adverse decision and the opportunity for requesting an external review.
(d) (1) The insured has the right to request an independent external review of an adverse decision by a health insurance plan or insurer when:
(A) The insured has exhausted all available internal review procedures provided by the health insurance plan or insurer, unless the insured has an emergency medical condition, in which case an expedited procedure is used; or
(B) the insured has not received a final decision from the insurer within 60 days of seeking the internal review, except to the extent that the delay was requested by the insured.
(2) Whenever an insurer or health insurance plan fails to strictly adhere to all appeal procedure requirements as prescribed by state or federal law, the claimant shall be deemed to have exhausted the internal claims and appeal process regardless of whether such insurer or health insurance plan asserts that:
(A) It has substantially complied with such appeal procedure; or
(B) any error it committed was de minimis.
(e) Within 120 days of receipt of an adverse decision by a health insurance plan or an insurer, any request for external review shall be made in writing to the commissioner from the following persons: (1) The insured; (2) the treating physician or health care provider acting on behalf of the insured with written authorization from the insured; or (3) a legally authorized designee of the insured.
(f) The insured shall provide all information in the possession of the insured pertaining to the adverse decision in order for the commissioner to make a preliminary determination for an external review. The insured also shall provide the commissioner with an appeal form, and a fully executed release for the commissioner and the external review organization to obtain any necessary medical records from the insurer or health insurance plan and any other relevant provider.
(g) In responding to the commissioner, the insurer or health insurance plan shall provide a copy of the adverse decision given to the insured and all medical and other records pertaining to the insured's claim within five business days of the request of the commissioner.
(h) The confidentiality of any medical information submitted by the insured, on behalf of the insured, insurer or health insurance plan, shall be maintained pursuant to applicable state and federal laws.
History: L. 1999, ch. 162, § 7; L. 2011, ch. 111, § 3; July 1.
On and after July 1, 2011:
(a) The commissioner shall:
(1) Negotiate contracts with external review organizations which are eligible to conduct independent review of the adverse decision by a health insurance plan or insurer;
(2) allow the insurer or the health insurance plan, an insured or treating physician or health care provider acting on behalf of the insured, or legally authorized designee filing a request for external review to provide additional written information as may be relevant for the commissioner to make a final decision on whether the request qualified for external review;
(3) make a decision on a request for external review within 10 business days after receiving all necessary information;
(4) notify the insured and treating physician or health care provider acting on behalf of the insured, or legally authorized designee, and insurer or health insurance plan in writing that a request for external review will or will not be granted; and
(5) design and implement an expedited procedure for use in an emergency medical condition for purposes of the external review organization rendering a decision.
(b) The external review organization as defined in subsection (c) of K.S.A. 40-22a13, and amendments thereto, shall provide that all reviews completed pursuant to K.S.A. 40-22a13 through 40-22a16, and amendments thereto, are conducted by qualified and credentialed health care providers with respect to the health care service under review and who have no conflict of interest relating to the performance of the external review organization's duties in K.S.A. 40-22a13 through 40-22a16, and amendments thereto.
(c) The external review organization shall issue a written decision to the insured and concurrently send a copy of such decision to the commissioner including the basis and rationale for its decision within 30 business days. The standard of review shall be whether the health care service denied by the insurer or health insurance plan was medically necessary under the terms of the insured's contract. In reviews regarding experimental or investigational treatment, the standard of review shall be whether the health care service denied by the insurer or health insurance plan was covered or excluded from coverage under the terms of the insured's contract.
(d) The external review organization shall provide expedited resolution when an emergency medical condition exists, and shall resolve all issues not more than 72 hours after the date of receipt of the request for an expedited external review, or as expeditiously as the insured's medical condition or circumstances require.
(e) The external review organization shall maintain and report such data as may be required by the commissioner in order to assess the effectiveness of the external review process.
(f) No external review organization nor any individual working on behalf of such organization shall be liable in damages to any insured, health insurance plan or insurer for any opinion rendered as part of an external review conducted pursuant to K.S.A. 40-22a13 through 40-22a16, and amendments thereto.
(g) The external review organization shall maintain confidentiality of the medical records of the insured in accordance to state and federal law.
(h) The external review organization's fee for performance of any external review may be paid by the commissioner, the insurer or the health insurance plan. In no event shall the insured be held responsible for any portion of such fee.
History: L. 1999, ch. 162, § 8; L. 2011, ch. 111, § 4; July 1.
On and after July 1, 2011:
(a) The decision of the external review organization may be reviewed directly by the district court at the request of either the insured, insurer or health insurance plan. The review by the district court shall be de novo. The decision of the external review organization shall not preclude the insured, insurer or health insurance plan from exercising other available remedies applicable under state or federal law. Seeking a review by the district court or any other available remedies exercised by the insured, insurer or health insurance plan after the decision of the external review organization will not stay the external review organization's decision as to the payment or provision of services to be rendered during the pendency of the review by the insurer or health insurance plan. All material used in an external review and the decision of the external review organization as a result of the external review shall be deemed admissible in any subsequent litigation.
(b) In no event shall more than one external review be available for any request arising out of the same set of facts during a period of 12 consecutive months commencing on the date of the initial request for external review. An insured may not pursue, either concurrently or sequentially, an external review process under both a federal and state law.
(c) The commissioner of insurance is hereby authorized to negotiate and enter into contracts necessary to perform the duties required by K.S.A. 40-22a13 through 40-22a16, and amendments thereto.
(d) The commissioner of insurance shall adopt rules and regulations necessary to carry out the purposes of K.S.A. 40-22a13 through 40-22a16, and amendments thereto. The rules and regulations shall ensure that the commissioner is able to provide for an effective and efficient external review of health care services.
(e) Except as provided in subsection (a), the decision of the external review organization shall be binding on the insured and the insurer or health insurance plan.
History: L. 1999, ch. 162, § 9; L. 2011, ch. 111, § 5; July 1.
(a) Each utilization review entity, certified pursuant to K.S.A. 40-22a04, and amendments thereto, shall implement and maintain a prior authorization application programming interface, pursuant to 45 C.F.R. 156.223 (b), as in effect on January 1, 2028.
(b) Nothing in this section shall be construed to apply to a prior authorization request for coverage of drugs.
(c) As used in this section, "drug" means the same as defined in 45 C.F.R. 156.221 (b)(1)(v), as in effect on January 1, 2028.
(d) This section shall be a part of and supplemental to the utilization review organization act.
(e) This section shall be effective on January 1, 2028.
History: L. 2024, ch. 70, § 1; July 1.
In order to extend to certain employees of the state and its political subdivisions and to the dependents and survivors of such employees, the basic protection accorded to others by the old-age and survivors insurance system embodied in the social security act, it is hereby declared to be the policy of the legislature, subject to the limitations of this act, that such steps be taken as to provide such protection to employees of the state and its political subdivisions on as broad a basis as is permitted under the social security act. It is also the policy of the legislature that the protection afforded employees in positions covered by a retirement system on the date an agreement under this act is made applicable to service performed in such positions, or receiving periodic benefits under such retirement system at such time, will not be impaired as a result of making the agreement so applicable or as result of legislative enactment in anticipation thereof.
History: L. 1951, ch. 464, § 1; L. 1955, ch. 246, § 1; April 13.
For the purposes of this act:
(a) The term "wages" means all remuneration for employment as defined herein, including the cash value of all remuneration, paid in any medium other than cash, except that such term shall not include that part of such remuneration which, even if it were for "employment" within the meaning of the federal insurance contributions act, would not constitute "wages" within the meaning of that act;
(b) the term "employment" means any service performed by an employee in the employ of the state, or any political subdivision thereof, for such employer, except: (1) Service which in the absence of an agreement entered into under this act would constitute "employment" as defined in the social security act; (2) service which under the social security act may not be included in an agreement between the state and the secretary of health, education, and welfare entered into under this act; (3) service in any class or classes of positions, the compensation for which is on a fee basis; (4) service performed by a student which, if performed in the employ of a private employer, would be excluded from employment under the social security act; or (5) service of an emergency nature: Provided, That service which under the social security act may be included in an agreement only upon certification by the governor in accordance with section 218 (d) (3) of that act shall be included in the term "employment" if and when the governor issues, with respect to such service, a certificate to the secretary of health, education, and welfare pursuant to subsection (c) of K.S.A. 40-2305;
(c) the term "employee" includes an officer of the state or political subdivision thereof: Provided, That the term "employee" shall not include elected officials of a political subdivision other than the state or counties unless the elected officials of such political subdivisions are covered by a plan which is in conformity with the terms of the agreement of such political subdivision approved by the state agency under K.S.A. 40-2305;
(d) the term "state agency" means the director of accounts and reports, who shall exercise his powers as prescribed by K.S.A. 75-3749, and acts amendatory thereof or supplemental thereto;
(e) the term "secretary of health, education, and welfare" includes any individual to whom the secretary of health, education, and welfare of the United States has delegated any of his functions under the social security act with respect to coverage under such act of employees of states and their political subdivisions and with respect to any action taken prior to April 11, 1953, includes the federal security administrator and any individual to whom such administrator had delegated any such function;
(f) the term "political subdivision" includes every taxing district in this state and also includes an instrumentality of the state, of one or more of its political subdivisions, or of the state and one or more of its political subdivisions, but only if such instrumentality is a juristic entity which is legally separate and distinct from the state or subdivision and only if its employees are not by virtue of their relation to such juristic entity employees of the state or subdivision;
(g) the term "social security act" means the act of congress approved August 14, 1935, chapter 531, 49 Stat. 620, officially cited as the "social security act" (including regulations and requirements issued pursuant thereto), as such act has been and may from time to time be amended; and
(h) the term "federal insurance contributions act" means subchapter A of chapter 9 of the federal internal revenue code of 1939 and subchapters A and B of chapter 21 of the federal internal revenue code of 1954, as such codes have been and may from time to time be amended; and the term "employee tax" means the tax imposed by section 1400 of such code of 1939 and section 3101 of such code of 1954.
History: L. 1951, ch. 464, § 2; L. 1955, ch. 246, § 2; L. 1974, ch. 191, § 1; July 1.
(a)
Federal state agreement.
The state agency, with the approval of the governor, is hereby authorized to enter on behalf of the state into an agreement with the secretary of health, education, and welfare, consistent with the terms and provision of this act, for the purpose of extending the benefits of the federal old-age and survivors insurance system to employees of the state or any political subdivision thereof with respect to services specified in such agreement which constitute "employment" as defined in subsection (b) of K.S.A. 40-2302. Such agreement may contain such provisions relating to coverage, benefits, contributions, effective date, modification and termination of the agreement, administration, and other appropriate provisions as the state agency and secretary of health, education, and welfare shall agree upon, but, except as may be otherwise required by or under the social security act as to the services to be covered, such agreement shall provide in effect that:
(1) Benefits will be provided for employees whose services are covered by the agreement (and their dependents and survivors) on the same basis as though such services constituted employment within the meaning of title II* of the social security act;
(2) the state will pay to the secretary of the treasury, at such time or times as may be prescribed under the social security act, contributions with respect to wages, as defined in subsection (a) of K.S.A. 40-2302, equal to the sum of the taxes which would be imposed by the federal insurance contributions act if the services covered by the agreement constituted employment within the meaning of that act;
(3) such agreement shall be effective with respect to services in employment covered by the agreement performed after a date specified therein but in no event may it be effective with respect to any such services performed prior to the first day of the calendar year in which such agreement is entered into or in which the modification of the agreement making it applicable to such services, is entered into except that a modification entered into after December 31, 1954, and prior to January 1, 1958, shall be effective with respect to services performed after December 31, 1954;
(4) all services which constitute employment, as defined in subsection (b) of K.S.A. 40-2302, and are performed in the employ of the state or a county by employees of the state or a county, shall be covered by the agreement;
(5) all services which: (A) Constitute employment as defined in K.S.A. 40-2302; (B) are performed in the employ of another political subdivision of the state; and (C) are covered by a plan which is in conformity with the terms of the agreement and has been approved by the state agency under K.S.A. 40-2305, shall be covered by the agreement;
(6) as modified, the agreement shall include all services described in either paragraph (4) or paragraph (5) of this subsection and performed by individuals to whom section 218(c)(3)(C) of the social security act is applicable, and shall provide that the service of any such individual shall continue to be covered by the agreement in case he thereafter becomes eligible to be a member of a retirement system; and
(7) as modified, the agreement shall include all services described in either paragraph (4) or paragraph (5) of this subsection and performed by individuals in positions covered by a retirement system with respect to which the governor has issued a certificate to the secretary of health, education, and welfare pursuant to K.S.A. 40-2305a.
(b)
Interstate instrumentalities.
Any instrumentality jointly created by this state and any other state or states is hereby authorized, upon the granting of like authority by such other state or states:
(1) To enter into an agreement with the secretary of health, education, and welfare whereby the benefits of the federal old-age and survivors insurance system shall be extended to employees of such instrumentality;
(2) to require its employees to pay (and for that purpose to deduct from their wages) contributions equal to the amounts which they would be required to pay under subsection (a) of K.S.A. 40-2304, if they were covered by an agreement made pursuant to subsection (a) of this section; and
(3) to make payments to the secretary of the treasury in accordance with such agreement, including payments from its own funds, and otherwise to comply with such agreements.
Such agreements shall, to the extent practicable, be consistent with the terms and provisions of subsection (a) of this section and other provisions of this act.
History: L. 1951, ch. 464, § 3; L. 1953, ch. 236, § 1; L. 1955, ch. 246, § 3; April 13.
(a) Every employee of the state whose services are covered by an agreement entered into under K.S.A. 40-2303, shall be required to pay for the period of such coverage, into the contribution fund established by K.S.A. 40-2307, contributions, with respect to wages, as defined in subsection (a) of K.S.A. 40-2302, equal to the amount of the employee tax which would be imposed by the federal insurance contributions act if such services constituted employment within the meaning of that act. Such liability shall arise in consideration of the employee's retention in the service of the state, or his entry upon such service, after the enactment of this act.
(b) The contribution imposed by this section shall be collected by deducting the amount of the contribution from wages as and when paid, but failure to make such deduction shall not relieve the employee from liability for such contribution.
(c) If more or less than the correct amount of the contribution imposed by this section is paid or deducted with respect to any remuneration, proper adjustments, or refund if adjustment is impracticable, shall be made, without interest, in such manner and at such times as the state agency shall prescribe.
History: L. 1951, ch. 464, § 4; L. 1955, ch. 246, § 4; April 13.
(a) Each political subdivision of the state is hereby authorized to submit for approval by the state agency a plan for extending or modifying the benefits of title II of the social security act, in conformity with the applicable provisions of such act, to employees, including any holding the office or position of policeman or fireman, of such political subdivisions. Whenever the governor certifies to the secretary of health and human services that, as a result of a referendum held pursuant to subsection (b) of K.S.A. 40-2305a, and amendments thereto, school employees who are covered by the state system for retirement and payment of annuities to school employees as provided for in article 26 of chapter 72 of the Kansas Statutes Annotated, and amendments thereto, the conditions specified in section 218(d)(3) of the social security act have been met with respect to such employees under such separate retirement system, the state agency shall adopt a plan or amend a plan for extending such benefits to school employees, as defined in subsection (d) of K.S.A. 72-2624, and amendments thereto, of every political subdivision and such political subdivision, and its employees shall be liable under such plan or amended plan to the same extent as if the political subdivision had submitted the plan and the same had been approved by the state agency. Each such plan and any amendment thereof shall be approved by the state agency if it finds that such plan, or such plan as amended, is in conformity with such requirements as are provided in regulations of the state agency, except that no such plan shall be approved unless: (1) It is in conformity with the requirements of the federal social security act and with the agreement entered into pursuant to K.S.A. 40-2303, and amendments thereto; (2) it provides that all services which constitute employment as defined in subsection (b) of K.S.A. 40-2302, and amendments thereto, and are performed in the employ of the political subdivision by employees thereof, including any holding the office or position of policeman or fireman, shall be covered by the plan, except that it may exclude services performed by other individuals to whom section 218(c)(3)(C) of the federal social security act is applicable; (3) it specifies the source or sources from which the funds necessary to make the payments required by paragraph (1) of subsection (c) of this section and by subsection (d) of this section are expected to be derived and contains reasonable assurance that such sources will be adequate for such purpose; (4) it provides for such methods of administration of the plan by the political subdivision as are found by the state agency to be necessary for the proper and efficient administration of the plan; (5) it provides that the political subdivision will make such reports, in such form and containing such information, as the state agency may from time to time require, and comply with such provisions as the state agency or the secretary of health and human services may from time to time find necessary to assure the correctness and verification of such reports; and (6) it authorizes the state agency to terminate the plan in its entirety, in the discretion of the state agency, if it finds there has been a failure to comply substantially with any provision contained in such plan, such termination to take effect at the expiration of such notice and on such conditions as may be provided by regulations of the state agency and may be consistent with the provisions of the social security act.
(b) The state agency shall not finally refuse to approve a plan submitted by a political subdivision under subsection (a) of this section, and shall not terminate an approved plan, without reasonable notice and opportunity for hearing to the political subdivision affected thereby. Hearings under this subsection shall be conducted in accordance with the provisions of the Kansas administrative procedure act.
(c) (1) Each political subdivision as to which a plan has been approved under this section shall pay into the contribution fund, with respect to wages, as defined in subsection (a) of K.S.A. 40-2302, and amendments thereto, at such time or times as the state agency may by regulation prescribe, contributions in the amounts and at the rates specified in the applicable agreement entered into by the state agency under K.S.A. 40-2303, and amendments thereto. Delinquent contributions shall be subject to a late penalty to defray the costs of the collection efforts in the amount of $10 for each contribution period. All moneys received for the late penalty imposed by this paragraph (1) of subsection (c) shall be remitted to the state treasurer in accordance with the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount in the state treasury to the credit of the municipal accounting services recovery fund.
(2) Each political subdivision required to make payments under paragraph (1) of this subsection (c) is authorized, in consideration of the employee's retention in, or entry upon, employment after enactment of this act, to impose upon each of its employees, as to services which are covered by an approved plan, a contribution with respect to such employee's wages, as defined in subsection (a) of K.S.A. 40-2302, and amendments thereto, not exceeding the amount of the employee tax which would be imposed by the federal insurance contributions act if such services constituted employment within the meaning of that act, and to deduct the amount of such contribution from such employee's wages as and when paid. Contributions so collected shall be paid into the contribution fund in partial discharge of the liability of such political subdivision or instrumentality under paragraph (1) of this subsection (c). Failure to deduct such contribution shall not relieve the employee or employer of liability therefor.
(d) Delinquent payments due under paragraph (1) of subsection (c) of this section may, with interest at the rate prescribed by federal statute or regulation for delinquent social security remittances, be recovered by the state agency by action in a court of competent jurisdiction against the political subdivision liable therefor or may, at the request of the state agency, be deducted from any other moneys payable to such subdivision by any department or agency of the state or may be offset against any funds of the subdivision held by the county treasurer upon certification by the state agency of such liability to the officials of the subdivision and to the county treasurer. Upon receipt of the state agency's certification, the county treasurer shall remit from the funds of such political subdivision the amount certified. The county treasurer shall notify the subdivision of the amount remitted to the state agency.
(e) Each political subdivision, other than an instrumentality of the state, shall pay its contributions required under the provisions of subsection (c) of this section from the same fund that the wages for which such contribution is made are paid or from any other funds available to it for such purpose. Each political subdivision, except an instrumentality of the state or a school district, which is by law authorized to levy taxes for other purposes, annually at the time of its levy of taxes for other purposes, may levy a tax, which may be in addition to all other taxes authorized by law, for the purpose of making its contributions under subsection (c) of this section and, in the case of cities and counties, to pay a portion of the principal and interest on bonds issued under the authority of K.S.A. 12-1774, and amendments thereto, by cities located in the county, which tax together with any other funds available to such political subdivision for such purpose shall be sufficient to enable it to make such contributions. Any taxing subdivision authorized to levy a tax under this subsection, in lieu of levying such tax, may pay the required employer contribution from any employee benefits contribution fund established pursuant to K.S.A. 12-16,102, and amendments thereto. All contributions of such political subdivisions shall be transmitted to the state agency in the manner as the state agency shall by rules and regulations provide, and, upon receipt of the same, the state agency shall remit such contributions to the state treasurer, in accordance with the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount in the state treasury to the credit of the contribution fund created by K.S.A. 40-2307, and amendments thereto.
History: L. 1951, ch. 464, § 5; L. 1953, ch. 237, § 1; L. 1955, ch. 246, § 5; L. 1961, ch. 238, § 1; L. 1978, ch. 296, § 14; L. 1978, ch. 163, § 4; L. 1979, ch. 52, § 153; L. 1981, ch. 196, § 1; L. 1983, ch. 157, § 1; L. 1988, ch. 356, § 109; L. 1990, ch. 66, § 40; L. 2001, ch. 5, § 118; July 1.
(a) For the purpose of applying and construing the provisions of this section, the employees of any political subdivision who are covered by the state system for retirement and payment of annuities to school employees as provided for in article 55 of chapter 72 of the Kansas Statutes Annotated, and acts amendatory thereof or supplemental thereto, shall be considered to be employees of the state and not of a political subdivision.
(b) With respect to employees of the state the governor is empowered to authorize a referendum, and with respect to the employees of any political subdivision he shall authorize a referendum upon request of the governing body of such subdivision; and in either case the referendum shall be conducted, and the governor shall designate an agency or individual to supervise its conduct, in accordance with the requirements of section 218(d)(3) of the social security act, on the question of whether service in positions covered by a retirement system established by the state or by a political subdivision thereof should be excluded from or included under an agreement under this act. The governor or the agency or individual whom he shall designate to supervise the conduct of a referendum, with the approval of the governor, shall adopt rules and regulations governing the calling, holding and canvassing of such referendum. If the governor shall have, prior to the effective date of this act, designated an agency or individual to supervise the conduct of a referendum all the acts of the governor and of such agency or individual performed prior to the effective date of this act are hereby validated and confirmed to the same extent as if done under the authority of this act and, in the case of a political subdivision, regardless of the fact that the governing body of such political subdivision did not request such referendum. The notice of referendum required by section 218(d)(3)(C) of the social security act to be given to employees shall contain or shall be accompanied by a statement, in such form and such detail as the agency or individual designated to supervise the referendum shall deem necessary and sufficient, to inform the employees of the rights which will accrue to them and their dependents and survivors, and the liabilities to which they will be subject, if their services are included under an agreement under this act.
(c) Upon receiving evidence satisfactory to him that with respect to any such referendum the conditions specified in sections 218(d)(3) of the social security act have been met, the governor shall so certify to the secretary of health, education and welfare.
History: L. 1955, ch. 246, § 6; April 13.
(a) Each department, commission, board, institution, bureau, office, officer or other employing unit or instrumentality of the state shall pay to the state agency contributions with respect to wages, as defined in subsection (a) of K.S.A. 40-2302, and amendments thereto, of its employees which are paid from fees or other income except from direct appropriations from the state general fund, equal to the taxes which would be imposed by the federal insurance contributions act if the services for which such wages were paid constituted employment within the meaning of that act. Such contributions shall be transmitted to the state agency in the manner as the state agency shall, by rules and regulations, provide, and upon receipt of the same, the state agency shall remit such contributions to the state treasurer in accordance with the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount in the state treasury to the credit of the contribution fund created by K.S.A. 40-2307, and amendments thereto.
(b) Contributions with respect to wages, as defined in subsection (a) of K.S.A. 40-2302, and amendments thereto, of employees of the state or an instrumentality of the state which wages are paid from direct appropriations from the state general fund, equal to the taxes which would be imposed by the federal insurance contributions act if the services for which such wages were paid constituted employment within the meaning of that act shall be paid or transferred by the state agency to the contribution fund created by K.S.A. 40-2307, and amendments thereto, from the "old-age insurance fund" in the state treasury, which fund is hereby created for use by the state agency for such purposes and such transfer of funds shall be made by the state treasurer upon order of the state agency transmitted to the state treasurer and the director of accounts and reports and upon receipt of such order the state treasurer and director of accounts and reports shall make the proper changes in the records of their respective offices.
(c) If any employing unit or instrumentality of this state, due to a shortage of funds; is unable to make the contributions required by subsection (a) of this section, the state agency may advance funds to such employing unit or instrumentality for such purpose from the old-age insurance fund created by subsection (b) of this section upon such terms and conditions as shall be agreed upon by the state agency and the employing unit or instrumentality.
(d) If the amount of funds in the contribution fund or the old-age insurance fund are insufficient to make payments required to be made by the state to the secretary of the treasury, any department, commission, board or other agency of the state, which is supported in whole or in part from fees, may advance money from its fee funds to the state agency upon such terms and conditions as shall be agreed upon by such department, commission, board or other agency of the state with the state agency for the purpose of making such payments to the secretary of the treasury.
History: L. 1951, ch. 464, § 6; L. 1955, ch. 246, § 7; L. 2001, ch. 5, § 119; July 1.
Nothing contained in this act shall be construed as repealing or amending any law except those specifically amended or repealed by this act, nor shall this act be construed as amending any retirement, annuity or pension plan provided under any other law of this state.
History: L. 1955, ch. 246, § 8; April 13.
History: L. 1951, ch. 464, § 7; L. 1973, ch. 196, § 1; L. 1975, ch. 404, § 3; L. 1976, ch. 386, § 7; Repealed, L. 1992, ch. 272, § 19; July 1.
The state agency may adopt, publish, and file in the office of the secretary of state as provided by law, such rules and regulations, not inconsistent with the provisions of this act, as it finds necessary or appropriate to the efficient administration of the functions with which it is charged under this act.
History: L. 1951, ch. 464, § 8; L. 1988, ch. 366, § 9; June 1.
The state agency shall make studies concerning the problem of old-age and survivors insurance protection for employees of the state and local governments and their instrumentalities and concerning the operation of agreements made and plans approved under this act and shall submit a report to the legislature at the beginning of each regular session, covering the administration and operation of this act during the preceding calendar year, including such recommendations for amendments to this act as it considers proper.
History: L. 1951, ch. 464, § 9; April 2.
The purpose of this act is to regulate trade practices in the business of insurance in accordance with the intent of congress as expressed in the act of congress of March 9, 1945 (Public Law 15*, 79th
Congress), by defining, or providing for the determination of, all such practices in this state which constitute unfair methods of competition or unfair or deceptive acts or practices and by prohibiting the trade practices so defined or determined.
History: L. 1955, ch. 247, § 1; June 30.
When used in this act:
(a) "Person" means any individual, corporation, association, partnership, reciprocal exchange, inter-insurer, Lloyd's insurer, fraternal benefit society and any other legal entity engaged in the business of insurance, including agents, brokers and adjusters. Person also means any nonprofit medical and hospital service corporations, as defined in article 19c of chapter 40 of the Kansas Statutes Annotated, and amendments thereto; administrators, as defined in article 38 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto; and health maintenance organizations, as defined in article 32 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto.
(b) "Commissioner" means the commissioner of insurance of this state.
(c) "Insurance policy" or "insurance contract" means any contract of insurance, indemnity, medical or hospital service, suretyship or annuity issued, proposed for issuance or intended for issuance by any person.
History: L. 1955, ch. 247, § 2; L. 1972, ch. 189, § 1; L. 1985, ch. 163, § 1; L. 1987, ch. 170, § 1; L. 1997, ch. 8, § 10; July 1.
No person shall engage in this state in any trade practice which is defined in this act as, or determined pursuant to K.S.A. 40-2406 to be, an unfair method of competition or an unfair or deceptive act or practice in the business of insurance.
History: L. 1955, ch. 247, § 3; L. 1972, ch. 189, § 2; July 1.
The following are hereby defined as unfair methods of competition and unfair or deceptive acts or practices in the business of insurance:
(1)
Misrepresentations and false advertising of insurance policies.
Making, issuing, circulating or causing to be made, issued or circulated, any estimate, illustration, circular, statement, sales presentation, omission or comparison that:
(a) Misrepresents the benefits, advantages, conditions or terms of any insurance policy;
(b) misrepresents the dividends or share of the surplus to be received on any insurance policy;
(c) makes any false or misleading statements as to the dividends or share of surplus previously paid on any insurance policy;
(d) is misleading or is a misrepresentation as to the financial condition of any person, or as to the legal reserve system upon which any life insurer operates;
(e) uses any name or title of any insurance policy or class of insurance policies misrepresenting the true nature thereof;
(f) is a misrepresentation for the purpose of inducing or tending to induce the lapse, forfeiture, exchange, conversion or surrender of any insurance policy;
(g) is a misrepresentation for the purpose of effecting a pledge or assignment of or effecting a loan against any insurance policy; or
(h) misrepresents any insurance policy as being shares of stock.
(2)
False information and advertising generally.
Making, publishing, disseminating, circulating or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated or placed before the public, in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio or television station, or in any other way, an advertisement, announcement or statement containing any assertion, misrepresentation or statement with respect to the business of insurance or with respect to any person in the conduct of such person's insurance business, that is untrue, deceptive or misleading.
(3)
Defamation.
Making, publishing, disseminating or circulating, directly or indirectly, or aiding, abetting or encouraging the making, publishing, disseminating or circulating of any oral or written statement or any pamphlet, circular, article or literature that is false, or maliciously critical of or derogatory to the financial condition of any person, and that is calculated to injure such person.
(4)
Boycott, coercion and intimidation.
Entering into any agreement to commit, or by any concerted action committing, any act of boycott, coercion or intimidation resulting in or tending to result in unreasonable restraint of the business of insurance, or by any act of boycott, coercion or intimidation monopolizing or attempting to monopolize any part of the business of insurance.
(5)
False statements and entries.
(a) Knowingly filing with any supervisory or other public official, or knowingly making, publishing, disseminating, circulating or delivering to any person, or placing before the public, or knowingly causing directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public, any false material statement of fact as to the financial condition of a person.
(b) Knowingly making any false entry of a material fact in any book, report or statement of any person or knowingly omitting to make a true entry of any material fact pertaining to the business of such person in any book, report or statement of such person.
(6)
Stock operations and advisory board contracts.
Issuing or delivering or permitting agents, officers or employees to issue or deliver, agency company stock or other capital stock, or benefit certificates or shares in any common-law corporation, or securities or any special or advisory board contracts or other contracts of any kind promising returns and profits as an inducement to insurance. Nothing herein shall prohibit the acts permitted by K.S.A. 40-232, and amendments thereto.
(7)
Unfair discrimination.
(a) Making or permitting any unfair discrimination between individuals of the same class and equal expectation of life in the rates charged for any contract of life insurance or life annuity or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of such contract.
(b) Making or permitting any unfair discrimination between individuals of the same class and of essentially the same hazard in the amount of premium, policy fees or rates charged for any policy or contract of accident or health insurance or in the benefits payable thereunder, in any of the terms or conditions of such contract or in any other manner whatever.
(c) Refusing to insure, refusing to continue to insure, limiting the amount, extent or kind of coverage available to an individual or charging an individual a different rate for the same coverage solely because of blindness or partial blindness. With respect to all other conditions, including the underlying cause of the blindness or partial blindness, persons who are blind or partially blind shall be subject to the same standards of sound actuarial principles or actual or reasonably anticipated experience as are sighted persons. Refusal to insure includes denial by an insurer of disability insurance coverage on the grounds that the policy defines "disability" as being presumed in the event that the insured loses such person's eyesight. However, an insurer may exclude from coverage disabilities consisting solely of blindness or partial blindness when such condition existed at the time the policy was issued.
(d) Refusing to insure, refusing to continue to insure or limiting the amount, extent or kind of coverage available for accident and health and life insurance to an applicant who is the proposed insured, charging a different rate for the same coverage, excluding or limiting coverage for losses or denying a claim incurred by an insured as a result of abuse based on the fact that the applicant who, is the proposed insured, is, has been, or may be the subject of domestic abuse, except as provided in subsection (7)(d)(v). As used in this paragraph, "abuse" means one or more acts defined in K.S.A. 60-3102, and amendments thereto, between family members, current or former household members or current or former intimate partners.
(i) An insurer shall not ask an applicant for life or accident and health insurance who is the proposed insured if the individual is, has been or may be the subject of domestic abuse, or seeks, has sought or had reason to seek medical or psychological treatment or counseling specifically for abuse, protection from abuse or shelter from abuse.
(ii) Nothing in this section shall be construed to prohibit a person from declining to issue an insurance policy insuring the life of an individual who is, has been or has the potential to be the subject of abuse if the perpetrator of the abuse is the applicant or would be the owner of the insurance policy.
(iii) No insurer that issues a life or accident and health policy to an individual who is, has been or may be the subject of domestic abuse shall be subject to civil or criminal liability for the death or any injuries suffered by that individual as a result of domestic abuse.
(iv) No person shall refuse to insure, refuse to continue to insure, limit the amount, extent or kind of coverage available to an individual or charge a different rate for the same coverage solely because of physical or mental condition, except where the refusal, limitation or rate differential is based on sound actuarial principles.
(v) Nothing in this section shall be construed to prohibit a person from underwriting or rating a risk on the basis of a preexisting physical or mental condition, even if such condition has been caused by abuse, provided that:
(A) The person routinely underwrites or rates such condition in the same manner with respect to an insured or an applicant who is not a victim of abuse;
(B) the fact that an individual is, has been or may be the subject of abuse may not be considered a physical or mental condition; and
(C) such underwriting or rating is not used to evade the intent of this section or any other provision of the Kansas insurance code.
(vi) Any person who underwrites or rates a risk on the basis of preexisting physical or mental condition as set forth in subsection (7)(d)(v), shall treat such underwriting or rating as an adverse underwriting decision pursuant to K.S.A. 40-2,112, and amendments thereto.
(vii) The provisions of this paragraph shall apply to all policies of life and accident and health insurance issued in this state after the effective date of this act and all existing contracts that are renewed on or after the effective date of this act.
(e) Refusing to insure, or refusing to continue to insure, or limiting the amount, extent or kind of coverage available for life insurance to an individual, or charging an individual a different rate for the same coverage, solely because of such individual's status as a living organ donor. With respect to all other conditions, persons who are living organ donors shall be subject to the same standards of sound actuarial principles or actual or reasonably anticipated experience as are persons who are not organ donors.
(8)
Rebates.
(a) Except as otherwise expressly provided by law, knowingly permitting, offering to make or making any contract of life insurance, life annuity or accident and health insurance, or agreement as to such contract other than as plainly expressed in the insurance contract issued thereon; paying, allowing, giving or offering to pay, allow or give, directly or indirectly, as inducement to such insurance, or annuity, any rebate of premiums payable on the contract, any special favor or advantage in the dividends or other benefits thereon, or any valuable consideration or inducement whatever not specified in the contract; or giving, selling, purchasing or offering to give, sell or purchase as inducement to such insurance contract or annuity or in connection therewith, any stocks, bonds or other securities of any insurance company or other corporation, association or partnership, or any dividends or profits accrued thereon, or anything of value whatsoever not specified in the contract.
(b) Nothing in subsection (7)(a) or (8)(a) shall be construed as including within the definition of discrimination or rebates any of the following practices:
(i) In the case of any contract of life insurance or life annuity, paying bonuses to policyholders or otherwise abating their premiums in whole or in part out of surplus accumulated from nonparticipating insurance. Any such bonuses or abatement of premiums shall be fair and equitable to policyholders and for the best interests of the company and its policyholders;
(ii) in the case of life insurance policies issued on the industrial debit plan, making allowance to policyholders who have continuously for a specified period made premium payments directly to an office of the insurer in an amount that fairly represents the saving in collection expenses;
(iii) readjustment of the rate of premium for a group insurance policy based on the loss or expense experience thereunder, at the end of the first or any subsequent policy year of insurance thereunder, which may be made retroactive only for such policy year;
(iv) engaging in an arrangement that would not violate section 106 of the bank holding company act amendments of 1972, as interpreted by the board of governors of the federal reserve system or section 5(q) of the home owners' loan act;
(v) the offer or provision by insurers or producers, by or through employees, affiliates or third-party representatives, of value-added products or services at no or reduced cost when such products or services are not specified in the policy of insurance if the product or service:
(A) Relates to the insurance coverage; and
(B) is primarily designed to satisfy one or more of the following:
(1) Provide loss mitigation or loss control;
(2) reduce claim costs or claim settlement costs;
(3) provide education about liability risks or risk of loss to persons or property;
(4) monitor or assess risk, identify sources of risk or develop strategies for eliminating or reducing risk;
(5) enhance health;
(6) enhance financial wellness through items such as education or financial planning services;
(7) provide post-loss services;
(8) (a) incentivize behavioral changes to improve the health or reduce the risk of death or disability of a customer;
(b) as used in this section, "customer" means a policyholder, potential policyholder, certificate holder, potential certificate holder, insured, potential insured or applicant; or
(9) assist in the administration of the employee or retiree benefit insurance coverage.
(C) The cost to the insurer or producer offering the product or service to any given customer shall be reasonable in comparison to such customer's premiums or insurance coverage for the policy class.
(D) If the insurer or producer is providing the product or service offered, the insurer or producer shall ensure that the customer is provided with contact information, upon request, to assist the customer with questions regarding the product or service.
(E) The commissioner may adopt rules and regulations when implementing the permitted practices set forth in this section to ensure consumer protection. Such rules and regulations, consistent with applicable law, may address, among other issues, consumer data protections and privacy, consumer disclosure and unfair discrimination.
(F) The availability of the value-added product or service shall be based on documented objective criteria and offered in a manner that is not unfairly discriminatory. The documented criteria shall be maintained by the insurer or producer and produced upon request by the commissioner.
(G) (1) If an insurer or producer does not have sufficient evidence but has a good-faith belief that the product or service meets the criteria in subsection (8)(b)(v)(B), the insurer or producer may provide the product or service in a manner that is not unfairly discriminatory as part of a pilot or testing program for not more than one year. An insurer or producer shall notify the commissioner of such a pilot or testing program offered to consumers in this state prior to launching and may proceed with the program unless the commissioner objects within 21 days of notice.
(2) If the insurer or producer is unable to determine sufficient evidence within the one-year pilot or testing period, the insurer or producer may request that such pilot or testing period be extended for such additional time as necessary to determine if the product or service meets the criteria described in subsection (8)(b)(v)(B). Upon such a request, the commissioner may grant an extension of a specified time.
(vi) An insurer or a producer may:
(A) Offer or give non-cash gifts, items or services, including meals to or charitable donations on behalf of a customer, in connection with the marketing, sale, purchase or retention of contracts of insurance, as long as the cost does not exceed an amount determined to be reasonable by the commissioner per policy year per term. The offer shall be made in a manner that is not unfairly discriminatory. The customer shall not be required to purchase, continue to purchase or renew a policy in exchange for the gift, item or service.
(B) Conduct raffles or drawings to the extent permitted by state law, as long as there is no financial cost to entrants to participate, the drawing or raffle does not obligate participants to purchase insurance, the prizes are not valued in excess of a reasonable amount determined by the commissioner and the drawing or raffle is open to the public. The raffle or drawing shall be offered in a manner that is not unfairly discriminatory. The customer shall not be required to purchase, continue to purchase or renew a policy in exchange for the gift, item or service.
(c) An insurer, producer or representative of an insurer or producer shall not offer or provide insurance as an inducement to the purchase of another policy.
(9)
Unfair claim settlement practices.
It is an unfair claim settlement practice if any of the following or any rules and regulations pertaining thereto are either committed flagrantly and in conscious disregard of such provisions, or committed with such frequency as to indicate a general business practice:
(a) Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue;
(b) failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies;
(c) failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies;
(d) refusing to pay claims without conducting a reasonable investigation based upon all available information;
(e) failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed;
(f) not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear;
(g) compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds;
(h) attempting to settle a claim for less than the amount to which a reasonable person would have believed that such person was entitled by reference to written or printed advertising material accompanying or made part of an application;
(i) attempting to settle claims on the basis of an application that was altered without notice to, or knowledge or consent of the insured;
(j) making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which payments are being made;
(k) making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration;
(l) delaying the investigation or payment of claims by requiring an insured, claimant or the physician of either to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information;
(m) failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage; or
(n) failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.
(10)
Failure to respond to an inquiry.
An insurer's failing, upon receipt of any inquiry from the insurance department concerning a complaint or inquiry related to a particular matter, within 14 calendar days of receipt of such inquiry to furnish the department with an adequate response to such inquiry.
(11)
Failure to maintain complaint handling procedures.
Failure of any person, who is an insurer on an insurance policy, to maintain a complete record of all the complaints that it has received since the date of its last examination under K.S.A. 40-222, and amendments thereto, except that no such records shall be required for complaints received prior to the effective date of this act. The record shall indicate the total number of complaints, their classification by line of insurance, the nature of each complaint, the disposition of the complaints, the date each complaint was originally received by the insurer and the date of final disposition of each complaint. For purposes of this section, "complaint" means any written communication primarily expressing a grievance related to the acts and practices set out in this section.
(12)
Misrepresentation in insurance applications.
Making false or fraudulent statements or representations on or relative to an application for an insurance policy, for the purpose of obtaining a fee, commission, money or other benefit from any insurer, agent, broker or individual.
(13)
Statutory violations.
Any violation of any of the provisions of K.S.A. 40-216, 40-276a, 40-2,155 or 40-1515, and amendments thereto.
(14)
Disclosure of information relating to adverse underwriting decisions and refund of premiums.
Failing to comply with the provisions of K.S.A. 40-2,112, and amendments thereto, within the time prescribed in such section.
(15)
Rebates and other inducements in title insurance.
(a) No title insurance company or title insurance agent, or any officer, employee, attorney, agent or solicitor thereof, may pay, allow or give, or offer to pay, allow or give, directly or indirectly, as an inducement to obtaining any title insurance business, any rebate, reduction or abatement of any rate or charge made incident to the issuance of such insurance, any special favor or advantage not generally available to others of the same classification, or any money, thing of value or other consideration or material inducement. "Charge made incident to the issuance of such insurance" includes, without limitations, escrow, settlement and closing charges.
(b) No insured named in a title insurance policy or contract nor any other person directly or indirectly connected with the transaction involving the issuance of the policy or contract, including, but not limited to, mortgage lender, real estate broker, builder, attorney or any officer, employee, agent representative or solicitor thereof, or any other person may knowingly receive or accept, directly or indirectly, any rebate, reduction or abatement of any charge, or any special favor or advantage or any monetary consideration or inducement referred to in subsection (15)(a).
(c) Nothing in this section shall be construed as prohibiting:
(i) The payment of reasonable fees for services actually rendered to a title insurance agent in connection with a title insurance transaction;
(ii) the payment of an earned commission to a duly appointed title insurance agent for services actually performed in the issuance of the policy of title insurance; or
(iii) the payment of reasonable entertainment and advertising expenses.
(d) Nothing in this section prohibits the division of rates and charges between or among a title insurance company and its agent, or one or more title insurance companies and one or more title insurance agents, if such division of rates and charges does not constitute an unlawful rebate under the provisions of this section and is not in payment of a forwarding fee or a finder's fee.
(e) As used in subsections (15)(e) through (15)(i), unless the context otherwise requires:
(i) "Associate" means any firm, association, organization, partnership, business trust, corporation or other legal entity organized for profit in which a producer of title business is a director, officer or partner thereof, or owner of a financial interest, the spouse or any relative within the second degree by blood or marriage of a producer of title business who is a natural person, any director, officer or employee of a producer of title business or associate, any legal entity that controls, is controlled by, or is under common control with a producer of title business or associate and any natural person or legal entity with whom a producer of title business or associate has any agreement, arrangement or understanding or pursues any course of conduct, the purpose or effect of which is to evade the provisions of this section.
(ii) "Financial interest" means any direct or indirect interest, legal or beneficial, where the holder thereof is or will be entitled to 1% or more of the net profits or net worth of the entity in which such interest is held. Notwithstanding the foregoing, an interest of less than 1% or any other type of interest shall constitute a "financial interest" if the primary purpose of the acquisition or retention of that interest is the financial benefit to be obtained as a consequence of that interest from the referral of title business.
(iii) "Person" means any natural person, partnership, association, cooperative, corporation, trust or other legal entity.
(iv) "Producer of title business" or "producer" means any person, including any officer, director or owner of 5% or more of the equity or capital or both of any person, engaged in this state in the trade, business, occupation or profession of:
(A) Buying or selling interests in real property;
(B) making loans secured by interests in real property; or
(C) acting as broker, agent, representative or attorney for a person who buys or sells any interest in real property or who lends or borrows money with such interest as security.
(v) "Refer" means to direct or cause to be directed or to exercise any power or influence over the direction of title insurance business, whether or not the consent or approval of any other person is sought or obtained with respect to the referral.
(f) No title insurer or title agent may accept any order for, issue a title insurance policy to, or provide services to, an applicant if it knows or has reason to believe that the applicant was referred to it by any producer of title business or by any associate of such producer, where the producer, the associate, or both, have a financial interest in the title insurer or title agent to which business is referred unless the producer has disclosed to the buyer, seller and lender the financial interest of the producer of title business or associate referring the title insurance business.
(g) (i) No title insurer or title agent may accept an order for title insurance business, issue a title insurance policy, or receive or retain any premium, or charge in connection with any transaction if: (A) The title insurer or title agent knows or has reason to believe that the transaction will constitute controlled business for that title insurer or title agent; and (B) 70% or more of the closed title orders of that title insurer or title agent during the 12 full calendar months immediately preceding the month in which the transaction takes place is derived from controlled business.
(ii) Paragraph (g) shall become effective on and after January 1, 2026.
(h) Within 90 days following the end of each business year, as established by the title insurer or title agent, each title insurer or title agent shall file with the department of insurance and any title insurer with which the title agent maintains an underwriting agreement, a report executed by the title insurer's or title agent's chief executive officer or designee, under penalty of perjury, stating the percent of closed title orders originating from controlled business. The failure of a title insurer or title agent to comply with the requirements of this section, at the discretion of the commissioner, shall be grounds for the suspension or revocation of a license or other disciplinary action, with the commissioner able to mitigate any such disciplinary action if the title insurer or title agent is found to be in substantial compliance with competitive behavior as defined by federal housing and urban development statement of policy 1996-2.
(i) (1) No title insurer or title agent may accept any title insurance order or issue a title insurance policy to any person if it knows or has reason to believe that such person was referred to it by any producer of title business or by any associate of such producer, where the producer, the associate, or both, have a financial interest in the title insurer or title agent to which business is referred unless the producer has disclosed in writing to the person so referred the fact that such producer or associate has a financial interest in the title insurer or title agent, the nature of the financial interest and a written estimate of the charge or range of charges generally made by the title insurer or agent for the title services. Such disclosure shall include language stating that the consumer is not obligated to use the title insurer or agent in which the referring producer or associate has a financial interest and shall include the names and telephone numbers of not less than three other title insurers or agents that operate in the county in which the property is located. If fewer than three insurers or agents operate in that county, the disclosure shall include all title insurers or agents operating in that county. Such written disclosure shall be signed by the person so referred and must have occurred prior to any commitment having been made to such title insurer or agent.
(2) No producer of title business or associate of such producer shall require, directly or indirectly, as a condition to selling or furnishing any other person any loan or extension thereof, credit, sale, property, contract, lease or service, that such other person shall purchase title insurance of any kind through any title agent or title insurer if such producer has a financial interest in such title agent or title insurer.
(3) No title insurer or title agent may accept any title insurance order or issue a title insurance policy to any person it knows or has reason to believe that the name of the title company was pre-printed in the sales contract, prior to the buyer or seller selecting that title company.
(4) Nothing in this paragraph shall prohibit any producer of title business or associate of such producer from referring title business to any title insurer or title agent of such producer's or associate's choice, and, if such producer or associate of such producer has any financial interest in the title insurer, from receiving income, profits or dividends produced or realized from such financial interest, if:
(a) Such financial interest is disclosed to the purchaser of the title insurance in accordance with paragraphs (i)(1) through (i)(4);
(b) the payment of income, profits or dividends is not in exchange for the referral of business; and
(c) the receipt of income, profits or dividends constitutes only a return on the investment of the producer or associate.
(5) Any producer of title business or associate of such producer who violates the provisions of paragraphs (i)(2) through (i)(4), or any title insurer or title agent who accepts an order for title insurance knowing that it is in violation of paragraphs (i)(2) through (i)(4), in addition to any other action that may be taken by the commissioner of insurance, shall be subject to a fine by the commissioner in an amount equal to five times the premium for the title insurance and, if licensed pursuant to K.S.A. 58-3034 et seq., and amendments thereto, shall be deemed to have committed a prohibited act pursuant to K.S.A. 58-3602, and amendments thereto, and shall be liable to the purchaser of such title insurance in an amount equal to the premium for the title insurance.
(6) Any title insurer or title agent that is a competitor of any title insurer or title agent that, subsequent to the effective date of this act, has violated or is violating the provisions of this paragraph, shall have a cause of action against such title insurer or title agent and, upon establishing the existence of a violation of any such provision, shall be entitled, in addition to any other damages or remedies provided by law, to such equitable or injunctive relief as the court deems proper. In any such action under this subsection, the court may award to the successful party the court costs of the action together with reasonable attorney fees.
(7) The commissioner shall also require each title agent to provide core title services as required by the real estate settlement procedures act.
(j) The commissioner shall adopt any rules and regulations necessary to carry out the provisions of this act.
(16)
Disclosure of nonpublic personal information.
(a) No person shall disclose any nonpublic personal information contrary to the provisions of title V of the Gramm-Leach-Bliley act of 1999, public law 106-102. The commissioner may adopt rules and regulations necessary to carry out this subsection. Such rules and regulations shall be consistent with and not more restrictive than the model regulation adopted on September 26, 2000, by the national association of insurance commissioners entitled "Privacy of consumer financial and health information regulation."
(b) Nothing in this subsection shall be deemed or construed to authorize the promulgation or adoption of any regulation that preempts, supersedes or is inconsistent with any provision of Kansas law concerning requirements for notification of, or obtaining consent from, a parent, guardian or other legal custodian of a minor relating to any matter pertaining to the health and medical treatment for such minor.
History: L. 1955, ch. 247, § 4; L. 1972, ch. 189, § 3; L. 1981, ch. 190, § 4; L. 1983, ch. 158, § 1; L. 1987, ch. 171, § 1; L. 1989, ch. 140, § 2; L. 1992, ch. 4, § 1; L. 1994, ch. 302, § 12; L. 1996, ch. 193, § 1; L. 2000, ch. 147, § 46; L. 2001, ch. 202, § 1; L. 2004, ch. 159, § 6; L. 2004, ch. 159, § 18; L. 2019, ch. 54, § 4; L. 2022, ch. 21, § 2; L. 2025, ch. 94, § 16; July 1.
The commissioner may, after notice and hearing, promulgate reasonable rules and regulations, as are necessary or proper to identify specific methods of competition or acts or practices which are prohibited by K.S.A. 40-2404, but the regulations shall not enlarge upon or extend the provisions of K.S.A. 40-2404.
History: L. 1972, ch. 189, § 10; July 1.
History: L. 1955, ch. 247, § 4; L. 1972, ch. 189, § 3; L. 1981, ch. 190, § 4; L. 1983, ch. 158, § 1; L. 1987, ch. 171, § 1; L. 1989, ch. 139, § 1; Repealed, L. 1992, ch. 4, § 2; July 1.
History: L. 2001, ch. 202, § 2; Expired, April 14, 2003.
History: L. 1955, ch. 247, § 5; L. 1972, ch. 189, § 4; Repealed, L. 2021, ch. 108, § 21; July 1.
(a) Whenever the commissioner has reason to believe that any such person has been engaged or is engaging in this state in any unfair method of competition or any unfair or deceptive act or practice, whether or not defined in K.S.A. 40-2404, and amendments thereto, and that a proceeding by the commissioner in respect thereto would be in the interest of the public, the commissioner shall issue and serve upon such person a statement of the charges in that respect and conduct a hearing thereon in accordance with the provisions of the Kansas administrative procedure act.
(b) If, after such hearing, the commissioner determines that the person charged has engaged in any unfair method of competition or any unfair or deceptive act or practice, any costs incurred as a result of conducting any administrative hearing authorized under the provisions of this section shall be assessed against such person or the company or companies represented by such person as an agent, broker or adjuster who is a participating party to the matters giving rise to the hearing. As used in this subsection, "costs" shall include witness fees, mileage allowances, any costs associated with reproduction of documents which become a part of the hearing record and the expense of making a record of the hearing.
History: L. 1955, ch. 247, § 6; L. 1972, ch. 189, § 5; L. 1982, ch. 205, § 1; L. 1986, ch. 318, § 37; L. 1988, ch. 356, § 110; July 1, 1989.
(a) If, after such hearing, the commissioner shall determine that the person charged has engaged in an unfair method of competition or an unfair or deceptive act or practice, the commissioner shall render an order requiring such person to cease and desist from engaging in such method of competition, act or practice and if the act or practice is a violation of K.S.A. 40-2404, and amendments thereto, the commissioner may in the exercise of discretion order any one or more of the following:
(1) Payment of a monetary penalty of not more than $1,000 for each and every act or violation, but not to exceed an aggregate penalty of $10,000, unless the person knew or reasonably should have known such person was in violation of this act, in which case the penalty shall be not more than $5,000 for each and every act or violation, but not to exceed an aggregate of $50,000 in any six-month period;
(2) suspension or revocation of the person's license if such person knew or reasonably should have known such person was in violation of this act; or
(3) redress of the injury by requiring the refund of any premiums paid by, the payment of any moneys withheld from, any consumer and appropriate public notification of the violation. In applying this penalty any requirement for the payment of moneys may include reasonable interest at a rate not to exceed the rate specified in K.S.A. 40-2,126, and amendments thereto, with such interest commencing no earlier than the date the consumer's complaint was received by the commissioner and actual costs incurred by the consumer in effecting the payment associated directly with the injury.
(b) After the expiration of the time allowed for filing a petition for review if no such petition has been duly filed within such time, the commissioner may at any time, after notice and opportunity for hearing in accordance with the provisions of the Kansas administrative procedure act, reopen and alter, modify or set aside, in whole or in part, any order issued under this section, whenever in the commissioner's opinion conditions of fact or of law have so changed as to require such action or if the public interest shall so require.
History: L. 1955, ch. 247, § 7; L. 1972, ch. 189, § 6; L. 1976, ch. 219, § 1; L. 1988, ch. 356, § 111; L. 1993, ch. 91, § 1; L. 1997, ch. 24, § 5; July 1.
(a) An order issued by the commissioner under K.S.A. 40-2407, and amendments thereto, shall become final: (1) Upon the expiration of the time allowed for filing a petition for review if no such petition has been duly filed within such time, except that the commissioner may thereafter modify or set aside the order to the extent provided in subsection (b) of K.S.A. 40-2407, and amendments thereto; or (2) upon the final decision of the court on review if the court directs that the order of the commissioner be affirmed or the petition for review dismissed.
(b) No order of the commissioner under this act or order of a court to enforce such order shall in any way relieve or absolve any person affected by such order from any liability under any other laws of this state.
History: L. 1955, ch. 247, § 8; L. 1972, ch. 189, § 7; L. 1986, ch. 318, § 38; July 1.
History: L. 1955, ch. 247, § 9; Repealed, L. 1972, ch. 189, § 11; July 1.
History: L. 1955, ch. 247, § 10; L. 1972, ch. 189, § 8; Repealed, L. 1986, ch. 318, § 146; July 1.
Any person who violates a cease and desist order of the commissioner issued under K.S.A. 40-2407, and amendments thereto, may after notice and hearing in accordance with the provisions of the Kansas administrative procedure act and upon order of the commissioner be subject at the discretion of the commissioner to any one or more of the following:
(a) A monetary penalty of not more than $10,000 for each and every act or violation, but not to exceed an aggregate penalty of $50,000 in any six-month period; or
(b) suspension or revocation of such person's license;
(c) redress of the injury by requiring the refund of any premiums paid by, the payment of any moneys withheld from, any consumer and appropriate public notification of the violation.
History: L. 1955, ch. 247, § 11; L. 1972, ch. 189, § 9; L. 1976, ch. 219, § 2; L. 1988, ch. 356, § 112; July 1, 1989.
The powers vested in the commissioner by this act, shall be additional to any other powers to enforce any penalties, fines or forfeitures authorized by law with respect to the methods, acts and practices hereby declared to be unfair or deceptive.
History: L. 1955, ch. 247, § 12; June 30.
If any person shall ask to be excused from attending and testifying or from producing any books, papers, records, correspondence or other documents at any hearing on the ground that the testimony or evidence required of him may tend to incriminate him or subject him to a penalty or forfeiture, and shall notwithstanding be directed to give such testimony or produce such evidence, he must nonetheless comply with such direction, but he shall not thereafter be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter or thing concerning which he may testify or produce evidence pursuant thereto, and no testimony so given or evidence produced shall be received against him upon any criminal action, investigation or proceeding: Provided, however, That no such individual so testifying shall be exempt from prosecution or punishment for any perjury committed by him while so testifying and the testimony or evidence so given or produced shall be admissible against him upon any criminal action, investigation or proceeding concerning such perjury, nor shall he be exempt from the refusal, revocation or suspension of any license, permission or authority conferred, or to be conferred, pursuant to the insurance law of this state.
Any such individual may execute, acknowledge and file in the office of the commissioner a statement expressly waiving such immunity or privilege in respect to any transaction, matter or thing specified in such statement and thereupon the testimony of such person or such evidence in relation to such transaction, matter or thing may be received or produced before any judge or justice, court, tribunal, grand jury or otherwise, and if so received or produced such individual shall not be entitled to any immunity or privilege on account of any testimony he may so give or evidence so produced.
History: L. 1955, ch. 247, § 13; June 30.
If any provision of this act, or the application of such provision to any person or circumstances, shall be held invalid, the remainder of the act, and the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby.
History: L. 1955, ch. 247, § 14; June 30.
(a) The commissioner of insurance shall have the authority to adopt such rules and regulations to protect service members of the United States armed forces from dishonest and predatory life insurance sales practices by declaring certain identified practices to be false, misleading, deceptive or unfair except that such rules and regulations shall not affect federal insurance programs under subchapter III of chapter 19 of title 38, United States code.
(b) This section shall be part of and supplemental to the unfair trade practice law.
History: L. 2007, ch. 103, § 1; L. 2007, ch. 146, § 2; July 1.
K.S.A. 40-2401 through 40-2414, K.S.A. 40-2414a and 40-2414b, and amendments thereto, may be cited as the unfair trade practice law.
History: L. 2007, ch. 103, § 2; July 1.
The purpose of this act is to subject to the jurisdiction of the commissioner of insurance of this state and to the jurisdiction of the courts of this state insurers not authorized to transact business in this state which place in or send into this state any false advertising designed to induce residents of this state to purchase insurance from insurers not authorized to transact business in this state. The legislature declares it is in the interest of the citizens of this state who purchase insurance from insurers which solicit insurance business in this state in the manner set forth in the preceding sentence that such insurers be subject to the provisions of this act. In furtherance of such state interest, the legislature herein provides a method of substituted service of process upon such insurers and declares that in so doing, it exercises its power to protect its residents and also exercises powers and privileges available to the state by virtue of Public Law 15, 79th Congress of the United States, chapter 20, first session, S. 340 (U.S.C. Title 15, chapter 20, sections 1011-1015; U.S.C.A. Title 15, chapter 20, sections 1011-1015) which declares that the business of insurance and every person engaged therein shall be subject to the laws of the several states; the authority provided herein to be in addition to any existing powers of this state. The provisions of this act shall be liberally construed.
History: L. 1963, ch. 265, § 1; July 1.
When used in this act: "Commissioner" shall mean the commissioner of insurance of this state; "unfair trade practice law" shall mean K.S.A. 40-2401 through 40-2414, K.S.A. 40-2414a and 40-2414b, and amendments thereto; "residents" shall mean and include person, partnership or corporation, domestic, alien or foreign.
History: L. 1963, ch. 265, § 2; L. 2007, ch. 103, § 3; July 1.
No unauthorized foreign or alien insurer of the kind described in K.S.A. 40-2415 shall make, issue, circulate or cause to be made, issued or circulated, to residents of this state any estimate, illustration, circular, pamphlet, or letter, or cause to be made in any newspaper, magazine or other publication or over any radio or television station, any announcement or statement to such residents misrepresenting its financial condition or the terms of any contracts or certificates of insurance issued or to be issued or the benefits or advantages promised thereby, or the dividends or share of the surplus to be received thereon in violation of the unfair trade practice law, and whenever the commissioner shall have reason to believe that any such insurer is engaging in such unlawful advertising, it shall be his duty to give notice of such fact by registered mail to such insurer and to the insurance supervisory official of the domiciliary state of such insurer. For the purpose of this section, the domiciliary state of an alien insurer shall be deemed to be the state of entry or the state of the principal office in the United States.
History: L. 1963, ch. 265, § 3; July 1.
If after thirty (30) days following the giving of the notice mentioned in K.S.A. 40-2417 such insurer has failed to cease making, issuing, or circulating such false misrepresentations or causing the same to be made, issued or circulated in this state, and if the commissioner has reason to believe that a proceeding by him in respect to such matters would be to the interest of the public, and that such insurer is issuing or delivering contracts or certificates of insurance to residents of this state or collecting premiums on such contracts or certificates of insurance or doing any of the acts enumerated in K.S.A. 40-2419, he shall take action against such insurer under the unfair trade practice law.
History: L. 1963, ch. 265, § 4; July 1.
Any of the following acts in this state, effected by mail or in any other manner, by any such unauthorized foreign or alien insurer:
(1) The issuance or delivery of contracts or certificates of insurance to residents of this state;
(2) the solicitation of applications for such contracts or certificates of insurance;
(3) the collection of premiums, whether paid by an employee or an employer or by any other person, membership fees, assessments or other considerations for such contracts or certificates of insurance; or
(4) any other transaction of insurance business, is equivalent to and shall constitute an appointment by such insurer of the commissioner and his successor or successors in office, to be its true and lawful attorney, upon whom may be served all statements of charges, notices and lawful process in any proceeding instituted in respect to the misrepresentations set forth in K.S.A. 40-2417 under the provisions of the unfair trade practice law, or in any action, suit or proceeding for the recovery of any penalty therein provided, and any such act shall be signification of its agreement that such service of statement of charges, notices or process is of the same legal force and validity as personal service of such statement of charges, notices or process in this state, upon such insurer.
Service of a statement of charges and notices under said unfair trade practice law shall be made by any deputy or employee of the insurance department delivering to and leaving with the commissioner or some person in apparent charge of his office, two (2) copies thereof. Service of process issued by any court in any action, suit or proceeding to collect any penalty under said act provided, shall be made by delivering and leaving with the commissioner, or some person in apparent charge of his office, two (2) copies thereof. The commissioners shall forthwith cause to be mailed by registered mail one of the copies of such statement of charges, notices or process to the defendant at its last known principal place of business, and shall keep a record of all statements of charges, notices and process so served. Such service of statement of charges, notices or process shall be sufficient provided they shall have been so mailed and the defendant's receipt or receipt issued by the post office with which the letter is registered, showing the name of the sender of the letter and the name and address of the person to whom the letter is addressed, and the affidavit of the person mailing such letter showing a compliance herewith are filed with the commissioner in the case of any statement of charges or notices, or with the clerk of the court in which such action is pending in the case of any process, on or before the date the defendant is required to appear or within such further time as may be allowed.
Service of statement of charges, notices and process in any such proceeding, action or suit shall in addition to the manner provided in this section be valid if served upon any person within this state who on behalf of such insurer is (1) soliciting insurance, or (2) making, issuing or delivering any contract or certificate of insurance, or (3) collecting or receiving in this state any premium for insurance; and a copy of such statement of charges, notices or process is sent within ten (10) days thereafter by registered mail by or on behalf of the commissioner to the defendant at the last known principal place of business of the defendant, and the defendant's receipt, or the receipt issued by the post office with which the letter is registered, showing the name of the sender of the letter, the name and address of the person to whom the letter is addressed, and the affidavit of the person mailing the same showing a compliance herewith, are filed with the commissioner in the case of any statement of charges or notices, or with the clerk of the court in which such action is pending in the case of any process, on or before the date the defendant is required to appear or within such further time as the court may allow.
No cease or desist order or judgment by default under this section shall be entered until the expiration of thirty (30) days from the date of the filing of the affidavit of compliance.
Service of process and notice under the provisions of this act shall be in addition to all other methods of service provided by law, and nothing in this act shall limit or prohibit the right to serve any statement of charges, notices or process upon any insurer in any other manner now or hereafter permitted by law.
History: L. 1963, ch. 265, § 5; July 1.
If any provision of this act or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or application of the act which can be given effect without the invalid provision or application, and to this end the provisions of this act are declared to be severable.
History: L. 1963, ch. 265, § 6; July 1.
This act may be cited as the unauthorized insurers false advertising process act.
History: L. 1963, ch. 265, § 7; July 1.
On and after July 1, 2006: (a) No insurance company, including health maintenance organizations, offering any type of accident and sickness policy covering individuals residing in this state shall print or encode an insured's social security number on or into the insured's policy card.
(b) Any distinguishing identifier assigned to the insured's policy card shall be a combination of numbers or letters or both, which is unique to the insured.
(c) An insured's distinguishing identifier assigned to such insured's policy card shall not, in any way, be based on or depend on the insured's social security number.
History: L. 2004, ch. 157, § 3; July 1.
On and after July 1, 2006: (a) No insurance company, including health maintenance organizations, offering any type of coverage for prescription drugs or devices covering individuals residing in this state shall print or encode an insured's social security number on or into the insured's policy card.
(b) Any distinguishing identifier assigned to the insured's policy card shall be a combination of numbers or letters or both, which is unique to the insured.
(c) An insured's distinguishing identifier assigned to such insured's policy card shall not, in any way, be based on or depend on the insured's social security number.
History: L. 2004, ch. 157, § 4; July 1.
If a federal law takes effect requiring the United States department of health and human services to establish a national unique patient health identifier program, any person or entity that complies with such federal law shall be deemed to be in compliance with the provisions of K.S.A. 40-2425 and 40-2425a, and amendments thereto, and K.S.A. 40-4623, and amendments thereto.
History: L. 2004, ch. 157, § 5; July 1.
(a) K.S.A. 40-2440 through 40-2442, and amendments thereto, shall be known as the Kansas health care prompt payment act and shall apply to any policy of accident and sickness insurance issued or renewed in this state.
(b) The provisions of the Kansas health care prompt payment act shall take effect and be in force on and after January 1, 2001.
History: L. 2000, ch. 147, § 43; July 1.
As used in K.S.A. 40-2440 through 40-2442, and amendments thereto:
(a) The term "clean claim" means a claim that has no defect or impropriety, including any lack of required substantiating documentation, or particular circumstance requiring special treatment that prevents timely payment from being made on the claim under the Kansas health care prompt payment act.
(b) The term "claim" means a written proof of loss as defined in paragraph (7) of subsection (A) of K.S.A. 40-2203, and amendments thereto, or an electronic proof of loss which contains the information required by paragraph (7) of subsection (A) of K.S.A. 40-2203, and amendments thereto.
(c) The term "policy of accident and sickness insurance" means any policy or contract insuring against loss resulting from sickness or bodily injury or death by accident, or both, any hospital, dental or medical expense policy, health, hospital, medical service corporation contract issued by a stock or mutual company or association, a health maintenance organization or any other insurer, third party administrator or other entity which pays claims pursuant to a policy of accident and sickness insurance. The term policy of accident and sickness insurance does not include any policy or contract of reinsurance, life insurance, endowment or annuity contract, policies or certificates covering only credit, disability income, long-term care, medicare supplement, drug, or vision-care only policy, coverage issued as a supplement to liability insurance, insurance arising out of a workers compensation or similar law, automobile medical-payment insurance or insurance under which benefits are payable without regard to fault and which is statutorily required to be contained in any liability insurance policy or equivalent self-insurance.
History: L. 2000, ch. 147, § 44; L. 2007, ch. 150, § 8; July 1.
(a) Within 30 days after receipt of any claim, and amendments thereto, any insurer issuing a policy of accident and sickness insurance shall pay a clean claim for reimbursement in accordance with this section or send a written or electronic notice acknowledging receipt of and the status of the claim. Such notice shall include the date such claim was received by the insurer and state that:
(1) The insurer refuses to reimburse all or part of the claim and specify each reason for denial; or
(2) additional information is necessary to determine if all or any part of the claim will be reimbursed and what specific additional information is necessary.
(b) If any insurer issuing a policy of accident and sickness insurance fails to comply with subsection (a), such insurer shall pay interest at the rate of 1% per month on the amount of the claim that remains unpaid 30 days after the receipt of the claim. The interest paid pursuant to this subsection shall be included in any late reimbursement without requiring the person who filed the original claim to make any additional claim for such interest.
(c) After receiving a request for additional information, the person claiming reimbursement shall submit all additional information requested by the insurer within 30 days after receipt of the request for additional information. Failure to furnish such additional information within the time required shall not invalidate nor reduce the claim if it was not reasonably possible to give such information within such time, provided such proof is furnished as soon as possible as defined (within the time prescribed) in paragraph (7) of subsection (A) of K.S.A. 40-2203, and amendments thereto.
(d) Within 15 days after receipt of all the requested additional information, an insurer issuing a policy of accident and sickness insurance shall pay a clean claim in accordance with this section or send a written or electronic notice that states:
(1) Such insurer refuses to reimburse all or part of the claim; and
(2) specifies each reason for denial. Any insurer issuing a policy of accident and sickness insurance that fails to comply with this subsection shall pay interest on any amount of the claim that remains unpaid at the rate of 1% per month.
(e) The provisions of subsection (b) shall not apply when there is a good faith dispute about the legitimacy of the claim, or when there is a reasonable basis supported by specific information that such claim was submitted fraudulently.
(f) In the event that an insurer erroneously pays a claim providing benefits to which the insured person or provider is not entitled, the insurer shall not initiate a request for reimbursement or refund of that erroneous payment, or in any other way seek to recoup the erroneous payment, unless such action is initiated within 18 months after the end of the month in which the erroneous payment was made. In cases of fraud by the insured person or provider, such action may be initiated within the applicable statute of limitations pursuant to K.S.A. 60-513, and amendments thereto. In the case of an audit of the records of a pharmacy by a managed care company, insurance company, third party payor or the representative of the managed care company, insurance company or third party payor, the period covered by the audit shall not exceed two years from the date the claim was submitted to or adjudicated or as otherwise provided by state or federal law.
(g) Any violation of this act by an insurer issuing a policy of accident and sickness insurance with flagrant and conscious disregard of the provisions of this act or with such frequency as to constitute a general business practice shall be considered a violation of the unfair trade practices act in K.S.A. 40-2401 et seq., and amendments thereto.
(h) The commissioner of insurance shall adopt rules and regulations necessary to carry out the provisions of the Kansas health care prompt payment act.
History: L. 2000, ch. 147, § 45; L. 2008, ch. 134, § 2; July 1.
History: L. 1967, ch. 270, § 1; Repealed, L. 2021, ch. 108, § 21; July 1.
History: L. 1967, ch. 270, § 2; Repealed, L. 2021, ch. 108, § 21; July 1.
History: L. 1967, ch. 270, § 3; Repealed, L. 2021, ch. 108, § 21; July 1.
History: L. 1967, ch. 270, § 4; Repealed, L. 2021, ch. 108, § 21; July 1.
History: L. 1967, ch. 270, § 5; Repealed, L. 2021, ch. 108, § 21; July 1.
History: L. 1967, ch. 270, § 6; L. 1986, ch. 318, § 39; L. 1988, ch. 356, § 113; Repealed, L. 2021, ch. 108, § 21; July 1.
History: L. 1967, ch. 270, § 7; Repealed, L. 2021, ch. 108, § 21; July 1.
History: L. 1967, ch. 270, § 8; L. 1974, ch. 192, § 1; L. 1993, ch. 12, § 1; Repealed, L. 2021, ch. 108, § 21; July 1.
History: L. 1967, ch. 270, § 9; Repealed, L. 2021, ch. 108, § 21; July 1.
History: L. 1967, ch. 270, § 10; Repealed, L. 2021, ch. 108, § 21; July 1.
History: L. 1967, ch. 270, § 11; Repealed, L. 2021, ch. 108, § 21; July 1.
History: L. 1967, ch. 270, § 12; Repealed, L. 2021, ch. 108, § 21; July 1.
History: L. 1967, ch. 270, § 13; Repealed, L. 2021, ch. 108, § 21; July 1.
This act may be cited as the "Kansas insurance premium finance company act."
History: L. 1968, ch. 287, § 1; July 1.
For the purpose of this act: (a) "Insurance premium finance company" means a person engaged in the business of entering into insurance premium finance agreements under this act.
(b) "Premium finance agreement" means an agreement by which an insured or prospective insured promises to pay to a premium finance company the amount advanced or to be advanced under the agreement to an insurer or to an insurance agent in payment of premium on an insurance contract insuring against the perils of fire, extended coverage, marine and inland marine as defined in article 9 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, and insuring against casualty losses as defined in article 11 of chapter 40 of the Kansas Statutes Annotated and amendments thereto, together with a service charge as authorized and limited by this act.
(c) "Licensee" means an insurance premium finance company holding a license issued by the commissioner under this act.
(d) "Commissioner" as used in this act means the commissioner of insurance of the state of Kansas.
(e) "Premium" for purposes of this act shall include the annual premium surcharge for the health care stabilization fund.
History: L. 1968, ch. 287, § 2; L. 1986, ch. 179, § 1; April 24.
The provisions of this act shall not apply with respect to: (a) Any insurance company authorized to do business in the state of Kansas, or any agent or agency of an insurance company financing premiums on policies written by such agent or agency,
(b) any bank, trust company, savings and loan association, consumer loan licensee or sales finance company authorized to do business in this state,
(c) the enrollment of individuals under a group policy or the inclusion of insurance in a credit transaction under an arrangement for its purchase by the creditor in compliance with the applicable provisions of the Kansas uniform consumer credit code, and
(d) the financing of insurance premiums in Kansas in accordance with the provisions of K.S.A. 16-207, and amendments thereto, relating to legal interest rate.
History: L. 1968, ch. 287, § 3; L. 1989, ch. 141, § 1; L. 1991, ch. 136, § 1; July 1.
(a) No person shall engage in the business of financing insurance premiums under this act in this state without first having obtained a license as a premium finance company from the commissioner of insurance. Every violation of any of the provisions of this act shall subject the person violating such provisions to a penalty not to exceed $500 for each violation or by imprisonment not to exceed six months in jail or both.
(b) (1) (A) The license continuation fee shall not exceed $100. The fee for such continuation shall be paid to the commissioner to be deposited in the state general fund.
(B) Licenses may be continued from year to year as of May 1 of each year upon payment of the continuation fee. Every licensee shall, on or before the first day of April, pay to the commissioner an amount not to exceed $100 as a continuation fee for the succeeding year. Failure to pay the continuation fee within the time prescribed shall automatically revoke the license.
(2) Not later than December 1 of each year, the commissioner shall set and cause to be published in the Kansas register the fees required pursuant to this subsection for the next calendar year.
(c) The applicant for such license shall file with the commissioner written application and shall make sworn answers to such interrogatories as the commissioner may require on forms prepared by the commissioner. The commissioner shall have authority, at any time, to require the applicant fully to disclose the identity of all stockholders, partners, officers and employees, and the commissioner may, in the exercise of discretion, refuse to issue or renew a license in the name of any firm, partnership, or corporation if not satisfied that any officer, employee, stockholder, or partner thereof who may materially influence the applicant's conduct meets the standards of this act.
History: L. 1968, ch. 287, § 4; L. 1991, ch. 136, § 2; L. 2025, ch. 87, § 16; July 1.
Upon the filing of an application and the payment of the license fee the commissioner shall make an investigation of each applicant and shall issue a license if he finds that the person to be licensed: (a) Is competent and trustworthy and intends to act in good faith in the capacity involved by the license applied for,
(b) has a good business reputation and has had experience, training, or education so as to be qualified in the business for which the license is applied for, and
(c) if a corporation, is a corporation incorporated under the laws of this state or a foreign corporation authorized to transact business in this state.
History: L. 1968, ch. 287, § 5; July 1.
The commissioner shall have the right to revoke or suspend the license of any premium finance company if the commissioner finds that:
(a) Any license issued to such company was obtained by fraud;
(b) there was any misrepresentation in the application for the license;
(c) the holder of such license is otherwise shown to be untrustworthy or incompetent to act as a premium finance company; or
(d) such company has violated any of the provisions of this act.
Before the commissioner shall revoke, suspend or refuse to renew the license of any premium finance company, the commissioner shall conduct a hearing in accordance with the provisions of the Kansas administrative procedure act. In lieu of revoking or suspending the license for any of the causes enumerated in this section, after hearing as herein provided, the commissioner may subject such company to a penalty of not more than $500 for each offense when the commissioner finds that the public interest would not be harmed by the continued operation of such company. The amount of any such penalty shall be paid by such company to the commissioner for deposit in the state general fund. At any hearing provided by this section, anyone testifying falsely, after having been administered an oath, shall be subject to the penalty of perjury.
History: L. 1968, ch. 287, § 6; L. 1986, ch. 318, § 40; L. 1988, ch. 356, § 114; July 1, 1989.
Every licensee shall maintain records of its premium finance transactions and the said records shall be open to examination and investigation by the commissioner: Provided, however, That said licensee shall be assessed and make payment of such fees and expenses incurred as a result of examination and investigation as set forth in K.S.A. 40-223. The commissioner may, at any time, require any licensee to bring such records as he may direct to the commissioner's office for examination.
Every licensee shall preserve its records of such premium finance transactions, including cards used in a card system, for at least three (3) years after making the final entry in respect to any premium finance agreement. The preservation of records in photographic form shall constitute compliance with this requirement.
History: L. 1968, ch. 287, § 7; July 1.
The commissioner may adopt rules and regulations to implement this act.
History: L. 1968, ch. 287, § 8; July 1.
No premium finance agreement shall be issued or delivered in this state until the form of the same has been filed with the commissioner of insurance, nor if the commissioner of insurance gives written notice within thirty (30) days of such filing to the licensee proposing to issue such premium finance agreement, showing wherein the form of such premium finance agreement does not comply with the requirements of the laws of this state; but the failure of any licensee to comply with this section shall not constitute a defense to any action brought on its premium finance agreement. A premium finance agreement shall: (a) Be dated, signed by or on behalf of the insured, and the printed portion thereof shall be in at least 8-point type,
(b) contain the name and place of business of the insurance agent negotiating the related insurance contract, the name and residence or the place of business of the insured as specified by him, the name and place of business of the premium finance company to which payments are to be made, a description of the insurance contracts involved and the amount of the premium therefor; and
(c) set forth the following items where applicable:
(1) The total amount of the premiums,
(2) the amount of the down payment,
(3) the principal balance (difference between items (1) and (2)),
(4) the annual percentage rate and the dollar amount of the total charges (including any additional charge),
(5) the balance payable by the insured (sum of items (3) and (4)), and
(6) the number of installments required, the amount of each installment expressed in dollars, and the due date or period thereof. The items set out in subsection (c) of this section need not be stated in the sequence or order in which they appear in such clause, and additional items may be included to explain the computations made in determining the amount to be paid by the insured.
History: L. 1968, ch. 287, § 9; L. 1971, ch. 172, § 1; April 1.
A premium finance company shall not charge, contract for, receive, or collect a service charge other than as permitted by this act.
The service charge shall be computed on the balance of the premiums due (after subtracting the down payment made by the insured in accordance with the premium finance agreement) from the effective date of the insurance coverage, for which the premiums are being advanced, to and including the date when the final installment of the premium finance agreement is payable.
The total service charges shall be a maximum of $12 per $100 per year, plus an additional charge of $10 per premium finance agreement, which need not be refunded on prepayment. No insurance premium finance company shall induce an insured to become obligated under more than one premium finance agreement for the purpose of obtaining more than one additional charge of $10. The insured may prepay the premium finance agreement at any time and if the premium finance agreement is prepaid in full (by cash, renewal or refinancing) one month or more before the final payment is due, any unearned service charge shall be refunded on the basis of the rule commonly known as the rule of seventy-eighths (78ths), which is computed as follows:
The amount refunded shall be the proportion of the service charge which the sum of the monthly balances scheduled to follow the date of prepayment in full bears to the sum of the scheduled monthly balances of the premium finance agreement.
History: L. 1968, ch. 287, § 10; L. 1975, ch. 246, § 1; L. 1980, ch. 139, § 1; L. 1991, ch. 136, § 3; July 1.
A premium finance agreement may provide for the payment by the insured of a delinquency charge of $5 plus an amount not to exceed 2% of the delinquent installment on any installment which is in default for a period of five days or more.
History: L. 1968, ch. 287, § 11; L. 1991, ch. 136, § 4; July 1.
(a) When a premium finance agreement contains a power of attorney enabling the premium finance company to cancel any insurance contract or contracts listed in the agreement, the insurance contract or contracts shall not be canceled by the premium finance company unless such cancellation is effectuated in accordance with this section.
(b) In the event the insured fails to make the payments at the time and in the amount provided in the premium finance agreement, the premium finance company shall mail to the insured a written notice of the intent of the premium finance company to cancel the insurance contract because of the default in payments by the insured unless the default in payments is cured within a time certain stated in the notice, which time shall not be less than 10 days. A copy of such notice shall also be sent to the insurance agent or insurance broker indicated on the premium finance agreements.
(c) After expiration of such 10 day period, the premium finance company may thereafter request in the name of the insured, cancellation of such insurance contract or contracts by mailing to the insurer a notice of cancellation, and the insurance contract shall be canceled as if such notice of cancellation had been submitted by the insured, but without requiring the return of the insurance contract or contracts. The premium finance company shall also mail a notice of cancellation to the insured at the insured's last known address and to the insurance agent or insurance broker indicated on the premium finance agreement.
(d) All statutory, regulatory, and contractual restrictions providing that the insurance contract may not be canceled unless notice is given to a governmental agency, mortgagee, or other third party shall apply where cancellation is effected under the provisions of this section. The insurer shall give the prescribed notice in behalf of itself or the insured to any governmental agency, mortgagee, or other third party on or before the second business day after the day it receives the notice of cancellation from the premium finance company and shall determine the effective date of cancellation taking into consideration the number of days notice required to complete the cancellation.
(e) Whenever a financed insurance contract is canceled, the insurer shall, within 20 days of the effective date of cancellation, return whatever gross unearned premiums are due under the insurance contract to the premium finance company, either directly or via the agent or agency writing the insurance, where an assignment of such funds is included in the premium finance agreement for the account of the insured or insureds.
(f) In the event that the crediting of return premiums to the account of the insured results in a surplus over the amount due from the insured, the premium finance company shall refund such excess to the insured via the insured's insurance agent or agency, but no such refund shall be required if it amounts to less than $1.
History: L. 1968, ch. 287, § 12; L. 1991, ch. 136, § 5; July 1.
No filing of the premium finance agreement shall be necessary to perfect the validity of such agreement as a secured transaction as against creditors, subsequent purchasers, pledgees, encumbrances, successors or assigns.
History: L. 1968, ch. 287, § 13; July 1.
The purpose of this act is to subject certain insurers to the jurisdiction of the commissioner of insurance and the courts of this state in suits by or on behalf of the state. The legislature hereby declares that it is concerned with the protection of residents of this state against acts by insurers not authorized to do an insurance business in this state, by the maintenance of fair and honest insurance markets, by protecting authorized insurers which are subject to regulation from unfair competition by unauthorized insurers and by protecting against the evasion of the insurance regulatory laws of this state. In furtherance of such state interests, the legislature herein provides methods for substituted service of process upon such insurers in any proceeding, suit or action in any court and substituted service of any notice, order, pleading or process upon such insurers in any proceeding by the commissioner of insurance to enforce or effect full compliance with the insurance laws of this state. In so doing, the state exercises its powers to protect residents of this state and to define what constitutes transacting an insurance business in this state, and also exercises powers and privileges available to this state by virtue of public law 79-15, 79th Congress of the United States, chapter 20, 1st Sess., S. 340, 59 Stat. 33; 15 U.S.C. §§ 1011 to 1015, inclusive, as amended, which declares that the business of insurance and every person engaged therein shall be subject to the laws of the several states.
It is not the purpose of this act to alter, modify or abrogate the provisions of K.S.A. 40-214 as they apply to insurers authorized to transact the business of insurance in this state by the commissioner of insurance; nor to alter, modify or abrogate the provisions of article 20 of chapter 40 of the Kansas Statutes Annotated, and any amendments thereto, relating to the service of process upon unauthorized insurers in actions by or on behalf of insureds or beneficiaries under insurance contracts; nor to alter, modify or abrogate the provisions of K.S.A. 40-2415 to K.S.A. 40-2421, inclusive, relative to the unauthorized insurer's false advertising process act.
History: L. 1969, ch. 240, § 1; April 19.
(a) As used in this act, unless the context otherwise requires, the term "insurer" means and includes all corporations, companies, associations, societies, fraternal benefit societies, mutual nonprofit hospital service and nonprofit medical service companies, partnerships and persons engaged as principals in the business of insurance of the kinds enumerated in articles 4, 5, 6, 7, 11, 18, 19, 19a, 19b, 19c, 22, 32 and 38 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, insofar as the business of insurance of the kinds enumerated in such articles relate to life and accident or sickness. Whenever in this section there is reference to an act effected or committed by mail, the venue of such act shall be at the point where the matter transmitted by mail is delivered and takes effect.
It shall be unlawful for any insurer to transact insurance business in this state, as set forth in subsection (b), without a certificate of authority from the commissioner of insurance. This section shall not apply to:
(1) The lawful transaction of insurance procured by agents under the authority of K.S.A. 40-246b, 40-246c and 40-246d, and amendments thereto, relating to accident and sickness insurance;
(2) contracts of reinsurance issued by an insurer not organized under the laws of this state;
(3) transactions in this state involving a policy lawfully solicited, written and delivered outside of this state, covering only subjects of insurance not resident in this state at the time of issuance and which transactions are subsequent to the issuance of such policy;
(4) attorneys acting in the ordinary relation of attorney and client in the adjustment of claims or losses;
(5) transactions in this state involving group life and group sickness and accident or blanket sickness and accident insurance or group annuities, where the master policy of such groups was lawfully issued and delivered in and pursuant to the laws of a state in which the insurer was authorized to do an insurance business to a group organized for purposes other than the procurement of insurance and where the policyholder is domiciled or otherwise has a bona fide residence;
(6) transactions in this state involving any policy of life or accident and health insurance or annuity contract issued prior to the effective date of this act;
(7) contracts of insurance written by certain lodges, societies, persons and associations specified in K.S.A. 40-202, and amendments thereto, and organizations preempted from state jurisdiction as a result of compliance with both the employees retirement income security act of 1974, as amended, including all bonding provisions, and paragraph (9) of subsection (c) of section 501 of the internal revenue code; and
(8) any life insurance company organized and operated, without profit to any private shareholder or individual, exclusively for the purpose of aiding and strengthening educational institutions, organized and operated without profit to any private shareholder or individual, by issuing insurance and annuity contracts directly from the home office of the company, without insurance agents or insurance representatives in this state, only to or for the benefit of such institutions and individuals engaged in the services of such institutions, but this exemption shall be conditioned upon any such company complying with the following requirements:
(A) Payment of an annual registration fee not to exceed $500. Not later than December 1 of each year, the commissioner shall set and cause to be published in the Kansas register such fee for the next calendar year;
(B) filing a copy of the form of any policy or contract issued to Kansas residents with the commissioner of insurance;
(C) filing a copy of its annual statement prepared pursuant to the laws of its state of domicile, as well as such other financial material as may be requested, with the commissioner of insurance; and
(D) providing, in such form as may be prescribed by the commissioner of insurance, for the appointment of the commissioner of insurance as its true and lawful attorney upon whom may be served all lawful process in any action or proceeding against such company arising out of any policy or contract it has issued to, or which is currently held by, a Kansas citizen and process so served against such company shall have the same force and validity as if served upon the company.
(b) Any of the following acts in this state effected by mail or otherwise by or on behalf of an unauthorized insurer shall be deemed to constitute the transaction of an insurance business in this state:
(1) The making of or proposing to make, as an insurer, an insurance contract;
(2) the taking or receiving of any application for insurance;
(3) the receiving or collection of any premium, commission, membership fees, assessments, dues or other consideration for any insurance or any part thereof;
(4) the issuance or delivery of contracts of insurance to residents of this state or to persons authorized to do business in this state;
(5) (A) directly or indirectly acting as an agent for or otherwise representing or aiding on behalf of any other person or insurer in the:
(i) solicitation, negotiation, procurement or effectuation of insurance or renewals thereof;
(ii) dissemination of coverage or rate information;
(iii) forwarding of applications or delivery of policies or contracts;
(iv) investigation or adjustment of claims or losses or in the transaction of matters subsequent to effectuation of the contract and rising out of it; or
(v) in any other manner representing or assisting a person or insurer in the transaction of insurance with respect to subjects of insurance resident in this state.
(B) Nothing in this paragraph shall be construed to prohibit full-time salaried employees of a corporate insured from acting in the capacity of an insurance manager or buyer in placing insurance on behalf of such employer;
(6) the transaction of any kind of insurance business specifically recognized as transacting an insurance business within the meaning of the statutes relating to insurance; or
(7) the transacting of or proposing to transact any insurance business, in substance equivalent to any of the foregoing, in a manner designed to evade the provisions of this act.
(c) (1) The failure of an insurer transacting insurance business in this state to obtain a certificate of authority from the commissioner of insurance shall not impair the validity of any act or contract of such insurer and shall not prevent such insurer from defending any action at law or suit in equity in any court of this state, but no insurer transacting insurance business in this state without a certificate of authority shall be permitted to maintain an action in any court of this state to enforce any right, claim or demand arising out of the transaction of such business until such insurer shall have obtained a certificate of authority.
(2) In the event of failure of any such unauthorized insurer to pay any claim or loss within the provisions of such insurance contract, any person who assisted or in any manner aided, directly or indirectly, in the procurement of such insurance contract shall be liable to the insured for the full amount of the claim or loss in the manner provided by the provisions of such insurance contract.
History: L. 1969, ch. 240, § 2; L. 1985, ch. 164, § 1; L. 2025, ch. 87, § 17; July 1.
Whenever the commissioner of insurance believes, from evidence satisfactory to him, that any insurer is violating or about to violate the provisions of K.S.A. 40-2702, the commissioner of insurance may, through the attorney general of this state, cause a complaint to be filed in a district court of proper venue to enjoin and restrain such insurer from continuing such violation or engaging therein or doing any act in furtherance thereof. Said district court shall have jurisdiction of any such proceeding and shall have the power to make and enter an order or judgment awarding such preliminary or final injunctive relief as in its judgment is proper.
History: L. 1969, ch. 240, § 3; April 19.
(a) Any act of transacting an insurance business, as set forth in K.S.A. 40-2701, by any unauthorized insurer is equivalent to and shall constitute an irrevocable appointment by such insurer, binding upon him, his executor or administrator, or successor in interest if a corporation, of the secretary of state of the state of Kansas or his successor in office, to be the true and lawful attorney of such insurer upon whom may be served all lawful process in any action, suit or proceeding in any court by the commissioner of insurance, or by the state, and upon whom may be served any notice, order, pleading or process in any administrative proceeding before the commissioner of insurance which arises out of transacting an insurance business in this state by such insurer. Any act of transacting an insurance business in this state by any unauthorized insurer shall be signification of its agreement that any such lawful process in such court action, suit or proceeding, and any such notice, order, pleading or process in such administrative proceeding before the commissioner of insurance so served, shall be of the same legal force and validity as personal service of process in this state upon such insurer.
(b) Service of process in such action shall be made by delivering to and leaving with the secretary of state, or some person in apparent charge of his office, two (2) copies thereof and by payment to the secretary of state of the fee prescribed by law. Service upon the secretary of state as such attorney shall be service upon the principal.
(c) The secretary of state shall forthwith forward by certified mail one (1) of the copies of such process or such notice, order, pleading or process in administrative proceedings before the commissioner to the defendant in such court proceeding, or to whom the notice, order, pleading or process in such administrative proceeding is addressed or directed, at his last known principal place of business and shall keep a record of all process so served on him, which shall show the day and hour of service. Such service is sufficient if:
(1) Notice of such service and a copy of the court process are sent by certified mail within ten (10) days thereafter by the plaintiff or the plaintiff's attorney to the defendant in the court proceeding at the last known principal place of business of the defendant; or the notice, order, pleading or process in an administrative proceeding before the commissioner of insurance is sent within such time to the respondent in the administrative proceeding at his last known principal place of business; and
(2) The defendant's receipt or receipts issued by the post office with which the letter is registered, showing the name of the sender of the letter and the name and address of the person or insurer to whom the letter is addressed, and an affidavit of the plaintiff or the plaintiff's attorney in a court proceeding, or of the commissioner of insurance in an administrative proceeding, showing compliance therewith, are filed with the clerk of the court in which such action, suit or proceeding is pending, or with the commissioner of insurance in administrative proceedings, on or before the date the defendant in the court or administrative proceeding is required to appear or respond thereto, or within such further time as the court or commissioner of insurance may allow.
(d) No plaintiff shall be entitled to a judgment or a determination by default in any court or administrative proceeding in which court process, or notice, order, pleading, or process in administrative proceedings before the commissioner of insurance, is served under this section until the expiration of forty-five (45) days from the date of filing of the affidavit of compliance.
(e) Nothing in this section shall limit or affect the right to serve any process, notice, order or demand upon any person or insurer in any other manner now or hereafter permitted by law.
History: L. 1969, ch. 240, § 4; April 19.
(a) Before any unauthorized insurer files or causes to be filed any pleading in any court action, suit or proceeding, or any notice, order, pleading or process in an administrative proceeding before the commissioner of insurance, instituted against such person or insurer by services made as provided in K.S.A. 40-2704, and amendments thereto, such insurer shall either:
(1) Deposit with the clerk of the court in which such action, suit or proceeding is pending, or with the commissioner of insurance in administrative proceedings before the commissioner, cash or securities, or file with such clerk or commissioner a bond with good and sufficient sureties, to be approved by the judge or commissioner of insurance, respectively, in an amount to be fixed by the court or commissioner, as the case may be, sufficient to secure the payment of any final judgment which may be rendered in such action or administrative proceeding; or
(2) Procure a certificate of authority to transact the business of insurance in this state. In considering the application of an insurer for a certificate of authority, for the purposes of this paragraph, the commissioner of insurance need not assert the provisions of K.S.A. 40-253, and amendments thereto, against such insurer with respect to its application, if the commissioner determines that such company would otherwise comply with the requirements for such certificate of authority.
(b) The commissioner of insurance, in any administrative proceeding in which service is made as provided in K.S.A. 40-2704, and amendments thereto, in the commissioner's discretion, may order such postponement as may be necessary to afford the defendant reasonable opportunity to comply with the provisions of subsection (a) and to defend such action.
(c) Nothing in subsection (a) shall be construed to prevent an unauthorized insurer from filing a motion to quash a writ or to set aside service thereof, made in the manner provided in K.S.A. 40-2704, and amendments thereto, on the grounds that such unauthorized insurer has not done any of the acts enumerated in K.S.A. 40-2702, and amendments thereto.
History: L. 1969, ch. 240, § 5; L. 1992, ch. 314, § 6; July 1.
(a) As used in this section:
(1) "Reciprocal state" means any state or territory of the United States the laws of which contain procedures substantially similar to those specified in this section for the enforcement of decrees or orders in equity issued by courts located in other states or territories of the United States, against any insurer incorporated or authorized to do business in said state or territory.
(2) "Foreign decree" means any decree or order in equity of a court located in a "reciprocal state," including a court of the United States located therein, against any insurer incorporated or authorized to do business in this state.
(3) "Qualified party" means a state regulatory agency acting in its capacity to enforce the insurance laws of its state.
(b) The attorney general upon request of the commissioner of insurance may proceed in the courts of this state or any reciprocal state to enforce an order or decision in any court proceeding or in any administrative proceeding before the commissioner of insurance. The commissioner of insurance of this state shall determine which states and territories qualify as reciprocal states and shall maintain at all times an up-to-date list of such states.
(c) A copy of any foreign decree authenticated in accordance with the statutes of this state may be filed in the office of the clerk of any court of competent jurisdiction in this state. The clerk, upon verifying with the commissioner of insurance that the decree or order qualifies as a "foreign decree," shall treat the foreign decree in the same manner as a decree of a court of competent jurisdiction in this state. A foreign decree so filed has the same effect and shall be deemed as a decree of any court of competent jurisdiction in this state, and is subject to the same procedures, defenses and proceedings for reopening, vacating or staying as a decree of any court of competent jurisdiction in this state, and may be enforced or satisfied in like manner.
(d) (1) At the time of the filing of the foreign decree, the attorney general shall make and file with the clerk of the court an affidavit setting forth the name and last known post-office address of the defendant.
(2) Promptly upon the filing of the foreign decree and the affidavit, the clerk of such court shall mail notice of the filing of the foreign decree to the defendant at the address stated therein and to the commissioner of insurance of this state, and shall make a note of the mailing in the docket. In addition, the attorney general may mail a notice of the filing of the foreign decree to the defendant and to the commissioner of insurance of this state and may file proof of mailing with the clerk. Lack of mailing notice of filing by the clerk shall not affect the enforcement proceedings if proof of mailing by the attorney general has been filed.
(3) No execution or other process for enforcement of a foreign decree filed hereunder shall issue until thirty (30) days after the date the decree is filed.
(e) (1) If the defendant shows the court that an appeal from the foreign decree is pending or will be taken, or that a stay of execution has been granted, the court shall stay enforcement of the foreign decree until the appeal is concluded, the time for appeal expires or the stay of execution expires or is vacated, upon proof that the defendant has furnished the security for the satisfaction of the decree required by the state in which it was rendered.
(2) If the defendant shows the court any ground upon which enforcement of a decree of any court of competent jurisdiction in this state would be stayed, the court shall stay enforcement of the foreign decree for an appropriate period, upon requiring the same security for satisfaction of the decree which is required in this state.
(f) Any person filing a foreign decree shall pay the required fee to the clerk of the court where said decree is filed. Fees for docketing, transcription or other enforcement proceedings shall be as provided for decrees of such court.
History: L. 1969, ch. 240, § 6; April 19.
Any unauthorized insurer who transacts any unauthorized act of insurance business as set forth in this act may, upon conviction thereof, be fined not more than ten thousand dollars ($10,000).
History: L. 1969, ch. 240, § 7; April 19.
This act shall be known and may be cited as the uniform unauthorized insurers act.
History: L. 1969, ch. 240, § 8; April 19.
If any provision of this act or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of the act which can be given effect without the invalid provision, and to this end the provisions of this act are declared to be severable.
History: L. 1969, ch. 240, § 9; April 19.
Every life, fire and casualty, hail and county mutual fire insurance company organized under the laws of this state, shall annually pay to the state for the privilege of doing business within this state, a tax according to or measured by its net income for the next preceding calendar year. Such tax shall be an amount equal to five percent (5%) of such net income. The provisions of this section shall not apply to net income earned in calendar year 1998 or in any calendar year thereafter.
History: L. 1970, ch. 184, § 1; L. 1997, ch. 175, § 9; July 1.
The tax levied under the provisions of this act shall be in lieu of ad valorem taxes which might otherwise be imposed by the state or political subdivisions thereof upon shares of capital stock and other intangible assets owned by such company.
History: L. 1970, ch. 184, § 2; January 1, 1971.
For the purpose of computing the tax imposed upon life insurance companies under the provisions of this act the term "net income" shall mean the net taxable income for the preceding calendar year of such company as determined under the provisions of section 802 of the internal revenue code of 1954, as heretofore or hereafter amended. The term "net income" shall not include dividends received from stock issued by Kansas Venture Capital, Inc. to the extent such dividends are included in the Kansas taxable income of a corporation, interest income on obligations of this state or a political subdivision thereof which is specifically exempt from income tax under the laws of this state authorizing the issuance of such obligations. The term "net income" shall include the amount of any charitable contribution made to the extent the same is claimed as the basis for the credit allowed pursuant to K.S.A. 79-32,196, and amendments thereto. The term "net income" shall include the amount of any contribution made to the extent the same is claimed as the basis for the credit allowed pursuant to K.S.A. 74-50,154, and amendments thereto. In case the entire business of such company is not transacted within this state, the net income for the purposes of this act shall be determined by multiplying such net income by a fraction, the numerator of which shall be the premiums received from business transacted within this state and the denominator of which is the amount of premiums received by such company from all its business. Insurance companies connected through stock ownership, which operate under common control and management are hereby authorized to make a consolidated return for the purpose of determining "net income" under the provisions of this section and intercompany transactions shall not be considered or included for the purpose of such determination.
History: L. 1970, ch. 184, § 3; L. 1973, ch. 197, § 1; L. 1986, ch. 332, § 5; L. 1994, ch. 38, § 6; L. 2004, ch. 112, § 71; July 1.
For the purpose of computing the tax imposed under the provisions of this act the term "net income" as applied to a domestic fire and casualty insurance company shall mean the amount required to be reported as "net income" in the annual statement form required to be filed by such company with the Kansas commissioner of insurance under the provisions of K.S.A. 40-225, and amendments thereto; as applied to a domestic mutual hail insurance company the term "net income" shall mean the amount required to be reported as "net income," annual increase in reserve fund in section VII of the annual statement form required to be filed by such company with the Kansas commissioner of insurance under the provisions of K.S.A. 40-225, and amendments thereto; and as applied to a domestic county mutual fire insurance company the term "net income" shall mean the amount required to be reported as "net income," annual net gain in its combined reserve and general funds in section VII of the annual statement form required to be filed by such company with the Kansas commissioner of insurance under the provisions of K.S.A. 40-225, and amendments thereto. If any such domestic fire and casualty insurance company, domestic mutual hail insurance company, or domestic county mutual fire insurance company does business in states other than Kansas its "net income" shall be determined by the proportion of net premiums (gross premiums less cancellations) received from business written in Kansas compared to total net premiums received from all its business. Insurance companies connected through stock ownership with a common parent corporation, which operate under common control and management are hereby authorized to make a consolidated return for the purpose of determining "net income" under the provisions of this section and intercompany transactions shall not be considered or included for the purpose of such determination. If a domestic insurance company is exempt for any reason from filing an annual statement with the Kansas insurance department, its net income shall be determined in the same manner as herein provided. For the purposes of this section, the term "net income" shall not include dividends received from stock issued by Kansas Venture Capital, Inc. to the extent such dividends are included in the Kansas taxable income of a corporation, interest income on obligations of this state or a political subdivision thereof which is specifically exempt from income tax under the laws of this state authorizing the issuance of such obligations. For the purposes of this section, the term "net income" shall include the amount of any charitable contribution made to the extent the same is claimed as the basis for the credit allowed pursuant to K.S.A. 79-32,196, and amendments thereto. For the purposes of this section, the term "net income" shall include the amount of any contribution made to the extent the same is claimed as the basis for the credit allowed pursuant to K.S.A. 74-50,154, and amendments thereto.
History: L. 1970, ch. 184, § 4; L. 1973, ch. 197, § 2; L. 1986, ch. 332, § 6; L. 1994, ch. 38, § 7; L. 2004, ch. 112, § 72; July 1.
(a) Every insurance company subject to taxation under the provisions of this act shall pay the tax imposed and make a return thereof under oath to the commissioner of insurance under such rules and regulations and in such form and manner as the commissioner may by regulation prescribe.
(b) The return shall be filed and the tax paid on the same date as the insurance company's federal income tax return is filed with the internal revenue service except that in the event said federal tax return is filed with the internal revenue service subsequent to the fifteenth day of April, the tax, payable under this act, shall bear interest at the rate per annum prescribed by K.S.A. 79-2968(b), calculated from the fifteenth day of April until date of payment. If, subsequent to said filing, a change occurs affecting the amount of any tax previously imposed thereunder, such change shall be reported, and the necessary adjustments made, at the time the next return hereunder is filed with the commissioner of insurance.
History: L. 1970, ch. 184, § 5; L. 1980, ch. 308, § 7; July 1.
(a) If any company, without intent to evade the tax imposed by this act, shall fail to file a return or pay the tax, if one is due, at the time required by or under the provisions of this act, but shall voluntarily file a correct return of income or pay the tax due within sixty (60) days thereafter, there shall be added to the tax an additional amount equal to ten percent of the unpaid balance of tax due plus interest at the rate prescribed by K.S.A. 79-2968(a) for each month or fraction of a month from the date the tax was due until paid. No additional penalty and interest shall be imposed if the total amount thereof does not exceed one dollar ($1).
(b) If any company fails voluntarily to file a return of income, if one is due, within sixty (60) days after the time required by or under the provisions of this act, there shall be added to the tax an additional amount equal to twenty-five percent of the unpaid balance of tax due, plus interest at the rate prescribed by K.S.A. 79-2968(a) for each month or fraction of a month from the date the tax was due until paid except that no additional penalty and interest shall be imposed if the total amount thereof does not exceed one dollar ($1).
(c) If any company which has failed to file a return or has filed an incorrect or insufficient return, and after notice from the commissioner refuses or neglects within twenty (20) days to file a proper return, or files a fraudulent return, the commissioner shall determine the income of such taxpayer according to the best information available and assess the tax together with a penalty of fifty percent of the unpaid balance of tax due plus interest at the rate prescribed by K.S.A. 79-2968(a) for each month from the date the tax was originally due to the date of payment.
(d) Whenever, in the judgment of the commissioner, the failure of the taxpayer to comply with provisions of subsections (a), (b) and (c) of this section, was due to reasonable causes, the commissioner may, in the commissioner's discretion, waive or reduce any of the penalties upon making a record of its reasons therefor.
History: L. 1970, ch. 184, § 6; L. 1980, ch. 308, § 8; July 1.
(a) All reports and returns required by this act and rules and regulations adopted pursuant thereto shall be preserved for three (3) years and thereafter until the commissioner orders them to be destroyed.
(b) Except in accordance with proper judicial order, or as otherwise provided by law, it shall be unlawful for the commissioner, any deputy, agent, clerk or other officer or employee to divulge, or to make known in any way, the amount of income or any particulars set forth or disclosed in any such report or return; and it shall be unlawful for the commissioner, any deputy, agent, clerk or other officer or employee engaged in the administration of this act to engage in the business or profession of tax accounting or to accept employment, with or without consideration, from any person, firm or corporation for the purpose, directly or indirectly, of preparing tax returns or reports required by the laws of the state of Kansas, by any other state or by the United States government, or to accept any employment for the purpose of advising, preparing material or data, or the auditing of books or records to be used in an effort to defeat or cancel any tax or part thereof that has been assessed by the state of Kansas, any other state or by the United States government.
(c) Nothing herein shall be construed to prohibit the publication of statistics, so classified as to prevent the identification of particular reports or returns and the items thereof, or the inspection of returns by the attorney general or other legal representatives of the state.
(d) Notwithstanding the provisions of this section, the commissioner may, in his discretion, permit the commissioner of internal revenue of the United States, or the proper official of any state imposing an income tax, or the authorized representative of either, to inspect the returns made under this act: Provided, That the commissioner may make available or furnish to the taxing officials of any other state or the commissioner of internal revenue of the United States or other taxing officials of the federal government, or their authorized representatives, information contained in reports or returns or any audit thereof or the report of any investigation made with respect thereto, filed pursuant to this act, as he may consider proper, but such information shall not be used for any other purpose than that of the administration of tax laws of such state or of the United States.
History: L. 1970, ch. 184, § 7; January 1, 1971.
The commissioner of insurance is hereby charged with the administration of this act and is hereby authorized to adopt such rules and regulations as may be necessary to properly administer and enforce the provisions thereof.
History: L. 1970, ch. 184, § 8; January 1, 1971.
The commissioner of insurance shall remit all tax moneys collected under the provisions of this act to the state treasurer in accordance with the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount in the state treasury to the credit of the state general fund.
History: L. 1970, ch. 184, § 9; L. 1978, ch. 401, § 5; L. 2001, ch. 5, § 120; July 1.
No political subdivision of this state shall levy or impose any license, privilege, premium or gross receipts tax or fee or any occupation tax based upon income, premiums or gross receipts upon any insurance company subject to taxation under the provisions of this act.
History: L. 1970, ch. 184, § 10; January 1, 1971.
Nothing contained in this act shall apply to any of the organizations specified in K.S.A. 40-202.
History: L. 1970, ch. 184, § 11; January 1, 1971.
The provisions of this act shall be applicable to all taxable years commencing after December 31, 1972.
History: L. 1973, ch. 197, § 3; April 19.
For all taxable years commencing after December 31, 1997, any taxpayer who makes expenditures for the purpose of making all or any portion of an existing building or facility accessible to persons with a disability, which building or facility is on real property located in this state and used in a trade or business or held for the production of income, shall be entitled to claim a tax credit in an amount equal to 50% of such expenditures or, the amount of $10,000, whichever is less, against the premium tax or privilege fees imposed pursuant to K.S.A. 40-252, and amendments thereto. Such tax credit shall be deducted from the taxpayer's tax liability for the taxable year following the year in which the expenditures are made by the taxpayer. If the amount of such tax credit exceeds the taxpayer's tax liability for such taxable year, the amount thereof which exceeds such tax liability may be carried over for deduction from the taxpayer's tax liability in the next succeeding taxable year or years until the total amount of the tax credit has been deducted from tax liability, except that no such tax credit shall be carried over for deduction after the fourth taxable year succeeding the taxable year in which the expenditures are made. Terms used in this section shall have the same meanings as ascribed thereto in K.S.A. 79-32,175, and amendments thereto.
History: L. 1994, ch. 173, § 3; L. 1998, ch. 136, § 1; April 30.
The purpose of this act is to provide a mechanism for the payment of covered claims under certain insurance policies, to avoid excessive delay in payment and to avoid financial loss to claimants or policyholders because of the insolvency of an insurer, to assist in the detection and prevention of insurer insolvencies, and to provide an association to assess the cost of such protection among insurers. This act shall be liberally construed to effect such purpose which shall constitute an aid and guide to interpretation.
History: L. 1970, ch. 185, § 1; March 27.
This act shall apply to the kinds of direct insurance specified in K.S.A. 40-901 and 40-1102 except for the kinds of insurance specified in subsections (a), (e), (f), (g), (h) and (i) of K.S.A. 40-1102: Provided, That this act shall apply to accident and sickness coverages written pursuant to K.S.A. 40-1110.
History: L. 1970, ch. 185, § 2; March 27.
As used in this act: (a) "Association" means the Kansas insurance guaranty association created by this act.
(b) "Commissioner" means the commissioner of insurance of Kansas.
(c) "Covered claim" includes the following:
(1) An unpaid claim, including one for unearned premiums, that arises out of and is within the coverage and not in excess of the applicable limits of an insurance policy to which this act applies issued by an insurer, if such insurer becomes an insolvent insurer after the effective date of this act and:
(A) The claimant or insured is a resident of this state at the time of the insured event. For entities other than an individual, the residence of a claimant, insured or policyholder is the state in which the principal place of business of such claimant, insured or policyholder is located at the time of the insured events; or
(B) the claim is a first party claim for damage to property that is permanently located in this state.
(2) "Covered claim" includes claim obligations that arose through the issuance of an insurance policy by a member insurer, which are later allocated, transferred, merged into, novated, assumed by or otherwise made the sole responsibility of a member or nonmember insurer if:
(A) The original member insurer has no remaining obligation on the policy after the transfer;
(B) a final order of liquidation with a finding of insolvency has been entered against the insurer that assumed the member's coverage obligations by a court of competent jurisdiction in the insurer's state of domicile;
(C) the claim would have been a covered claim, as defined in subsection (c)(1), if the claim had remained the responsibility of the original member insurer and the order of liquidation had been entered against the original member insurer with the same claim submission date and liquidation date; and
(D) in cases where the member's coverage obligations were assumed by a nonmember insurer, the transaction received prior regulatory or judicial approval.
(3) "Covered claim" does not include:
(A) Any amount due any reinsurer, insurer, insurance pool or underwriting association as subrogation recoveries or otherwise;
(B) any amount awarded as punitive or exemplary damages unless such damages were covered under the policy of the insolvent insurer; or
(C) any claim by an affiliate of the insolvent insurer.
(d) "Domiciliary state" means:
(1) The state in which an insurer is incorporated or organized; or
(2) in the case of an alien insurer, the state of entry of such insurer.
(e) "Insolvent insurer" means:
(1) An insurer licensed by the commissioner to transact insurance in this state either at the time the policy was issued or when the insured event occurred; and
(2) determined to be insolvent by a court of competent jurisdiction and against whom a final order of liquidation has been entered by a court of competent jurisdiction in the insurer's domiciliary state.
(f) "Member insurer" means any person who is:
(1) Authorized to write any kind of insurance to which this act applies under K.S.A. 40-2902, and amendments thereto, including the exchange of reciprocal or inter-insurance contracts; and
(2) licensed by the commissioner to transact insurance in this state. This act shall not apply to those persons transacting business pursuant to the provisions of K.S.A. 40-202, and amendments thereto.
(g) "Net direct written premiums" means first gross premiums written in this state on insurance policies to which this act applies, less return premiums thereon and dividends paid or credited to policyholders on such direct business. "Net direct written premiums" does not include premiums on contracts between insurers or reinsurers.
(h) "Person" means any individual, corporation, partnership, association or voluntary organization.
(i) "Cybersecurity insurance," for purposes of this act, includes first and third-party coverage, in a policy or endorsement, written on a direct, admitted basis for losses and loss mitigation arising out of or relating to data privacy breaches, unauthorized information network security intrusions, computer viruses, ransomware, cyber extortion, identity theft and similar exposures.
History: L. 1970, ch. 185, § 3; L. 2005, ch. 92, § 1; L. 2006, ch. 122, § 2; L. 2024, ch. 74, § 2; July 1.
There is created a nonprofit unincorporated legal entity to be known as the Kansas insurance guaranty association. All insurers defined as member insurers in K.S.A. 40-2903(e) shall be and remain members of the association as a condition of their authority to transact insurance in this state. The association shall perform its functions under a plan of operation established and approved under K.S.A. 40-2907 and shall exercise its powers through a board of directors established under K.S.A. 40-2905.
History: L. 1970, ch. 185, § 4; March 27.
(a) (1) The board of directors of the association shall consist of nine persons, of which three members shall serve terms of one year; (2) three members shall serve terms of two years; and (3) three members shall serve terms of three years. The members of the board shall be selected by member insurers subject to the approval of the commissioner. Vacancies on the board shall be filled for the remaining period of the term in the same manner as the initial appointments. The members of the board of directors serving as of July 1, 2024, shall continue their terms until the expiration of such members' current terms. Upon expiration of each member's term, the commissioner shall decide whether to continue such member's position on the board or reduce the number of members of the board of directors in accordance with paragraph (d).
(b) In approving or continuing selections to the board, the commissioner shall consider among other criteria, whether all member insurers are fairly represented.
(c) Members of the board may be reimbursed from the assets of the association for expenses incurred thereby as members of the board of directors.
(d) On and after January 1, 2025, the board of directors shall consist of not fewer than seven members but not more than nine members appointed in accordance with this paragraph. Members of the board shall be selected by member insurers, subject to the approval of the commissioner. Each member of the board of directors shall serve a term of three years but shall be removable by the commissioner for inefficiency, neglect of duty or malfeasance.
History: L. 1970, ch. 185, § 5; L. 1976, ch. 220, § 1; L. 2024, ch. 74, § 3; July 1.
(a) In the event of the determination of insolvency and order of liquidation of a licensed insurer after the effective date of this act, the association shall:
(1) Be obligated to the extent of the covered claims existing prior to the determination of insolvency and arising within 30 days after the determination of insolvency, before the policy expiration date if less than 30 days after the determination or before the insured replaces the policy or causes such policy's cancellation if such insured does so within 30 days of the determination, except that such obligation shall include only that amount of each covered claim that does not exceed the first $300,000 of any claim, except that the association shall pay the full amount of any covered claim arising out of a workmen's compensation policy. In no event shall the association be obligated to the policyholder or claimant in an amount in excess of the face amount of the policy from which the claim arises. Additionally, in no event shall the association be obligated to pay an amount in excess of $300,000 for all first and third-party claims under a policy or endorsement providing, or that is found to provide, cybersecurity insurance coverage and arising out of, or related to, a single insured event, regardless of the number of claims made or the number of claimants;
(2) be deemed the insurer to the extent of its obligation on the covered claims and to such extent shall have all rights, duties and obligations of the insolvent insurer as if the insurer had not become insolvent;
(3) assess insurers amounts necessary to pay the obligations of the association under subsection (1) subsequent to an insolvency, the expenses of handling covered claims subsequent to an insolvency, the cost of examinations under K.S.A. 40-2911, and amendments thereto, and other expenses authorized by this act. The assessments of each member insurer shall be in the proportion that the net direct written premiums of the member insurer for the preceding calendar year bears to the net direct written premiums of all member insurers for the preceding calendar year. Each member insurer shall be notified of the assessment not later than 30 days before it is due. No member insurer may be assessed in any year an amount greater than 2% of that member insurer's net direct written premiums for the preceding calendar year. If the maximum assessment, together with the other assets of the association, does not provide in any one year an amount sufficient to make all necessary payments, the funds available shall be prorated, and the unpaid portion shall be paid as soon thereafter as funds become available. The association may exempt or defer, in whole or in part, the assessment of any member insurer if the assessment would cause the member insurer's financial statement to reflect amounts of capital or surplus less than the minimum amounts required for a certificate of authority by any jurisdiction in which the member insurer is authorized to transact insurance, or the commissioner advises the association that such assessment would in such commissioner's opinion be detrimental to the solvency of a member insurer. Each member insurer may set off against any assessment, authorized payments made on covered claims and expenses incurred in the payment of such claims by the member insurer;
(4) investigate claims brought against the association and adjust, compromise, settle and pay covered claims to the extent of the association's obligation and deny all other claims and may review settlements, releases and judgments to which the insolvent insurer or its insureds were parties to determine the extent to which such settlements, releases and judgments may be properly contested;
(5) notify such persons as the commissioner directs under K.S.A. 40-2908 (b)(1), and amendments thereto;
(6) handle claims through its employees or through one or more insurers or other persons designated as servicing facilities. Designation of a servicing facility is subject to the approval of the commissioner, except that such designation may be declined by a member insurer; and
(7) reimburse each servicing facility for obligations of the association paid by the facility and for expenses incurred by the facility while handling claims on behalf of the association and pay the other expenses of the association authorized by this act.
(b) The association may:
(1) Employ or retain such persons as are necessary to handle claims, provide covered policy benefits and service and perform other duties of the association;
(2) borrow funds necessary to effect the purposes of this act in accordance with the plan of operation;
(3) sue or be sued;
(4) negotiate and become a party to such contracts as are necessary to carry out the purposes of this act;
(5) perform such other acts as are necessary or proper to effectuate the purposes of this act; or
(6) refund to the member insurers, in proportion to the contribution of each member insurer to the association, that amount by which the assets of the association exceed the liabilities, if, at the end of any calendar year, the board of directors finds that the assets of the association exceed the liabilities of the association as estimated by the board of directors for the coming year.
(c) The association shall issue to each insurer paying an assessment under this act a certificate of contribution, in a form prescribed by the commissioner, for the amount so paid. All outstanding certificates shall be of equal dignity and priority without reference to amounts or dates of issue. A certificate of contribution may be shown by the insurer in its financial statement as an asset in such form and for such amount, if any, and period of time as the commissioner may approve.
(d) Notwithstanding any other provisions of this act:
(1) A covered claim shall not include a claim filed with the association after the earlier of:
(A) 18 months after the date of the order of liquidation; or
(B) the final date set by the court for the filing of claims against the liquidator or receiver of an insolvent insurer.
(2) A covered claim shall not include any claim filed with the association or a liquidator for protection afforded under the insured's policy for incurred-but-not-reported losses.
(3) Any obligation of the association to defend an insured on a covered claim shall cease upon the association's:
(A) Payment, by settlement or on a judgment, of an amount equal to the lesser of the association's covered claim obligation limit or the applicable policy limit; or
(B) tender of such amount.
History: L. 1970, ch. 185, § 6; L. 1976, ch. 220, § 2; L. 2005, ch. 92, § 2; L. 2024, ch. 74, § 4; July 1.
(a) Unless a longer period has been allowed by the commissioner, a member insurer shall at its option have the right to show a certificate of contribution as an asset in the form approved by the commissioner pursuant to subsection (c) of K.S.A. 40-2906, and amendments thereto, at percentages of the original face amount approved by the commissioner, for calendar years as follows:
(1) One hundred percent for the calendar year of issuance;
(2) eighty percent for the first calendar year after the year of issuance;
(3) sixty percent for the second calendar year after the year of issuance;
(4) forty percent for the third calendar year after the year of issuance; and
(5) twenty percent for the fourth calendar year after the year of issuance.
(b) The insurer may offset the amount written off by it in a calendar year under subsection (a) against its premium tax liability to this state accrued with respect to business transacted in such year.
(c) Any sums acquired by refund pursuant to subsection (b) of K.S.A. 40-2906, and amendments thereto, from the association which have theretofore been written off by contributing insurers and offset against premium taxes as provided in subsection (b) of this section, and is not then needed for purposes of this act, shall be paid by the association to the commissioner to be remitted by the commissioner to the state treasurer in accordance with the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount in the state treasury to the credit of the state general fund.
(d) The provisions of K.S.A. 40-2914, and amendments thereto, shall not apply to amounts written off under subsection (a) of this section.
History: L. 1976, ch. 220, § 3; L. 2001, ch. 5, § 121; July 1.
(a) (1) The association shall submit to the commissioner a plan of operation and any amendments thereto necessary or suitable to assure the fair, reasonable and equitable administration of the association. The plan of operation and any amendments thereto shall become effective upon approval in writing by the commissioner.
(2) If the association fails to submit a suitable plan of operation within ninety (90) days following the effective date of this act or if at any time thereafter the association fails to submit suitable amendments to the plan, the commissioner shall, after notice and hearing, adopt and promulgate such reasonable regulations as are necessary or advisable to effectuate the provisions of this act. Such regulations shall continue in force until modified by the commissioner or superseded by a plan submitted by the association and approved by the commissioner.
(b) All member insurers shall comply with the plan of operation.
(c) The plan of operation shall: (1) Establish the procedures whereby all the powers and duties of the association under K.S.A. 40-2906 will be performed.
(2) Establish procedures for handling assets of the association.
(3) Establish the amount and method of reimbursing members of the board of directors under K.S.A. 40-2905.
(4) Establish procedures by which claims may be filed with the association and establish acceptable forms of proof of covered claims. Notice of claims to the receiver or liquidator of the insolvent insurer shall be deemed notice to the association or its agent and a list of such claims shall be periodically submitted to the association or similar organization in another state by the receiver or liquidator.
(5) Establish regular places and times for meetings of the board of directors.
(6) Establish procedures for records to be kept of all financial transactions of the association, its agents and the board of directors.
(7) Provide that any member insurer aggrieved by any final action or decision of the association may appeal to the commissioner within thirty (30) days after the action or decision.
(8) Establish the procedures whereby selections for the board of directors will be submitted to the commissioner.
(9) Contain additional provisions necessary or proper for the execution of the powers and duties of the association.
(d) The plan of operation may provide that any or all powers and duties of the association, except those under K.S.A. 40-2906(a)(3) and (b)(2), are delegated to a corporation, association or other organization which performs or will perform functions similar to those of this association, or its equivalent, in two (2) or more states. Such a corporation, association or organization shall be reimbursed as a servicing facility would be reimbursed and shall be paid for its performance of any other functions of the association. A delegation under this subsection shall take effect only with the approval of both the board of directors and the commissioner, and may be made only to a corporation, association or organization which extends protection not substantially less favorable and effective than that provided by this act.
History: L. 1970, ch. 185, § 7; March 27.
(a) The commissioner shall:
(1) Notify the association of the existence of an insolvent insurer not later than three regular business days after the commissioner receives notice of the determination of the insolvency.
(2) Upon request of the board of directors, provide the association with a statement of the net direct written premiums of each member insurer.
(b) The commissioner may:
(1) Require that the association notify the insureds of the insolvent insurer and any other interested party of the determination of insolvency and of their rights under this act. Such notification shall be by mail at the insurer's or interested party's last known address, where available, but if sufficient information for notification by mail is not available, notice by publication in a newspaper of general circulation shall be sufficient.
(2) Suspend or revoke, pursuant to the provisions of K.S.A. 40-223, and amendments thereto, the certificate of authority to transact insurance in this state of any member insurer which fails to pay an assessment when due or fails to comply with the plan of operation. As an alternative, the commissioner may levy a fine on any member insurer which fails to pay an assessment when due. Such fine shall not exceed 5% of the unpaid assessment per month, except that no fine shall be less than $100 per month.
(3) Revoke the designation of any servicing facility if the commissioner finds claims are being handled unsatisfactorily.
History: L. 1970, ch. 185, § 8; L. 1986, ch. 318, § 41; July 1.
(a) Any person recovering under this act shall be deemed to have assigned his rights under the policy to the association to the extent of his recovery from the association. Every insured or claimant seeking the protection of this act shall cooperate with the association to the same extent as such person would have been required to cooperate with the insolvent insurer. The association shall have no cause of action against the insured of the insolvent insurer for any sums it has paid out, except such causes of action as the insolvent insurer would have had if such sums had been paid out by the insolvent insurer. In the case of an insolvent insurer operating on a plan with assessment liability, payments of claims of the association shall not operate to reduce the liability of insureds to the receiver, liquidator, or statutory successor for unpaid assessments.
(b) The receiver, liquidator or statutory successor of an insolvent insurer shall be bound by settlements of covered claims by the association or a similar organization in another state. The court having jurisdiction shall grant such claims priority equal to that which the claimant would have been entitled in the absence of this act against the assets of the insolvent insurer. The expenses of the association or similar organization in handling claims shall be accorded the same priority as the liquidator's expenses. For purposes of this subsection, expenses for the investigation or defense of claims against insureds under policies with an insolvent insurer shall be considered expenses of the association or other similar organization in handling claims.
(c) The association shall periodically file with the receiver or liquidator of the insolvent insurer statements of the covered claims paid by the association and estimates of anticipated claims on the association which shall preserve the rights of the association against the assets of the insolvent insurer.
(d) The association shall have the right to recover from any person who is an affiliate of the insolvent insurer and whose liability obligations to other persons are satisfied in whole or in part by payments made under this act.
History: L. 1970, ch. 185, § 9; L. 2005, ch. 92, § 3; April 14.
(a) Any person having a claim against an insurer under any provision in an insurance policy other than a policy of an insolvent insurer that is also a covered claim shall be required to exhaust first such person's right under such policy. A claim under an insurance policy shall include a claim under any kind of insurance, whether such claim is a first party or third party claim, and shall include, without limitation, accident and health insurance, workers' compensation, Blue Cross and Blue Shield and all other coverages except for policies of an insolvent insurer or any right under a life insurance policy. Any amount payable on a covered claim under this act shall be reduced by the full applicable limits stated in the other insurance policy or by the amount of any recovery under such other insurance policy. The credit shall be reduced by the lesser of the:
(1) Association's covered claim limit;
(2) amount of the judgment on the settlement of the claim; or
(3) policy limits of the insolvent insurer's policy.
(b) Any person having a claim that may be recovered under more than one insurance guaranty association or its equivalent shall seek recovery first from the association of the place of residence of the insured except if it is a first party claim for damage to property with a permanent location from the association of the location of the property and if it is a workmen's compensation claim from the association of the residence of the claimant. Any recovery under this act shall be reduced by the amount of the recovery from any other insurance guaranty association or its equivalent.
(c) The provisions of this section shall apply to all claims that have not been paid prior to the effective date of this act.
History: L. 1970, ch. 185, § 10; L. 2005, ch. 92, § 4; L. 2024, ch. 74, § 5; July 1.
To aid in the detection and prevention of insurer insolvencies: (a) The board of directors may, upon majority vote, make reports and recommendations to the commissioner upon any matter germane to the solvency, liquidation, rehabilitation or conservation of any member insurer. Such reports and recommendations shall not be considered public documents.
(b) The board of directors may, upon majority vote, make recommendations to the commissioner for the detection and prevention of insurer insolvencies.
(c) The board of directors shall, at the conclusion of any insurer insolvency in which the association was obligated to pay covered claims, prepare a report on the history and causes of such insolvency, based on the information available to the association, and submit such report to the commissioner.
History: L. 1970, ch. 185, § 11; March 27.
The association shall be subject to examination and regulation by the commissioner. The board of directors shall submit, not later than March 30 of each year, a financial report for the preceding calendar year in a form approved by the commissioner.
History: L. 1970, ch. 185, § 12; L. 2017, ch. 37, § 2; April 20.
The association shall be exempt from payment of all fees and all taxes levied by this state or any of its subdivisions except taxes levied on real or personal property.
History: L. 1970, ch. 185, § 13; March 27.
The rates and premiums charged for insurance policies to which this act applies shall include amounts sufficient to recoup a sum equal to the amounts paid to the association by the member insurer less any amounts returned to the member insurer by the association and such rates shall not be deemed excessive because they contain an amount reasonably calculated to recoup assessments paid by the member insurer.
History: L. 1970, ch. 185, § 14; March 27.
There shall be no liability on the part of and no cause of action of any nature shall arise against any member insurer, the association or its agents or employees, the board of directors, or the commissioner or his representatives for any action taken by them in the performance of their powers and duties under this act.
History: L. 1970, ch. 185, § 15; March 27.
All proceedings in which the insolvent insurer is a party in any court in this state shall be stayed for sixty (60) days from the date the insolvency is determined to permit proper defense by the association of all pending causes of action. As to any covered claims arising from a judgment under any decision, verdict or finding based on the default of the insolvent insurer or its failure to defend an insured, the association either on its own behalf or on behalf of such insured may apply to have such judgment, order, decision, verdict or finding set aside by the same court or administrator that made such judgment, order, decision, verdict or finding and shall be permitted to defend against such claim on the merits.
History: L. 1970, ch. 185, § 16; March 27.
(a) The commissioner shall by order terminate the operation of the Kansas insurance guaranty association as to any kind of insurance covered by this act with respect to which he has found, after hearing, that there is in effect a statutory or voluntary plan which: (1) Is a permanent plan which is adequately funded or for which adequate funding is provided; and
(2) extends, or will extend to the Kansas policyholders and residents protection and benefits with respect to insolvent insurers not substantially less favorable and effective to such policyholders and residents than the protection and benefits provided with respect to such kinds of insurance under this act.
(b) The commissioner shall by the same such order authorize discontinuance of future payments by insurers to the Kansas insurance guaranty association with respect to the same kinds of insurance: Provided, The assessments and payments shall continue, as necessary, to liquidate covered claims of insurers adjudged insolvent prior to said order and the related expenses not covered by such other plan.
(c) In the event the operation of the Kansas insurance guaranty association shall be so terminated as to all kinds of insurance otherwise within its scope, the association as soon as possible thereafter shall distribute the balance of moneys and assets remaining, after discharge of the functions of the association with respect to prior insurer insolvencies not covered by such other plan, together with related expenses, to the insurers which are then writing in this state policies of the kinds of insurance covered by this act and which had made payments to the association, pro rate upon the basis of the aggregate of such payments made by the respective insurers during the period of five (5) years next preceding the date of such order. Upon completion of such distribution with respect to all of the kinds of insurance covered by this act, this act shall be deemed to have expired.
History: L. 1970, ch. 185, § 17; March 27.
The commissioner may adopt reasonable regulations to carry out the provisions and purposes of this act.
History: L. 1970, ch. 185, § 18; March 27.
This act shall be known and may be cited as the Kansas insurance guaranty association act.
History: L. 1970, ch. 185, § 19; March 27.
This act shall be known and may be cited as the Kansas life and health insurance guaranty association act.
History: L. 1972, ch. 190, § 1; July 1.
(a) The purpose of this act is to protect, subject to certain limitations, the persons specified in K.S.A. 40-3003, and amendments thereto, against failure in the performance of contractual obligations, under life, health and annuity policies, plans and contracts specified in K.S.A. 40-3003, and amendments thereto, because of the impairment or insolvency of the member insurer that issued the policies or contracts.
(b) To provide this protection, an association of member insurers is created to pay benefits and to continue coverages as limited herein, and members of the association are subject to assessment to provide funds to carry out the purpose of this act.
History: L. 1972, ch. 190, § 2; L. 1984, ch. 161, § 3; L. 1986, ch. 180, § 1; L. 2024, ch. 74, § 6; July 1.
(a) This act shall provide coverage for the policies, plans and contracts specified in subsection (b), for:
(1) Persons who, regardless of where they reside, except for nonresident certificate holders under group policies or contracts, are the beneficiaries, assignees, payees or providers of the persons covered under paragraph (2); and
(2) persons who are policyholders or contract holders of or certificate holders or enrollees under such policies or contracts other than structured settlement annunities, and who are:
(A) Residents;
(B) not residents, but only with respect to an annuity contract awarded pursuant to K.S.A. 60-3407 or 60-3409, and amendments thereto, an annuity contract for future economic loss procured pursuant to a settlement agreement in a medical malpractice liability action, as defined by K.S.A. 60-3401, and amendments thereto, or fixed-return accounts of the Kansas public employees deferred compensation plan under K.S.A. 74-49b08 through 74-49b14, and amendments thereto; or
(C) not residents, but only under all of the following conditions:
(i) The member insurers that issued such policies or contracts are domiciled in this state;
(ii) the states in which such persons reside have one or more associations similar to the association created by this act; and
(iii) the persons are not eligible for coverage by an association in any other state due to the fact that the insurer or health maintenance organization was not licensed in the state at the time specified in the state's guaranty association law.
(3) (A) Paragraphs (1) and (2) shall not apply to structured settlement annuities.
(B) Except as provided in paragraphs (4) and (5), this act shall provide coverage to a person who is a payee under a structured settlement annuity, or beneficiary of a payee if the payee is deceased, if the payee:
(i) (a) Is a resident, regardless of where the contract holder resides; or
(b) is not a resident, but only under both of the following conditions:
(1) The contract holder of the structured settlement annuity is a resident; or
(2) the contract holder of the structured settlement annuity is not a resident, but:
(A) The insurer that issued the structured settlement annuity is domiciled in this state; and
(B) the state in which the contract holder resides has an association similar to the association created by this act; and
(ii) neither the payee or beneficiary nor the contract holder is eligible for coverage by the association of the state in which the payee or contract holder resides.
(4) This act shall not provide coverage to a person who:
(A) Is a payee or beneficiary of a contract holder resident of this state, if the payee or beneficiary is afforded any coverage by the association of another state; or
(B) acquires rights to receive payments though a structured settlement factoring transaction as defined in 26 U.S.C. § 5891(c)(3)(A), regardless of whether the transaction occurred before or after such section became effective.
(5) This act is intended to provide coverage to a person who is a resident of this state and, in special circumstances, to a nonresident. In order to avoid duplicate coverage, if a person who would otherwise receive coverage under this act is provided coverage under the laws of any other state, the person shall not be provided coverage under this act. In determining the application of the provisions of this paragraph in situations where a person could be covered by the association of more than one state, whether as a policyholder, contract holder, payee, enrollee, beneficiary or assignee, this act shall be construed in conjunction with other state laws to result in coverage by only one association.
(b) (1) This act shall provide coverage to the persons specified in subsection (a) for policies or contracts of direct, nongroup life insurance, health insurance or annuities and supplemental contracts or unallocated annuity contracts covering individuals participating in a governmental deferred compensation plan established under section 457 of the U.S. internal revenue code pursuant to K.S.A. 74-49b08 through 74-49b14, and amendments thereto, whether or not a resident, or the beneficiaries of each such individual if deceased, and for certificates under direct group policies and contracts issued by member insurers, except as limited by this act.
(2) As used in this act, health insurer includes health maintenance organization subscriber contracts and certificates.
History: L. 1972, ch. 190, § 3; L. 1984, ch. 161, § 4; L. 1986, ch. 229, § 23; L. 1986, ch. 180, § 2; L. 1986, ch. 181, § 1; L. 1998, ch. 19, § 1; L. 2001, ch. 21, § 1; L. 2011, ch. 17, § 1; L. 2024, ch. 74, § 7; July 1.
History: L. 1972, ch. 190, § 4; Repealed, L. 2024, ch. 74, § 20; July 1.
As used in this act:
(a) "Account" means any of the three accounts created under K.S.A. 40-3006, and amendments thereto;
(b) "association" means the Kansas life and health insurance guaranty association created under K.S.A. 40-3006, and amendments thereto;
(c) "commissioner" means the commissioner of insurance of this state;
(d) "contractual obligation" means any obligation of a policy or contract or certificate under a group policy or contract, or portion thereof, for which coverage is provided under K.S.A. 40-3003, and amendments thereto;
(e) "covered contract" or "covered policy" means any policy or contract for which coverage is provided under K.S.A. 40-3003, and amendments thereto;
(f) "extra-contractual claims" shall include, for example, claims relating to bad faith in the payment of claims, punitive or exemplary damages or attorney fees and costs;
(g) "health benefit plan" means any hospital or medical expense policy or certificate, or health maintenance organization subscriber contract or any other similar health contract. "Health benefit plan" does not include:
(1) Accident only insurance;
(2) credit insurance;
(3) dental only insurance;
(4) vision only insurance;
(5) medicare supplement insurance;
(6) benefits for long-term care, home healthcare, community-based care or any combination thereof;
(7) disability income insurance;
(8) coverage for on-site medical clinics; and
(9) specified disease, hospital confinement indemnity or limited benefit health insurance if the types of coverage do not provide coordination of benefits and are provided under separate policies or certificates;
(h) "impaired insurer" means a member insurer that, after the effective date of this act, is not an insolvent insurer and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction;
(i) "insolvent insurer" means a member insurer that, after the effective date of this act, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency;
(j) "member insurer" means any insurer or health maintenance organization licensed or holding a certificate of authority to transact in this state any kind of insurance or health maintenance organization business for which coverage is provided under K.S.A. 40-3003, and amendments thereto, and includes any insurer or health maintenance organization whose license or certificate of authority in this state may have been suspended, revoked, nonrenewed or voluntarily withdrawn, but does not include:
(1) A hospital or medical service organization regardless of whether such hospital or medical service organization is organized for profit or not-for-profit;
(2) a fraternal benefit society;
(3) a mandatory state pooling plan;
(4) a mutual assessment company or any entity that operates on an assessment basis;
(5) an insurance exchange, except a reciprocal or interinsurance exchange governed by the provisions of article 16 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto;
(6) an organization that has a certificate or license limited to the issuance of charitable gift annuities; or
(7) any entity similar to any of the organizations listed in paragraphs (1) through (6);
(k) "Moody's corporate bond yield average" means the monthly average corporates as published by Moody's investors service, inc., or any successor thereto;
(l) "person" means any individual, corporation, partnership, association, voluntary organization or provider;
(m) "policyholder" and "contract holder" means the person who is identified as the legal owner under the terms of the policy or contract or who is otherwise vested with legal title to the policy or contract through a valid assignment completed in accordance with the terms of the policy or contract and properly recorded as the owner on the books of the member insurer. The terms "policyholder" and "contract holder" do not include persons with a mere beneficial interest in a policy or contract;
(n) "provider" means a person who is entitled to receive compensation for providing medical services to an insured or enrollee covered under any health insurance or health maintenance organization contract, certificate or policy issued by a member insurer, regardless of whether the provider is obligated by statute or by agreement with the member insurer to hold any insured or enrollee covered by any health insurance or health maintenance organization contract, certificate or policy harmless from liability for services;
(o) "premiums" means amounts received on covered policies or contracts less premiums, considerations and deposits returned thereon, and less dividends and experience credits thereon. Premiums does not include any amounts received for any policies or contracts or for the portions of any policies or contracts for which coverage is not provided under K.S.A. 40-3003, and amendments thereto, except that assessable premiums shall not be reduced on accounts for K.S.A. 40-3008, and amendments thereto, relating to interest limitations and K.S.A. 40-3008, and amendments thereto, relating to limitations with respect to any one life and any one policyholder or contract holder. Premiums shall not include:
(1) Any premiums on any unallocated annuity contract; or
(2) any premiums in excess of $5,000,000 with respect to multiple nongroup policies of life insurance owned by one policyholder or contract holder, regardless of the number of policies or contracts held by the policyholder or contract holder and regardless of whether:
(A) The policyholder is an individual, firm, corporation or other person; and
(B) the persons insured are officers, managers, employees or other persons;
(p) "resident" means any person who resides in this state at the time a member insurer is determined by court order to be an impaired or insolvent insurer and to whom a contractual obligation is owed. A person may be a resident of only one state, which, in the case of a person other than a natural person, shall be its principal place of business. Citizens of the United States that are either residents of foreign countries or residents of United States possessions, territories or protectorates that do not have an association similar to the association created by this act, shall be deemed residents of the state of domicile of the member insurer that issued the policies or contracts;
(q) "structured settlement annuity" means an annuity purchased in order to fund periodic payments for a plaintiff or other claimant in payment for or with respect to personal injury suffered by the plaintiff or other claimant, but excludes an annuity policy or contract awarded pursuant to K.S.A. 60-3407 or 60-3409, and amendments thereto;
(r) "supplemental contract" means any written agreement entered into for the distribution of proceeds under a life, health or annuity policy or contract; and
(s) "unallocated annuity contract" means any annuity contract or group annuity certificate that is not issued to and owned by an individual, except to the extent of any annuity benefits guaranteed to an individual by an insurer under such contract or certificate.
History: L. 1972, ch. 190, § 5; L. 1986, ch. 180, § 3; L. 2001, ch. 21, § 2; L. 2011, ch. 17, § 2; L. 2024, ch. 74, § 8; July 1.
(a) There is hereby created a nonprofit legal entity to be known as the Kansas life and health insurance guaranty association. All member insurers shall be and remain members of the association as a condition of their license or authority to transact insurance or health maintenance organization business in this state. The association shall perform its functions under the plan of operation established and approved under K.S.A. 40-3010, and amendments thereto, and shall exercise its powers through a board of directors established under K.S.A. 40-3007, and amendments thereto. For purposes of administration and assessment, the association shall maintain three accounts:
(1) Health account;
(2) life insurance account; and
(3) annuity account, excluding unallocated annuities.
(b) The association shall come under the immediate supervision of the commissioner and shall be subject to the applicable provisions of the insurance laws of this state. Meetings or records of the association may be opened upon majority vote of the board of directors of the association.
History: L. 1972, ch. 190, § 6; L. 1986, ch. 180, § 4; L. 2024, ch. 74, § 9; July 1.
(a) The board of directors of the association shall consist of not fewer than five nor more than nine member insurers serving terms as established in the plan of operation. The members of the board shall be selected by member insurers subject to the approval of the commissioner. Vacancies on the board shall be filled for the remaining periods of the terms by a majority vote of the remaining board members, subject to the approval of the commissioner.
(b) In approving selections or in appointing members to the board, the commissioner shall consider, among other things, whether all member insurers are fairly represented.
(c) Members of the board may be reimbursed from the assets of the association for expenses incurred by them as members of the board of directors but members of the board shall not otherwise be compensated by the association for their services.
(d) The terms of each member appointed and serving on the board of directors as of July 1, 2024, shall continue until the expiration of each member's current term. Upon expiration of each member's term, the commissioner shall decide whether to continue each member's position on the board or reduce the number of members of the board of directors in accordance with paragraph (e).
(e) On and after January 1, 2025, the board of directors shall consist of not fewer than five but not more than nine members appointed in accordance with this paragraph. Members of the board of directors shall be selected by member insurers subject to the approval of the commissioner. Each member of the board of directors shall be appointed for a term of three years, except that members shall be removable by the commissioner for inefficiency, neglect of duty or malfeasance.
History: L. 1972, ch. 190, § 7; L. 1986, ch. 180, § 5; L. 2024, ch. 74, § 10; July 1.
(a) If a member insurer is an impaired insurer, the association may, in its discretion and subject to any conditions imposed by the association that do not impair the contractual obligations of the impaired insurer and that are approved by the commissioner that:
(1) Guarantee, assume, reissue or reinsure, or cause to be guaranteed, assumed, reissued or reinsured, any or all of the policies or contracts of the impaired insurer; and
(2) provide such moneys, pledges, loans, notes, guarantees or other means as are proper to effectuate the provisions of paragraph (1) and assure payment of the contractual obligations of the impaired insurer pending action under paragraph (1).
(b) If a member insurer is an insolvent insurer, the association shall, in its discretion, either:
(1) (A) (i) Guarantee, assume, reissue or reinsure or cause to be guaranteed, assumed or reinsured, the policies or contracts of the insolvent insurer; or
(ii) assure payment of the contractual obligations of the insolvent insurer; and
(B) provide such moneys, pledges, loans, notes, guarantees or other means as are reasonably necessary to discharge such duties; or
(2) with respect to policies and contracts, provide benefits and coverages in accordance with subsection (c).
(c) When proceeding under subsection (b)(2), the association shall:
(1) Assure payment of benefits for premiums identical to the premiums and benefits that would have been payable under the policies or contracts of the insolvent insurer, for claims incurred:
(A) With respect to group policies and contracts, not later than the earlier of the next renewal date under such policies or contracts or 45 days, but in no event less than 30 days, after the date on which the association becomes obligated with respect to such policies and contracts;
(B) with respect to nongroup policies, contracts and annuities not later than the earlier of the next renewal date, if any, under such policies or contracts or one year, but in no event less than 30 days, from the date on which the association becomes obligated with respect to such policies or contracts;
(2) make diligent efforts to provide all known insureds, enrollees, annuitants or group policyholders or contract holders with respect to group policies and contracts, 30 days' notice of the termination of the benefits provided; and
(3) with respect to nongroup policies and contracts covered by the association, make available to each known insured, enrollee or annuitant, or owner if other than the insured or annuitant, and with respect to an individual formerly an insured, enrollee, or an annuitant under a group policy or contract who is not eligible for replacement group coverage, make available substitute coverage on an individual basis in accordance with the provisions of paragraph (4), if the insureds, enrollees or annuitants had a right under law or the terminated policy, contract or annuity to convert coverage to individual coverage or to continue an individual policy, contract or annuity in force until a specified age or for a specified time, during which the insurer or health maintenance organization had no right unilaterally to make changes in any provision of the policy, contract or annuity or had a right only to make changes in premium by class;
(4) (A) in providing the substitute coverage required under paragraph (3), the association may offer either to reissue the terminated coverage or to issue an alternative policy or contract at actuarially justified rates;
(B) alternative or reissued policies or contracts shall be offered without requiring evidence of insurability, and shall not provide for any waiting period or exclusion that would not have applied under the terminated policy or contract; and
(C) the association may reinsure any alternative or reissued policy or contract;
(5) (A) alternative policies or contracts adopted by the association shall be subject to the approval of the commissioner. The association may adopt alternative policies or contracts of various types for future issuance without regard to any particular impairment or insolvency;
(B) alternative policies or contracts shall contain at least the minimum statutory provisions required in this state and provide benefits that shall not be unreasonable in relation to the premiums charged. The association shall set the premiums in accordance with a table of rates that it shall adopt. The premiums shall reflect the amount of insurance or coverage to be provided and the age and class of risk of each insured or enrollee but shall not reflect any changes in the health of the insured or enrollee after the original policy or contract was last underwritten;
(C) any alternative policy or contract issued by the association shall provide coverage of a type similar to that of the policy or contract issued by the impaired or insolvent insurer, as determined by the association;
(6) if the association elects to reissue the insured's terminated coverage at a premium rate different from that charged under the terminated policy or contract, the premium shall be actuarially justified and set by the association in accordance with the amount of insurance or coverage provided and the age and class of risk, subject to prior approval of the commissioner.
(d) The association's obligations with respect to coverage under any policy or contract of the impaired or insolvent insurer or under any reissued or alternative policy or contract shall cease on the date such coverage or policy or contract is replaced by another similar policy or contract by the policyholder or contract holder, the insured, the enrollee or the association.
(e) When proceeding under subsection (b)(2) with respect to any policy or contract carrying guaranteed minimum interest rates, the association shall assure the payment or crediting of a rate of interest consistent with subsection (o)(3).
(f) Nonpayment of premiums within 31 days after the date required under the terms of any guaranteed, assumed, alternative or reissued policy or contract or substitute coverage shall terminate the association's obligations under such policy, contract or coverage under this act with respect to such policy, contract or coverage, except with respect to any claims incurred or any net cash surrender value that may be due in accordance with the provisions of this act.
(g) Premiums due after entry of an order of liquidation of an insolvent insurer shall belong to and be payable at the direction of the association, and the association shall be liable for unearned premiums due to policyholders or contract holders arising after the entry of such order.
(h) The protection provided by this act shall not apply where any guaranty protection is provided to residents of this state by the laws of the domiciliary state or jurisdiction of the impaired or insolvent insurer other than this state.
(i) In carrying out its duties under subsection (b), the association may, subject to approval by a court in this state:
(1) Impose permanent policy or contract liens in connection with any guarantee, assumption or reinsurance agreement, if the association finds that the amounts that can be assessed under this act are less than the amounts needed to assure full and prompt performance of the association's duties under this act, or that the economic or financial conditions as they affect member insurers are sufficiently adverse to render the imposition of such permanent policy or contract liens to be in the public interest; and
(2) impose temporary moratoriums or liens on payments of cash values and policy loans, or any other right to withdraw funds held in conjunction with policies or contracts, in addition to any contractual provisions for deferral of cash or policy loan value. In addition, in the event of a temporary moratorium or moratorium charge imposed by the receivership court on payment of cash values or policy loans or on any other right to withdraw funds held in conjunction with policies or contracts, out of the assets of the impaired or insolvent insurer, the association may defer the payment of cash values, policy loans or other rights by the association for the period of the moratorium or moratorium charge imposed by the receivership court, except for claims covered by the association to be paid in accordance with a hardship procedure established by the liquidator or rehabilitator and approved by the receivership court.
(j) A deposit in this state, held pursuant to law or required by the commissioner for the benefit of creditors, including policyholders or contract holders, not turned over to the domiciliary liquidator upon the entry of a final order of liquidation or order approving a rehabilitation plan of a member insurer domiciled in this state or in a reciprocal state, pursuant to K.S.A. 40-222b, and amendments thereto, shall be promptly paid to the association. The association shall be entitled to retain a portion of any amount so paid equal to the percentage determined by dividing the aggregate amount of policyholders' or contract holders' claims related to that insolvency for which the association has provided statutory benefits by the aggregate amount of all policyholders' or contract holders' claims in this state related to that insolvency and shall remit to the domiciliary receiver the amount so paid to the association less the amount retained pursuant to this subsection. Any amount so paid to the association and retained by such association shall be treated as a distribution of estate assets pursuant to applicable state receivership law dealing with early access disbursements.
(k) If the association fails to act within a reasonable period of time as provided in subsections (b) and (c), the commissioner shall have the powers and duties of the association under this act with respect to impaired or insolvent insurers.
(l) The association may render assistance and advice to the commissioner, upon request, concerning rehabilitation, payment of claims, continuance of coverage or the performance of other contractual obligations of any impaired or insolvent insurer.
(m) (1) The association shall have standing to appear or intervene before any court in this state with jurisdiction over:
(A) An impaired or insolvent insurer concerning that which the association is or may become obligated under this act; or
(B) any person or property against which the association may have rights through subrogation or otherwise.
(2) Such standing shall extend to all matters germane to the powers and duties of the association, including, but not limited to, proposals for reinsuring, reissuing or guaranteeing the covered policies of the impaired or insolvent insurer and the determination of the covered policies or contracts and contractual obligations.
(3) The association shall also have the right to appear or intervene before a court in another state with jurisdiction over an impaired or insolvent insurer for which the association is or may become obligated or with jurisdiction over any person or property against whom the association may have rights through subrogation or otherwise.
(n) (1) Any person receiving benefits under this act shall be deemed to have assigned the rights under, and any cause of action relating to, the covered policy or contract to the association to the extent of the benefits received because of this act, whether the benefits are payments of or on account of contractual obligations, continuation of coverage or provision of substitute or alternative policies, contracts or coverages. The association may require an assignment to it of such rights and cause of action by any enrollee, payee, policyholder, contract holder, beneficiary, insured or annuitant as a condition precedent to the receipt of any right or benefits conferred by this act upon such person.
(2) The subrogation rights of the association under this subsection shall have the same priority against the assets of the impaired or insolvent insurer as that possessed by the person entitled to receive benefits under this act.
(3) In addition to paragraphs (1) and (2), the association shall have all common-law rights of subrogation and any other equitable or legal remedy that would have been available to the impaired or insolvent insurer or policyholder or contract holder, beneficiary, enrollee or payee of a policy or contract with respect to such policy or contracts, including, without limitation, in the case of a structured settlement annuity, any rights of the owner, beneficiary or payee of the annuity, to the extent of benefits received pursuant to this act, against a person originally or by succession responsible for the losses arising from the personal injury relating to the annuity or payment therefor, excepting any such person responsible solely by reason of serving as an assignee regarding a qualified assignment pursuant to 26 U.S.C. § 130.
(4) If the preceding provisions of this subsection are invalid or ineffective with respect to any person or claim for any reason, the amount payable by the association with respect to the related covered obligations shall be reduced by the amount realized by any other person with respect to the person or claim that is attributable to the policies or contracts, or portion thereof, covered by the association.
(5) If the association has provided benefits with respect to a covered obligation and a person recovers amounts as to which the association has rights as described in the preceding paragraphs of this subsection, then the person shall pay to the association the portion of the recovery attributable to the policies or contracts, or portion thereof, covered by the association.
(o) Except for subsection (p), the association shall not provide coverage for:
(1) Any portion of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the policyholder or contract holder;
(2) any policy or contract of reinsurance, unless assumption certificates have been issued;
(3) any portion of a policy or contract to the extent that the rate of interest on which it is based, or the interest rate, crediting rate or similar factor determined by use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value:
(A) Averaged over the period of four years prior to the date on which the association becomes obligated with respect to such policy or contract, exceeds a rate of interest determined by subtracting two percentage points from Moody's corporate bond yield average averaged for that same four-year period or for such lesser period if the policy or contract was issued less than four years before the association became obligated; and
(B) on and after the date on which the association becomes obligated with respect to such policy or contract, exceeds the rate of interest determined by subtracting three percentage points from Moody's corporate bond yield average as most recently available;
(4) any plan or program of an employer, association or similar entity to provide life, health or annuity benefits to its employees or members to the extent that such plan or program is self-funded or uninsured, including, but not limited to, benefits payable by an employer, association or similar entity under:
(A) A multiple employer welfare arrangement as defined in 29 U.S.C. § 1144;
(B) a minimum premium group insurance plan;
(C) a stop-loss group insurance plan; or
(D) an administrative services only contract;
(5) any portion of a policy or contract to the extent that it provides dividends or experience rating credits, voting rights or provides that any fees or allowances be paid to any person, including the policyholder or contract holder, in connection with the service to or administration of such policy or contract;
(6) any policy or contract issued in this state by a member insurer at a time when it was not licensed or did not have a certificate of authority to issue such policy or contract in this state;
(7) any unallocated annuity contract, except as provided in K.S.A. 40-3003, and amendments thereto;
(8) a portion of a policy or contract to the extent that the assessments required by K.S.A. 40-3009, and amendments thereto, with respect to the policy or contract are preempted by federal or state law;
(9) an obligation that does not arise under the express written terms of the policy or contract issued by the member insurer to the enrollee, certificate holder, contract holder or policyholder, including, without limitation:
(A) Claims based on marketing materials;
(B) claims based on side letters, riders or other documents that were issued by the member insurer without meeting applicable policy or contract form filling or approval requirements;
(C) misrepresentations of or regarding policy or contract benefits;
(D) extra contractual claims; or
(E) a claim for penalties or consequential or incidental damages;
(10) a contractual agreement that establishes the member insurer's obligations to provide a book value accounting guaranty for defined contribution benefit plan participants by reference to a portfolio of assets that is owned by the benefit plan or its trustee, and, in each case, is not an affiliate of the member insurer;
(11) a policy or contract providing any hospital, medical, prescription drug or other healthcare benefits pursuant to part C or part D of subchapter XVIII, chapter 7 of title 42 of the United States code, commonly known as medicare part C and D, or subchapter xix, chapter 7 of title 42 of the United States code, commonly known as medicaid, or any regulations issued pursuant thereto;
(12) (A) any portion of a policy or contract:
(i) To the extent it provides for interest or other changes in value to be determined by the use of an index or other external reference stated in the policy or contract but which have not been credited to the policy or contract; or
(ii) as to which the policyholder or contract holder's rights are subject to forfeiture, as of the date the member insurer becomes an impaired or insolvent insurer under this act, whichever is earlier.
(B) If a policy's or contract's interest or changes in value are credited less frequently than annually, then for purposes of determining the values that have been credited and are not subject to forfeiture under this paragraph, the interest or change in value determined by using the procedures defined in the policy or contract shall be credited as if the contractual date of crediting interest or changing values was the date of impairment or insolvency, whichever is earlier, and shall not be subject to forfeiture; or
(13) structured settlement annuity benefits to which a payee or beneficiary has transferred such payee's or beneficiary's rights in a structured settlement factoring transaction, as defined in 26 U.S.C. § 5891(c)(3)(A), regardless of whether the transaction occurred before or after such section became effective.
(p) The exclusion from coverage reference in subsection (o)(3) shall not apply to any portion of a policy or contract, including a rider, that provides long-term care or any other health insurance benefits.
(q) The benefits for which the association may become liable shall in no event exceed the lesser of:
(1) The contractual obligations for which the member insurer is liable or would have been liable if it were not an impaired or insolvent insurer; or
(2) with respect to any one life, regardless of the number of policies or contracts: (A) $300,000 in life insurance death benefits, but not more than $100,000 in net cash surrender and net cash withdrawal values for life insurance;
(B) for health insurance benefits:
(i) $100,000 for coverages not defined as disability income insurance or health benefit plans or long-term care insurance including any net cash surrender and net cash withdrawal values;
(ii) $300,000 for disability income insurance and $300,000 for long-term care insurance;
(iii) $500,000 for health benefit plans;
(C) $250,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values;
(D) with respect to each payee of a structured settlement annuity or beneficiary or beneficiaries of the payee if deceased, $250,000 in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values;
(E) however, in no event shall the association be obligated to cover more than:
(i) An aggregate of $300,000 in benefits with respect to any one life as provided in subparagraphs (A), (B), (C) and (D) except with respect to benefits for health benefit plans under subsection (q)(2)(B)(iii), in which case the aggregate liability of the association shall not exceed $500,000 with respect to any one individual; or
(ii) with respect to one holder of multiple nongroup policies or contracts of life insurance, whether the policyholder or contract holder is an individual, firm, corporation or other person and whether the persons insured are officers, managers, employees or other persons, more than $5,000,000 in benefits, regardless of the number of policies and contracts held by the policyholder or contract holder;
(F) the limitations set forth in this paragraph are limitations on the benefits for which the association is obligated before taking into account either its subrogation and assignment rights or the extent to which those benefits could be provided out of the assets of the impaired or insolvent insurer attributable to covered policies. The costs of the association's obligations under this act may be met by the use of assets attributable to covered policies or reimbursed to the association pursuant to its subrogation and assignment rights;
(G) the guaranty association's limits of liability with respect to the obligations of any impaired or insolvent insurer shall be the limits of liability in effect under this act on the date the guaranty association became liable for that impaired or insolvent insurer;
(H) for purposes of this act, benefits provided by a long-term care rider to a life insurance policy or annuity contract shall be considered the same type of benefits as the base life insurance policy or annuity contract to which it relates;
(I) in performing its obligations to provide coverage under this section, the association shall not be required to guarantee, assume, reinsure, reissue or perform, or cause to be guaranteed, assumed, reinsured, reissued or performed, the contractual obligations of the insolvent or impaired insurer under a covered policy or contract that do not materially affect the economic values or economic benefits of the covered policy or contract.
The provisions of subsection (q) shall not apply to annuity contracts for future economic loss procured pursuant to a judgment or settlement agreement in a medical malpractice liability action.
(r) The association may:
(1) Enter into such contracts as are necessary or proper to carry out the provisions and purposes of this act;
(2) sue or be sued, including taking any legal actions necessary or proper to recover any unpaid assessments under K.S.A. 40-3009, and amendments thereto, and to settle claims or potential claims against it;
(3) borrow money to effect the purposes of this act. Any notes or other evidence of indebtedness of the association not in default shall be legal investments for domestic insurers and may be carried as admitted assets;
(4) employ or retain such persons as are necessary to handle the financial transactions of the association, and to perform such other functions as become necessary or proper under this act;
(5) take such legal action as may be necessary to avoid or recover payment of improper claims; or
(6) exercise, for the purposes of this act and to the extent approved by the commissioner, the powers of a domestic life insurer, health insurer or health maintenance organization, but in no case may the association issue policies or contracts other than those issued to perform its obligations under this act;
(7) organize itself as a corporation or in other legal form permitted by the laws of the state;
(8) request information from a person seeking coverage from the association in order to aid the association in determining its obligations under this act with respect to the person, and such person shall promptly comply with the request;
(9) in accordance with the terms and conditions of the policy or contract, file for actuarially justified rate or premium increases for any policy or contract for which it provides coverage under this act; and
(10) take other necessary or appropriate action to discharge its duties and obligations under this act or to exercise its powers under this act.
(s) The association may join an organization of one or more other state associations of similar purposes to further the purposes and administer the powers and duties of the association.
(t) (1) (A) At any time within 180 days of the date of the order of liquidation, the association may elect to succeed to the rights and obligations of the ceding member insurer that relate to policies, contracts or annuities covered, in whole or in part, by the association, in each case under any one or more reinsurance contracts entered into by the insolvent insurer and its reinsurers and selected by the association. Any such assumption shall be effective as of the date of the order of liquidation. The election shall be effected by the association or the national organization of life and health insurance guaranty associations (NOLHGA), on its behalf, sending written notice with return receipt requested to the affected reinsurers.
(B) To facilitate the earliest practicable decision about whether to assume any of the contracts of reinsurance, and in order to protect the financial position of the estate, the receiver and each reinsurer of the ceding member insurer shall make available upon request to the association or to NOLHGA on its behalf as soon as possible after commencement of formal delinquency proceedings:
(i) Copies of in-force contracts of reinsurance and all related files and records relevant to the determination of whether such contracts should be assumed; and
(ii) notices of any defaults under the reinsurance contacts or any known event or condition that with the passage of time could become a default under the reinsurance contracts.
(C) The following subparagraphs shall apply to reinsurance contracts so assumed by the association:
(i) The association shall be responsible for all unpaid premiums due under the reinsurance contracts for periods both before and after the date of the order of liquidation and shall be responsible for the performance of all other obligations to be performed after the date of the order of liquidation, in each case relating to policies, contracts or annuities covered, in whole or in part, by the association. The association may charge policies, contracts or annuities covered in part by the association, through reasonable allocation methods, the costs for reinsurance in excess of the obligations of the association and shall provide notice and an accounting of these charges to the liquidator;
(ii) the association shall be entitled to any amounts payable by the reinsurer under the reinsurance contracts with respect to losses or events that occur in periods after the date of the order of liquidation and that relate to policies, contracts or annuities covered, in whole or in part, by the association, provided that, upon receipt of any such amounts, the association shall be obliged to pay to the beneficiary under the policy, contract or annuity on account of which the amounts were paid a portion of the amount equal to the lesser of:
(a) The amount received by the association; and
(b) the excess of the amount received by the association over the amount equal to the benefits paid by the association on account of the policy, contract or annuity less the retention of the insurer applicable to the loss or event.
(iii) Within 30 days following the association's election, the "election date," the association and each reinsurer under contracts assumed by the association shall calculate the net balance due to or from the association under each reinsurance contract as of the election date with respect to policies, contracts or annuities covered, in whole or in part, by the association. Such calculation shall give full credit to all items paid by either the member insurer or its receiver or the reinsurer prior to the election date. The reinsurer shall pay the receiver any amounts due for losses or events prior to the date of the order of liquidation, subject to any set-off for premiums unpaid for periods prior to the date, and the association or reinsurer shall pay any remaining balance due the other, in each case within five days of the completion of the aforementioned calculation. Any disputes over the amounts due to either the association or the reinsurer shall be resolved by arbitration pursuant to the terms of the affected reinsurance contracts or, if the contract contains no arbitration clause, as otherwise provided by law. If the receiver has received any amounts due the association pursuant to subparagraph (C)(ii), the receiver shall remit such amounts to the association as promptly as practicable.
(iv) If the association or receiver, on the association's behalf, within 60 days of the election date, pays the unpaid premiums due for periods both before and after the election date that relate to policies, contracts or annuities covered, in whole or in part, by the association, the reinsurer shall not be entitled to terminate the reinsurance contracts for failure to pay premiums insofar as the reinsurance contracts relate to policies, contracts or annuities covered, in whole or in part, by the association, and shall not be entitled to set off any unpaid amounts due under other contracts or unpaid amounts due from parties other than the association against amounts due the association.
(2) During the period from the date of the order of liquidation until the election date, or, if the election date does not occur, until 180 days after the date of the order of liquidation:
(A) (i) Neither the association nor the reinsurer shall have any rights or obligations under reinsurance contracts that the association has the right to assume under paragraph (1), whether for periods prior to or after the date of the order of liquidation; and
(ii) the reinsurer, the receiver and the association shall, to the extent practicable, provide each other data and records reasonably requested;
(B) provided that once the association has elected to assume a reinsurance contract, the parties' rights and obligations shall be governed by paragraph (1).
(3) If the association does not elect to assume a reinsurance contract by the election date pursuant to paragraph (1), the association shall have no rights or obligations, in each case for periods both before and after the date of the order of liquidation, with respect to the reinsurance contract.
(4) When policies, contracts or annuities, or covered obligations with respect thereto are transferred to an assuming insurer, reinsurance on the policies, contracts or annuities may also be transferred by the association, in the case of contracts assumed under subsection (t)(1), subject to the following:
(A) Unless the reinsurer and the assuming insurer agree otherwise, the reinsurance contract transferred shall not cover any new policies of insurance, contracts or annuities in addition to those transferred;
(B) the obligations described in subsection (t)(1) shall no longer apply with respect to matters arising after the effective date of the transfer; and
(C) notice shall be given in writing, with return receipt requested, by the transferring party to the affected reinsurer not less than 30 days prior to the effective date of the transfer.
(5) The provisions of this subsection shall supersede the provisions of any state law or any affected reinsurance contract that provides for or requires any payment of reinsurance proceeds, on account of losses or events that occur in periods after the date of the order of liquidation, to the receiver of the insolvent insurer or any other person. The receiver shall remain entitled to any amounts payable by the reinsurer under the reinsurance contracts with respect to losses or events that occur in periods prior to the date of the order of liquidation, subject to applicable setoff provisions.
(6) Except as otherwise provided in this subsection, nothing in this subsection shall alter or modify the terms and conditions of any reinsurance contract. Nothing in this section shall abrogate or limit any rights of any reinsurer to claim that such reinsurer is entitled to rescind a reinsurance contract. Nothing in this section shall give a policyholder, contract owner, enrollee, certificate holder or beneficiary an independent cause of action against a reinsurer that is not otherwise set forth in the reinsurance contract. Nothing in this section shall limit or affect the association's rights as a creditor of the estate against the assets of the estate. Nothing in this section shall apply to reinsurance agreements covering property or casualty risks.
(u) The board of directors of the association shall have discretion and may exercise reasonable business judgment to determine the means by which the association is to provide the benefits of this act in an economical and efficient manner.
(v) Where the association has arranged or offered to provide the benefits of this act to a covered person under a plan or arrangement that fulfills the association's obligations under this act, the person shall not be entitled to benefits from the association in addition to or other than those provided under the plan or arrangement.
(w) Venue in a suit against the association arising under this act shall be in Shawnee County. The association shall not be required to give an appeal bond in an appeal that relates to a cause of action arising under this act.
(x) In carrying out its duties in connection with guaranteeing, assuming, reissuing or reinsuring policies or contracts under subsections (a) or (b), the association may issue substitute coverage for a policy or contract that provides an interest rate, crediting rate or similar factor determined by use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value by issuing an alternative policy or contract in accordance with the following provisions:
(1) In lieu of the index or other external reference provided for in the original policy or contract, the alternative policy or contract provides for:
(A) A fixed interest rate;
(B) payment of dividends with minimum guarantees; or
(C) a different method for calculating interest or changes in value.
(2) There is no requirement for evidence of insurability, waiting period or other exclusion that would not have applied under the replaced policy or contract; and
(3) the alternative policy or contract is substantially similar to the replaced policy or contract in all other material terms.
History: L. 1972, ch. 190, § 8; L. 1986, ch. 180, § 6; L. 1993, ch. 130, § 1; L. 1998, ch. 19, § 2; L. 2001, ch. 21, § 3; L. 2009, ch. 83, § 26; L. 2011, ch. 17, § 3; L. 2024, ch. 74, § 11; July 1.
(a) For the purpose of providing the funds necessary to carry out the powers and duties of the association, the board of directors shall assess the member insurers, separately for each account, at such time and for such amounts as the board finds necessary. Assessments shall be due not less than 30 days after prior written notice to the member insurers and shall accrue interest at 15% per annum on and after the due date.
(b) There shall be two classes of assessments, as follows: (1) Class A assessments shall be made for the purpose of meeting administrative and legal costs and other expenses and examinations conducted under the authority of subsection (e) of K.S.A. 40-3012, and amendments thereto. Class A assessments may be made whether or not related to a particular impaired or insolvent insurer.
(2) Class B assessments shall be made to the extent necessary to carry out the powers and duties of the association under K.S.A. 40-3008, and amendments thereto, with regard to an impaired or an insolvent insurer.
(c) (1) The amount of any class A assessment shall be determined by the board and may be made on a pro rata or non-pro rata basis. If pro rata, the board may provide that it be credited against future class B assessments. The amount of any class B assessment, except for assessments related to long-term care insurance, shall be allocated for assessment purposes among the accounts pursuant to an allocation formula that may be based on the premiums or reserves of the impaired or insolvent insurer or any other standard deemed by the board in its sole discretion as being fair and reasonable under the circumstances.
(2) The amount of the class B assessment for long-term care insurance written by the impaired or insolvent insurer shall be allocated according to a methodology included in the plan of operation and approved by the commissioner. The methodology shall provide for 50% of the assessment to be allocated to accident and health member insurers and 50% to be allocated to life and annuity member insurers.
(3) Class B assessments against member insurers for each account shall be in the proportion that the premiums received on business in this state by each assessed member insurer on policies or contracts covered by each account for the three most recent calendar years for which information is available preceding the year in which the member insurer became impaired or insolvent, as the case may be, bears to such premiums received on business in this state for such calendar years by all assessed member insurers.
(4) Assessments for funds to meet the requirements of the association with respect to an impaired or insolvent insurer shall not be made until necessary to implement the purposes of this act. Classification of assessments under subsection (b) and computation of assessments under this subsection shall be made with a reasonable degree of accuracy, recognizing that exact determinations may not always be possible.
(d) The association may abate or defer, in whole or in part, the assessment of a member insurer if, in the opinion of the board, payment of the assessment would endanger the ability of the member insurer to fulfill its contractual obligations. In the event an assessment against a member insurer is abated, or deferred in whole or in part, the amount by which such assessment is abated or deferred may be assessed against the other member insurers in a manner consistent with the basis for assessments set forth in this section. Once the conditions that caused a deferral have been removed or rectified, the member insurer shall pay all assessments that were deferred pursuant to a repayment plan approved by the association.
(e) (1) The total of all assessments upon a member insurer for each account shall not in any one calendar year exceed 2% of such member insurer's average premiums received in this state on the policies and contracts covered by the account during the three calendar years preceding the years in which the member insurer became an impaired or insolvent insurer.
(2) If two or more assessments are authorized in one calendar year with respect to member insurers that become impaired or insolvent in different calendar years, the average annual premiums for purposes of the aggregate assessment percentage limitation referenced in this subsection shall be equal and limited to the higher of the three-year average annual premiums for the applicable account as calculated pursuant to this section.
(3) If the maximum assessment, together with the other assets of the association in any account does not provide in any one year in either account an amount sufficient to carry out the responsibilities of the association, the necessary additional funds shall be assessed as soon thereafter as permitted by this act.
(4) The board may provide in the plan of operation a method of allocating funds among claims, whether relating to one or more impaired or insolvent insurers, when the maximum assessment will be insufficient to cover anticipated claims.
(f) The board, by an equitable method as established in the plan of operation, may refund to member insurers, in proportion to the contribution of each insurer to that account, the amount by which the assets of the account exceed the amount the board finds is necessary to carry out during the coming year the obligations of the association with regard to that account, including assets accruing from assignment, subrogation, net realized gains and income from investments. A reasonable amount may be retained in any account to provide funds for the continuing expenses of the association and for future losses.
(g) It shall be proper for any member insurer, in determining its premium rates and policyholder or contract holder dividends as to any kind of insurance or health maintenance organization business within the scope of this act, to consider the amount reasonably necessary to meet its assessment obligations under this act.
(h) The association shall issue to each member insurer paying an assessment under this act, other than a class A assessment, a certificate of contribution, in a form prescribed by the commissioner, for the amount of the assessment paid. All outstanding certificates shall be of equal dignity and priority without reference to amounts or dates of issue. A certificate of contribution may be shown by the member insurer in its financial statement as an asset in such form and for such amount, if any, and period of time as the commissioner may approve.
(i) (1) A member insurer that wishes to protest all or part of an assessment shall pay, when due, the full amount of the assessment as set forth in the notice provided by the association. The payment shall be available to meet association obligations during the pendency of the protest or any subsequent appeal. Payment shall be accompanied by a written statement that the payment is made under protest and shall set forth a brief statement of the grounds for the protest.
(2) Within 60 days following the payment of an assessment under protest by a member insurer, the association shall notify the member insurer, in writing, of its determination with respect to the protest unless the association notifies the member insurer that additional time is required to resolve the issues raised by the protest.
(3) Within 30 days after a final decision has been made, the association shall notify the protesting member insurer in writing of that final decision. Within 60 days of receipt of notice of the final decision, the protesting member insurer may appeal that final action to the commissioner.
(4) As an alternative to rendering a final decision with respect to a protest based on a question regarding the assessment base, the association may refer protests to the commissioner for a final decision, with or without a recommendation from the association.
(5) If the protest or appeal on the assessment is upheld, the amount paid in error or excess shall be returned to the member insurer. Interest on a refund due a protesting member insurer shall be paid at the rate actually earned by the association.
(j) The association may request information of member insurers in order to aid in the exercise of its power under this section, and member insurers shall promptly comply with a request.
History: L. 1972, ch. 190, § 9; L. 1986, ch. 180, § 7; L. 2011, ch. 17, § 4; L. 2024, ch. 74, § 12; July 1.
(a) (1) The association shall submit to the commissioner a plan of operation and any amendments thereto necessary or suitable to assure the fair, reasonable and equitable administration of the association. The plan of operation and any amendments thereto shall become effective upon the commissioner's written approval or unless the commissioner has not disapproved it within 30 days.
(2) If the association fails to submit a suitable plan of operation within 120 days following the effective date of this act, or, if at any time thereafter the association fails to submit suitable amendments to the plan, the commissioner, after notice and hearing, shall adopt and promulgate such reasonable rules and regulations as are necessary or advisable to effectuate the provisions of this act. Such rules and regulations shall continue in force until modified by the commissioner or superseded by a plan submitted by the association and approved by the commissioner.
(b) All member insurers shall comply with the plan of operation.
(c) The plan of operation shall, in addition to requirements enumerated elsewhere in this act:
(1) Establish procedures for handling the assets of the association;
(2) establish the amount and method of reimbursing members of the board of directors under K.S.A. 40-3007, and amendments thereto;
(3) establish regular places and times for meetings, including telephone conference calls, of the board of directors;
(4) establish procedures for records to be kept of all financial transactions of the association, its agents and the board of directors;
(5) establish the procedures whereby selections for the board of directors will be made and submitted to the commissioner;
(6) establish any additional procedures for assessments under K.S.A. 40-3009, and amendments thereto;
(7) contain additional provisions necessary or proper for the execution of the powers and duties of the association;
(8) establish procedures whereby a director may be removed for cause, including in the case where a member insurer director becomes an impaired or insolvent insurer; and
(9) require the board of directors to establish a policy and procedures for addressing conflicts of interests.
(d) The plan of operation may provide that any or all powers and duties of the association, except those under K.S.A. 40-3008 and 40-3009, and amendments thereto, are delegated to a corporation, association or other organization that performs or will perform functions similar to those of this association, or its equivalent, in two or more states. Such a corporation, association or organization shall be reimbursed for any payments made on behalf of the association and shall be paid for its performance of any function of the association. A delegation under this subsection shall take effect only with the approval of both the board of directors and the commissioner, and may be made only to a corporation, association or organization that extends protection not substantially less favorable and effective than that provided by this act.
History: L. 1972, ch. 190, § 10; L. 1986, ch. 180, § 8; L. 2024, ch. 74, § 13; July 1.
In addition to the duties and powers enumerated in this act:
(a) The commissioner shall:
(1) Upon request of the board of directors, provide the association with a statement of the premiums in this and any other appropriate state for each member insurer;
(2) when an impairment is declared and the amount of the impairment is determined, serve a demand upon the impaired insurer to make good the impairment within a reasonable time; notice to the impaired insurer shall constitute notice to its shareholders, if any; the failure of the impaired insurer to promptly comply with such demand shall not excuse the association from the performance of its powers and duties under this act;
(3) in any liquidation or rehabilitation proceeding involving a domestic insurer, be appointed as the liquidator or rehabilitator.
(b) The commissioner may suspend or revoke, after notice and hearing in accordance with the provisions of the Kansas administrative procedure act, the certificate of authority to transact insurance business in this state of any member insurer that fails to pay an assessment when due or fails to comply with the plan of operation. As an alternative the commissioner may levy a forfeiture on any member insurer that fails to pay an assessment when due. Such forfeiture shall not exceed 5% of the unpaid assessment per month, but a forfeiture shall be not less than $100 per month.
(c) Any final action of the board of directors or the association may be appealed to the commissioner by any member insurer if such appeal is taken within 60 days of the final action being appealed. A final action or order of the commissioner shall be subject to judicial review in a court of competent jurisdiction in accordance with the laws of this state that apply to the actions or orders of the commissioner.
(d) The liquidator, rehabilitator or conservator of any impaired insurer may notify all interested persons of the effect of this act.
History: L. 1972, ch. 190, § 11; L. 1986, ch. 180, § 9; L. 1986, ch. 318, § 42; L. 1988, ch. 356, § 115; L. 2024, ch. 74, § 14; July 1.
To aid in the detection and prevention of member insurer impairments or insolvencies:
(a) It shall be the duty of the commissioner to:
(1) Notify the commissioners of all other states, territories of the United States and the District of Columbia when the commissioner takes any of the following actions against a member insurer:
(A) Revocation of license or certificate of authority;
(B) suspension of license or certificate of authority; or
(C) makes any formal order that such member insurer restricts its premium writing, obtain additional contributions to surplus, withdraw from the state, reinsure all or any part of its business, or increase capital, surplus or any other account for the security of policyholders, contract holders, certificate holders or creditors.
Such notice shall be mailed to all commissioners within 30 days following the action taken or the date on which such action occurs;
(2) report to the board of directors when the commissioner has taken any of the actions set forth in paragraph (1) or has received a report from any other commissioner indicating that any such action has been taken in another state. Such report to the board of directors shall contain all significant details of the action taken or the report received from another commissioner;
(3) report to the board of directors when the commissioner has reasonable cause to believe from any examination, whether completed or in process, of any member company that such member insurer may be an impaired or insolvent insurer. Such report and information shall be kept confidential by the board of directors until such time as made public by the commissioner or other lawful authority;
(4) furnish to the board of directors the national association of insurance commissioners' insurance regulatory information system ratios and listings of companies not included in the ratios developed by the national association of insurance commissioners, and the board may use the information contained therein in carrying out its duties and responsibilities under this section. Such report and the information contained therein shall be kept confidential by the board of directors until such time as made public by the commissioner or other lawful authority.
(b) The commissioner may seek the advice and recommendations of the board of directors concerning any matter affecting the commissioner's duties and responsibilities regarding the financial condition of member insurers and health maintenance organization seeking admission to transact business in this state.
(c) The board of directors, upon majority vote, may make reports and recommendations to the commissioner upon any matter germane to the solvency, liquidation, rehabilitation or conservation of any member insurer or germane to the solvency of any insurer or health maintenance organization seeking to do business in this state. Such reports and recommendations shall not be considered public documents.
(d) It shall be the duty of the board of directors, upon majority vote, to notify the commissioner of any information indicating any member insurer may be an impaired or insolvent insurer.
(e) The board of directors, upon majority vote, may make recommendations to the commissioner for the detection and prevention of member insurer insolvencies.
History: L. 1972, ch. 190, § 12; L. 1986, ch. 180, § 10; L. 2024, ch. 74, § 15; July 1.
(a) Nothing in this act shall be construed to reduce the liability for unpaid assessments of the insureds or enrollees of an impaired or insolvent insurer operating under a plan with assessment liability.
(b) Records shall be kept of all negotiations and meetings in which the association or its representatives are involved to discuss the activities of the association in carrying out its powers and duties under K.S.A. 40-3008, and amendments thereto. Records of such negotiations or meetings shall be made public only upon the termination of a liquidation, rehabilitation or conservation proceeding involving the impaired or insolvent insurer, upon the termination of the impairment or insolvency of the member insurer, or upon the order of a court of competent jurisdiction. Nothing in this subsection shall limit the duty of the association to render a report of its activities under K.S.A. 40-3014, and amendments thereto.
(c) For the purpose of carrying out its obligations under this act, the association shall be deemed to be a creditor of the impaired or insolvent insurer to the extent of assets attributable to covered policies reduced by any amounts to which the association is entitled as subrogee pursuant to K.S.A. 40-3008, and amendments thereto. Assets of the impaired or insolvent insurer attributable to covered policies shall be used to continue all covered policies and pay all contractual obligations of the impaired or insolvent insurer as required by this act. Assets attributable to covered policies or contracts, as used in this subsection, are that proportion of the assets that the reserves that should have been established for such policies or contracts bear to the reserve that should have been established for all policies or contracts of insurance or health benefit plans written by the impaired or insolvent insurer.
(d) As a creditor of the impaired or insolvent insurer, as established in subsection (c) and consistent with K.S.A. 40-3635, and amendments thereto, the association and other similar associations shall be entitled to receive a disbursement of assets out of the marshaled assets, from time to time as the assets become available to reimburse it, as a credit against contractual obligations under this act. If the liquidator has not, within 120 days of a final determination of insolvency of a member insurer by the receivership court, made an application to the court for the approval of a proposal to disburse assets out of marshaled assets to guaranty associations having obligations because of the insolvency, then the association shall be entitled to make application to the receivership court for approval of its own proposal to disburse these assets.
(e) (1) Prior to the termination of any liquidation, rehabilitation, or conservation proceeding, the court may take into consideration the contributions of the respective parties, including the association, the shareholders, policyholders, contract holders, certificate holders and enrollees of the insolvent insurer, and any other party with a bona fide interest, in making an equitable distribution of the ownership rights of such insolvent insurer. In such a determination, consideration shall be given to the welfare of the policyholders, contract holders, certificate holders and enrollees of the continuing or successor member insurer.
(2) No distribution to stockholders, if any, of an impaired or insolvent insurer shall be made until and unless the total amount of valid claims of the association with interest thereon for funds expended in carrying out its powers and duties under K.S.A. 40-3008, and amendments thereto, with respect to such member insurer have been fully recovered by the association.
(f) (1) If an order for liquidation or rehabilitation of a member insurer domiciled in this state has been entered, the receiver appointed under such order shall have a right to recover on behalf of the member insurer, from any affiliate that controlled it, the amount of distributions, other than stock dividends paid by the member insurer on its capital stock, made at any time during the five years preceding the petition for liquidation or rehabilitation subject to the limitations of paragraphs (2) through (4).
(2) No such distribution shall be recoverable if the member insurer shows that when paid the distribution was lawful and reasonable, and that the member insurer did not know and could not reasonably have known that the distribution might adversely affect the ability of the member insurer to fulfill its contractual obligations.
(3) Any person who was an affiliate that controlled the member insurer at the time the distributions were paid shall be liable up to the amount of distributions such person received. Any person who was an affiliate that controlled the member insurer at the time the distributions were declared, shall be liable up to the amount of distributions such person would have received if such person had been paid immediately. If two or more persons are liable with respect to the same distributions, such person shall be jointly and severally liable.
(4) The maximum amount recoverable under this subsection shall be the amount needed in excess of all other available assets of the insolvent insurer to pay the contractual obligations of the insolvent insurer.
(5) If any person liable under paragraph (3) is insolvent, all its affiliates that controlled it at the time the distribution was paid, shall be jointly and severally liable for any resulting deficiency in the amount recovered from the insolvent affiliate.
History: L. 1972, ch. 190, § 13; L. 1986, ch. 180, § 11; L. 2024, ch. 74, § 16; July 1.
(a) No person, including a member insurer, agent or affiliate of a member insurer shall make, publish, disseminate, circulate or place before the public, or cause directly or indirectly, to be made, published, disseminated, circulated or placed before the public, in any newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio station or television station, or in any other way, any advertisement, announcement or statement, written or oral, which uses the existence of the insurance guaranty association of this state for the purpose of sales, solicitation or inducement to purchase any form of insurance or other coverage covered by the Kansas life and health insurance guaranty association act. This section shall not apply to the Kansas life and health insurance guaranty association or any other entity that does not sell or solicit insurance or coverage by a health maintenance organization.
(b) Within 180 days of the effective date of this act, the association shall prepare a summary document describing the general purposes and current limitations of this act in complying with subsection (c). This summary document shall be submitted to the commissioner for approval. Sixty days after receiving such approval, no member insurer may deliver a policy or contract to a policyholder, contract holder, certificate holder or enrollee unless the summary document is delivered to the policyholder, contract holder, certificate holder or enrollee at the time of delivery of the policy or contract. The summary document shall also be available upon request by a policyholder, contract holder, certificate holder or enrollee. The distribution, delivery or contents or interpretation of this summary document shall not mean that either the policy or the contract or the policyholder, contract holder, certificate holder or enrollee thereof would be covered in the event of the impairment or insolvency of a member insurer. The summary document shall be revised by the association as amendments to this act may require. Failure to receive this document does not give the policyholder, contract holder, certificate holder, enrollee or insured any greater rights than those stated in this act.
(c) The summary document prepared under subsection (b) shall contain a clear and conspicuous disclaimer on its face. The commissioner shall promulgate a rule establishing the form and content of the disclaimer. The disclaimer shall:
(1) State the name and address of the life and health insurance guaranty association and insurance department;
(2) prominently warn the policyholder, contract holder, certificate holder or enrollee that the life and health insurance guaranty association may not cover the policy or contract or, if coverage is available, it will be subject to substantial limitations, exclusions and conditioned on continued residence in the state;
(3) state the types of policies or contracts for which guaranty funds will provide coverage;
(4) state that the member insurer and its agents are prohibited by law from using the existence of the life and health insurance guaranty association for the purpose of sales, solicitation or inducement to purchase any form of insurance or health maintenance organization coverage;
(5) state that the policyholder, contract holder, certificate holder or enrollee should not rely on coverage under the life and health insurance guaranty association when selecting an insurer or health maintenance organization;
(6) explain rights available and procedures for filing a complaint to allege a violation of any provisions of this act; and
(7) provide other information as directed by the commissioner, including, but not limited to, sources for information about the financial condition of insurers, provided that the information is not proprietary and is subject to disclosure under that state's public records law.
(d) A member insurer shall retain evidence of compliance with subsection (b) for so long as the policy or contract for which the notice is given remains in effect.
History: L. 1986, ch. 180, § 15; L. 2024, ch. 74, § 17; July 1.
The association shall be subject to examination and regulation by the commissioner. The board of directors shall submit to the commissioner, not later than 120 days after the association's fiscal year ends, a financial report in a form approved by the commissioner and a report of its activities during the preceding fiscal year.
History: L. 1972, ch. 190, § 14; L. 1986, ch. 180, § 12; July 1.
The association shall be exempt from payment of all fees and all taxes levied by this state or any of its subdivisions, except taxes levied on real property.
History: L. 1972, ch. 190, § 15; July 1.
(a) Unless a longer period has been allowed by the commissioner, a member insurer shall at its option have the right to show a certificate of contribution as an asset in the form approved by the commissioner pursuant to K.S.A. 40-3009, and amendments thereto, at percentages of the original face amount approved by the commissioner, for calendar years as follows:
(1) 100% for the calendar year of issuance;
(2) 80% for the first calendar year after the year of issuance;
(3) 60% for the second calendar year after the year of issuance;
(4) 40% for the third calendar year after the year of issuance;
(5) 20% for the fourth calendar year after the year of issuance.
(b) The member insurer may offset the amount written off by it in a calendar year under subsection (a), against its premium tax liability to this state accrued with respect to business transacted in such year.
(c) A member insurer that is exempt from taxes referenced in subsection (a) may recoup its assessments by a surcharge on its premiums in a sum reasonably calculated to recoup the assessments over a reasonable period of time, as approved by the commissioner. Amounts recouped shall not be considered premiums for any other purpose, including the computation of gross premium tax, the medical loss ratio, or agent commission. If a member insurer collects excess surcharges, the member insurer shall remit the excess amount to the association, and the excess amount shall be applied to reduce future assessments in the appropriate account.
(d) Any sums acquired by refund, pursuant to K.S.A. 40-3009, and amendments thereto, from the association that have theretofore been written off by contributing member insurers and offset against premium taxes as provided in subsection (b), and are not then needed for purposes of this act, shall be paid by the association to the commissioner and the commissioner shall remit such moneys to the state treasurer in accordance with the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount in the state treasury to the credit of the state general fund.
History: L. 1972, ch. 190, § 16; L. 2001, ch. 5, § 122; L. 2024, ch. 74, § 18; July 1.
There shall be no liability on the part of and no cause of action of any nature shall arise against any member insurer or its agents or employees, the association or its agents or employees, members of the board of directors, or the commissioner or the commissioner's representatives, for any action or omission by them in the performance of their powers and duties under this act. Such immunity shall extend to the participation in any organization of one or more other state associations of similar purposes and to any such organization and its agents or employees.
History: L. 1972, ch. 190, § 17; L. 1986, ch. 180, § 13; July 1.
All proceedings in which the impaired or insolvent insurer is a party in any court in this state shall be stayed 180 days from the date an order of liquidation, rehabilitation or conservation is final to permit proper legal action by the association on any matters germane to its powers or duties. As to a judgment under any decision, order, verdict or finding based on default the association may apply to have such judgment set aside by the same court that made such judgment and shall be permitted to defend against such suit on the merits.
History: L. 1972, ch. 190, § 18; L. 1986, ch. 180, § 14; L. 2024, ch. 74, § 19; July 1.
(a) All matters relating to the insolvency or impairment of any member insurer placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency before the effective date, or for which the association otherwise exercises its powers and duties under K.S.A. 40-3008, and amendments thereto, before July 1, 2024, including past, present and future assessments and credits, shall be governed by the provisions of this act that were in effect before July 1, 2024.
(b) All matters relating to the insolvency or impairment of any member insurer placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency on or after the effective date of this section, or for which the association otherwise exercises its powers and duties under K.S.A. 40-3008, and amendments thereto, on or after July 1, 2024, shall be governed by the provisions of the act in effect on the date such actions are officially taken.
History: L. 2024, ch. 74, § 1; July 1.
This act may be cited and shall be known as the "Kansas automobile injury reparations act."
History: L. 1974, ch. 193, § 1; February 22.
The purpose of this act is to provide a means of compensating persons promptly for accidental bodily injury arising out of the ownership, operation, maintenance or use of motor vehicles in lieu of liability for damages to the extent provided herein.
History: L. 1974, ch. 193, § 2; February 22.
As used in this act, the following words and phrases shall have the meanings respectively ascribed to them herein:
(a) "Commissioner" means the state commissioner of insurance.
(b) "Disability benefits" means allowances for loss of monthly earnings due to an injured person's inability to engage in available and appropriate gainful activity, subject to the following conditions and limitations: (1) The injury sustained is the proximate cause of the injured person's inability to engage in available and appropriate gainful activity; (2) subject to the maximum benefits stated herein, allowances shall equal 100% of any such loss per individual, unless such allowances are deemed not includable in gross income for federal income tax purposes, in which event such allowances shall be limited to 85%; and (3) allowances shall be made up to a maximum of not less than $900 per month for not to exceed one year after the date the injured person becomes unable to engage in available and appropriate gainful activity.
(c) "Director" means the director of vehicles.
(d) "Funeral benefits" means allowances for funeral, burial or cremation expenses in an amount not to exceed $2,000 per individual.
(e) "Highway" means the entire width between the boundary lines of every way publicly maintained, when any part thereof is open to the use of the public for purposes of vehicular travel.
(f) "Implement of husbandry" means every vehicle designed or adapted and used exclusively for agricultural operations and only incidentally operated or moved upon the highways.
(g) "Insurer" means any insurance company, as defined by K.S.A. 40-201, and amendments thereto, authorized to transact business in this state, which issues policies of motor vehicle liability insurance covering liability arising out of the ownership, operation, maintenance or use of a motor vehicle.
(h) "Injured person" means any person suffering injury.
(i) "Injury" means bodily harm, sickness, disease or death resulting from an accident arising out of the ownership, maintenance or use of a motor vehicle.
(j) "Lienholder" means a person holding a security interest in a vehicle.
(k) "Medical benefits" means and includes allowances for all reasonable expenses, up to a limit of not less than $4,500, for necessary health care rendered by practitioners licensed by the state board of healing arts to practice any branch of the healing arts or licensed psychologists, surgical, x-ray and dental services, including prosthetic devices and necessary ambulance, hospital and nursing services; and such term also includes allowances for services recognized and permitted under the laws of this state for an injured person who relies upon spiritual means through prayer alone for healing in accordance with such person's religious beliefs.
(l) "Monthly earnings" means: (1) In the case of a regularly employed person or a person regularly self-employed,
1/12 of the annual earnings at the time of injury; or (2) in the case of a person not regularly employed or self-employed, or of an unemployed person,
1/12 of the anticipated annual earnings from the time such person would reasonably have been expected to be regularly employed. In calculating the anticipated annual earnings of an unemployed person who has previously been employed, the insurer shall average the annual compensation of such person for not to exceed five years preceding the year of injury or death, during which such person was employed.
(m) "Motor vehicle" means every self-propelled vehicle of a kind required to be registered in this state, including any trailer, semitrailer or pole trailer designed for use with such vehicle, but such term does not include a motorized bicycle.
(n) "Operator" means any person who drives or is in actual physical control of a motor vehicle upon a highway or who is exercising control over or steering a vehicle being towed by a motor vehicle.
(o) "Owner" means a person, other than a lienholder, having property in or title to a motor vehicle, including a person who is entitled to the use and possession of a motor vehicle subject to a security interest held by another person, but such term does not include a lessee under a lease not intended as security.
(p) "Person" means an individual, partnership, corporation or other association of persons.
(q) "Personal injury protection benefits" means the disability benefits, funeral benefits, medical benefits, rehabilitation benefits, substitution benefits and survivors' benefits required to be provided in motor vehicle liability insurance policies pursuant to this act.
(r) "Rehabilitation benefits" means allowances for all reasonable expenses, up to a limit of not less than $4,500, for necessary psychiatric or psychological services, occupational therapy and such occupational training and retraining as may be reasonably necessary to enable the injured person to obtain suitable employment.
(s) "Relative residing in the same household" means a relative of any degree by blood, marriage or adoption, who usually makes such person's home in the same family unit, whether or not temporarily living elsewhere.
(t) "Security interest" means an interest in a vehicle reserved or created by agreement and which secures payment or performance of an obligation. The term includes the interest of a lessor under a lease intended as security.
(u) "Self-insurer" means any person effecting self-insurance pursuant to subsection (f) of K.S.A. 40-3104, and amendments thereto, or any nonresident self-insurer that has filed the form prescribed in subsection (b) of K.S.A. 40-3106, and amendments thereto.
(v) "Special mobile equipment" means every vehicle not designed or used primarily for the transportation of persons or property and only incidentally operated or moved over a highway, including but not limited to: Ditch-digging apparatus, well-boring apparatus and road construction and maintenance machinery such as asphalt spreaders, bituminous mixers, bucket loaders, tractors other than truck tractors, ditchers, leveling graders, finishing machines, motor graders, road rollers, scarifiers, earth moving carryalls and scrapers, power shovels and drag lines and self-propelled cranes and earth moving equipment. The term does not include house trailers, dump trucks, truck mounted transit mixers, cranes or shovels or other vehicles designed for the transportation of persons or property to which machinery has been attached.
(w) "Substitution benefits" means allowances for appropriate and reasonable expenses incurred in obtaining other ordinary and necessary services in lieu of those that, but for the injury, the injured person would have performed for the benefit of such person or such person's family, subject to a maximum of $25 per day for not longer than 365 days after the date such expenses are incurred.
(x) "Survivor" means a decedent's spouse, or child under the age of 18 years, where death of the decedent resulted from an injury.
(y) "Survivors' benefits" means total allowances to all survivors for: (1) Loss of an injured person's monthly earnings after such person's death, up to a maximum of not less than $900 per month; and (2) substitution benefits following the injured person's death. Expenses of the survivors which have been avoided by reason of the injured person's death shall be subtracted from the allowances to which survivors would otherwise be entitled, and survivors' benefits shall not be paid for more than one year after the injured person's death, less the number of months the injured person received disability benefits prior to such person's death. For purposes of this subsection, monthly earnings shall include, in the case of a person who was a social security recipient or a retirement or pension benefit recipient, or both, at the time of such injured person's death, 1/12 of the annual amount of the difference between the annual amount of the social security benefits or the retirement benefits, or both, that such injured person was receiving at the time of such injured person's death and the annual amount of the social security benefits or the retirement benefits, or both, that the survivor is receiving after the time of such injured person's death.
(z) "Uninsured motor vehicle" means any motor vehicle which is not included under an approved self-insurance plan of a self-insurer or for which there is not in effect a motor vehicle liability insurance policy meeting the requirements of this act.
(aa) "Any workmen's compensation law" means the workmen's compensation act of Kansas, the United States longshoremen's and harbor workers' compensation act, the federal employer liability acts, and any similar state or federal law.
History: L. 1974, ch. 193, § 3; L. 1977, ch. 28, § 5; L. 1987, ch. 173, § 1; L. 1994, ch. 62, § 1; L. 1999, ch. 87, § 3; March 1, 2000.
(a) Every owner shall provide motor vehicle liability insurance coverage in accordance with the provisions of this act for every motor vehicle owned by such person, unless such motor vehicle: (1) Is included under an approved self-insurance plan as provided in subsection (f); (2) is used as a driver training motor vehicle, as defined in K.S.A. 72-4005, and amendments thereto, in an approved driver training course by a school district or an accredited nonpublic school under an agreement with a motor vehicle dealer, and such motor vehicle liability insurance coverage is provided by the school district or accredited nonpublic school; (3) is included under a qualified plan of self-insurance approved by an agency of the state in which such motor vehicle is registered and the form prescribed in subsection (b) of K.S.A. 40-3106, and amendments thereto, has been filed; or (4) is expressly exempted from the provisions of this act.
(b) An owner of an uninsured motor vehicle shall not permit the operation thereof upon a highway or upon property open to use by the public, unless such motor vehicle is expressly exempted from the provisions of this act.
(c) No person shall knowingly drive an uninsured motor vehicle upon a highway or upon property open to use by the public, unless such motor vehicle is expressly exempted from the provisions of this act.
(d) (1) Any person operating a motor vehicle upon a highway or upon property open to use by the public shall display, upon demand, evidence of financial security to a law enforcement officer. Such evidence of financial security which meets the requirements of subsection (e) may be displayed on a cellular phone or any other type of portable electronic device. The law enforcement officer to whom such evidence of financial security is displayed shall view only such evidence of financial responsibility. Such law enforcement officer shall be prohibited from viewing any other content or information stored on such cellular phone or other type of portable electronic device. The law enforcement officer shall issue a citation to any person who fails to display evidence of financial security upon such demand. The law enforcement officer shall transmit a copy of the insurance verification form prescribed by the secretary of revenue with the copy of the citation transmitted to the court.
(2) No citation shall be issued to any person for failure to provide proof of financial security when evidence of financial security meeting the standards of subsection (e) is displayed upon demand of a law enforcement officer. Whenever the authenticity of such evidence is questionable, the law enforcement officer may initiate the preparation of the insurance verification form prescribed by the secretary of revenue by recording information from the evidence of financial security displayed. The officer shall immediately forward the form to the department of revenue, and the department shall proceed with verification in the manner prescribed in the following paragraph. Upon return of a form indicating that insurance was not in force on the date indicated on the form, the department shall immediately forward a copy of the form to the law enforcement officer initiating preparation of the form.
(e) Unless the insurance company subsequently submits an insurance verification form indicating that insurance was not in force, no person charged with violating subsection (b), (c) or (d) shall be convicted if such person produces in court, within 10 days of the date of arrest or of issuance of the citation, evidence of financial security for the motor vehicle operated, which was valid at the time of arrest or of issuance of the citation. Such evidence of financial security may be produced by displaying such information on a cellular phone or any other type of portable electronic device. Any person to whom such evidence of financial security is displayed on a cellular phone or any other type of portable electronic device shall be prohibited from viewing any other content or information stored on such cellular phone or other type of portable electronic device. For the purpose of this subsection, evidence of financial security shall be provided by a policy of motor vehicle liability insurance, an identification card or certificate of insurance issued to the policyholder by the insurer which provides the name of the insurer, the policy number, make and year of the vehicle and the effective and expiration dates of the policy, or a certificate of self-insurance signed by the commissioner of insurance. Upon the production in court of evidence of financial security, the court shall record the information displayed thereon on the insurance verification form prescribed by the secretary of revenue, immediately forward such form to the department of revenue, and stay any further proceedings on the matter pending a request from the prosecuting attorney that the matter be set for trial. Upon receipt of such form the department shall mail the form to the named insurance company for verification that insurance was in force on the date indicated on the form. It shall be the duty of insurance companies to notify the department within 30 calendar days of the receipt of such forms of any insurance that was not in force on the date specified. Upon return of any form to the department indicating that insurance was not in force on such date, the department shall immediately forward a copy of such form to the office of the prosecuting attorney or the city clerk of the municipality in which such prosecution is pending when the prosecuting attorney is not ascertainable. Receipt of any completed form indicating that insurance was not in effect on the date specified shall be prima facie evidence of failure to provide proof of financial security and violation of this section. A request that the matter be set for trial shall be made immediately following the receipt by the prosecuting attorney of a copy of the form from the department of revenue indicating that insurance was not in force. Any charge of violating subsection (b), (c) or (d) shall be dismissed if no request for a trial setting has been made within 60 days of the date evidence of financial security was produced in court.
(f) Any person in whose name more than 25 motor vehicles are registered in Kansas may qualify as a self-insurer by obtaining a certificate of self-insurance from the commissioner of insurance. The certificate of self-insurance issued by the commissioner shall cover such owned vehicles and those vehicles, registered in Kansas, leased to such person if the lease agreement requires that motor vehicle liability insurance on the vehicles be provided by the lessee. Upon application of any such person, the commissioner of insurance may issue a certificate of self-insurance, if the commissioner is satisfied that such person is possessed and will continue to be possessed of ability to pay any liability imposed by law against such person arising out of the ownership, operation, maintenance or use of any motor vehicle described in this subsection. A self-insurer shall provide liability coverage subject to the provisions of subsection (e) of K.S.A. 40-3107, and amendments thereto, arising out of the ownership, operation, maintenance or use of a self-insured motor vehicle in those instances where the lessee or the rental driver, if not the lessee, does not have a motor vehicle liability insurance policy or insurance coverage pursuant to a motor vehicle liability insurance policy or certificate of insurance or such insurance policy for such leased or rented vehicle. Such liability coverage shall be provided to any person operating a self-insured motor vehicle with the expressed or implied consent of the self-insurer.
Upon notice and a hearing in accordance with the provisions of the Kansas administrative procedure act, the commissioner of insurance may cancel a certificate of self-insurance upon reasonable grounds. Failure to provide liability coverage or personal injury protection benefits required by K.S.A. 40-3107 and 40-3109, and amendments thereto, or pay any liability imposed by law arising out of the ownership, operation, maintenance or use of a motor vehicle registered in such self-insurer's name, or to otherwise comply with the requirements of this subsection shall constitute reasonable grounds for the cancellation of a certificate of self-insurance. Reasonable grounds shall not exist unless such objectionable activity occurs with such frequency as to indicate a general business practice.
Self-insureds shall investigate claims in a reasonably prompt manner, handle such claims in a reasonable manner based on available information and effectuate prompt, fair and equitable settlement of claims in which liability has become reasonably clear.
As used in this subsection, "liability imposed by law" means the stated limits of liability as provided under subsection (e) of K.S.A. 40-3107, and amendments thereto.
Nothing in this subsection shall preclude a self-insurer from pursuing all rights of subrogation against another person or persons.
(g) (1) Any person violating any provision of this section shall be guilty of a class B misdemeanor and shall be subject to a fine of not less than $300 nor more than $1,000 or confinement in the county jail for a term of not more than six months, or both such fine and confinement.
(2) Any person convicted of violating any provision of this section within three years of any such prior conviction shall be guilty of a class A misdemeanor and shall be subject to a fine of not less than $800 nor more than $2,500.
(h) In addition to any other penalties provided by this act for failure to have or maintain financial security in effect, the director, upon receipt of a report required by K.S.A. 8-1607 or 8-1611, and amendments thereto, or a denial of such insurance by the insurance company listed on the form prescribed by the secretary of revenue pursuant to subsection (d) of this section, shall, upon notice and hearing as provided by K.S.A. 40-3118, and amendments thereto:
(1) Suspend:
(A) The license of each driver in any manner involved in the accident;
(B) the license of the owner of each motor vehicle involved in such accident, unless the vehicle was stolen at the time of the accident, proof of which must be established by the owner of the motor vehicle. Theft by a member of the vehicle owner's immediate family under the age of 18 years shall not constitute a stolen vehicle for the purposes of this section;
(C) if the driver is a nonresident, the privilege of operating a motor vehicle within this state; or
(D) if such owner is a nonresident, the privilege of such owner to operate or permit the operation within this state of any motor vehicle owned by such owner; and
(2) revoke the registration of all vehicles owned by the owner of each motor vehicle involved in such accident.
(i) The suspension or revocation requirements in subsection (h) shall not apply:
(1) To the driver or owner if the owner had in effect at the time of the accident an automobile liability policy as required by K.S.A. 40-3107, and amendments thereto, with respect to the vehicle involved in the accident;
(2) to the driver, if not the owner of the vehicle involved in the accident, if there was in effect at the time of the accident an automobile liability policy with respect to such driver's driving of vehicles not owned by such driver;
(3) to any self-insurer as defined by subsection (u) of K.S.A. 40-3103, and amendments thereto;
(4) to the driver or owner of any vehicle involved in the accident which was exempt from the provisions of this act pursuant to K.S.A. 40-3105, and amendments thereto;
(5) to the owner of a vehicle described in subsection (a)(2).
(j) (1) For the purposes of provisions (1) and (2) of subsection (i) of this section, the director may require verification by an owner's or driver's insurance company or agent thereof that there was in effect at the time of the accident an automobile liability policy as required in this act.
(2) Subject to the provisions of subsection (k), any suspension or revocation effected hereunder shall remain in effect until such person:
(A) Has filed satisfactory proof of financial security with the director as required by subsection (d) of K.S.A. 40-3118, and amendments thereto;
(B) has paid the reinstatement fee herein prescribed; and
(C) (i) has been released from liability;
(ii) is a party to an action to determine liability pursuant to which the court temporarily stays such suspension pending final disposition of such action;
(iii) has entered into an agreement for the payment of damages; or
(iv) has been finally adjudicated not to be liable in respect to such accident and evidence of any such fact has been filed with the director.
(3) The reinstatement fee shall be $100 except that if the registration of a motor vehicle of any owner is revoked within one year following a prior revocation of the registration of a motor vehicle of such owner under the provisions of this act such fee shall be $300.
(k) (1) Whenever any person whose license has been suspended or revoked pursuant to this section is involved in an accident and has entered into an agreement with any driver, or such driver's insurer, who has been damaged or whose vehicle has been damaged to pay for such damage and such person defaults on payments under such agreement, the driver or the driver's insurer, as appropriate, shall notify the director within 60 days of the date of default.
(2) Upon receipt of the notice of default, the director shall immediately suspend such person's license and registration. If such person is a nonresident, the director shall immediately suspend such nonresident's privilege to operate a motor vehicle in this state.
(3) Except as provided in paragraph (4), such person's driver's license, registration and nonresident's operating privilege shall remain so suspended and shall not be renewed, nor shall any such license or registration be thereafter issued in the name of such person, including any such person not previously licensed, unless and until:
(A) The director receives notice payments under the agreement referred to in paragraph (1) have been resumed and that payments under such agreement are no longer in default;
(B) such person has filed satisfactory proof of financial responsibility with the director as required by subsection (d) of K.S.A. 40-3118, and amendments thereto; and
(C) the reinstatement fee required by subsection (j) has been paid.
(4) Upon due notice to the director that the conditions of paragraph (3) have been fulfilled, such person may obtain from the director an order restoring such person's driver's license, registration and nonresident's operating privilege to operate a motor vehicle in this state conditioned upon such person's continued compliance with the agreement referred to in paragraph (1).
(5) In the event such person fails to make any further payment under the agreement referred to in paragraph (1) when such payment is due, the director, upon receipt of notice of such default, shall immediately suspend the license, registration or nonresident's operating privilege of such person until all payments have been made under the agreement referred to in paragraph (1). No suspension of such person's license, registration or nonresident's privilege to operate a motor vehicle in this state shall be reinstated pursuant to paragraph (4).
(l) The provisions of this section shall not apply to motor carriers of property or passengers regulated by the corporation commission of the state of Kansas.
(m) The provisions of subsection (d) shall not apply to vehicle dealers, as defined in K.S.A. 8-2401, and amendments thereto, for vehicles being offered for sale by such dealers.
History: L. 1974, ch. 193, § 4; L. 1977, ch. 164, § 1; L. 1979, ch. 149, § 1; L. 1981, ch. 197, § 1; L. 1982, ch. 206, § 2; L. 1984, ch. 174, § 2; L. 1985, ch. 165, § 1; L. 1986, ch. 182, § 1; L. 1987, ch. 174, § 1; L. 1987, ch. 173, § 2; L. 1988, ch. 161, § 2; L. 1988, ch. 356, § 116; L. 1989, ch. 142, § 1; L. 1990, ch. 171, § 1; L. 1994, ch. 291, § 74; L. 1996, ch. 46, § 1; L. 1996, ch. 240, § 1; L. 1999, ch. 162, § 11; L. 2006, ch. 186, § 7; L. 2010, ch. 12, § 1; L. 2010, ch. 155, § 16; L. 2013, ch. 19, § 3; July 1.
The following vehicles shall be exempt from the provisions of this act:
(a) Any motor vehicle owned by the government of the United States, any state or any political subdivision of any state;
(b) an implement of husbandry or special mobile equipment which is operated only incidentally on a highway or property open to use by the public;
(c) a vehicle operated on a highway only for the purpose of crossing such highway from one property to another; and
(d) a nonhighway vehicle for which a nonhighway certificate of title has been issued pursuant to K.S.A. 8-198, and amendments thereto, except when such vehicle is being operated pursuant to subsection (g) of K.S.A. 8-198, and amendments thereto.
History: L. 1974, ch. 193, § 5; L. 1976, ch. 45, § 4; L. 1976, ch. 41, § 3; L. 1987, ch. 173, § 3; January 1, 1988.
(a) A motor vehicle owned by a nonresident shall not be operated in this state upon a highway or upon property open to use by the public, unless a motor vehicle liability insurance policy meeting the requirements of K.S.A. 40-3107, and amendments thereto, is in effect for such vehicle, or such nonresident has qualified as a self-insurer pursuant to subsection (f) of K.S.A. 40-3104, and amendments thereto, or has filed the form prescribed in subsection (b) of this section. Whenever the privilege of a nonresident operating a motor vehicle in this state is suspended for failure of the owner to maintain financial security, in effect, the director shall report such violation to the motor vehicle administrator in the state wherein the vehicle is registered. The director is hereby authorized to enter into such reciprocal agreements with the motor vehicle administrator or other appropriate official in other jurisdictions as may be necessary to effectuate the provisions of this act.
(b) Every insurance company authorized to transact the business of motor vehicle liability insurance in this state shall file with the commissioner as a condition of its continued transaction of such business within this state a form approved by the commissioner declaring that its motor vehicle liability policies, wherever issued, shall be deemed to provide the insurance required by K.S.A. 40-3107, and amendments thereto, when the vehicle is operated in this state. Any nonadmitted insurer may file such a form. A qualified self-insurer, approved by an agency of the state in which the vehicles are registered, may certify its compliance with K.S.A. 40-3107, and amendments thereto, on a form prescribed by the commissioner.
History: L. 1974, ch. 193, § 6; L. 1977, ch. 164, § 2; L. 1985, ch. 165, § 2; July 1.
Every policy of motor vehicle liability insurance issued or renewed on or after January 1, 2017, by an insurer to an owner residing in this state shall:
(a) Designate by explicit description or by appropriate reference of all vehicles with respect to which coverage is to be granted;
(b) insure the person named and any other person, as insured, using any such vehicle with the expressed or implied consent of such named insured, against loss from the liability imposed by law for damages arising out of the ownership, maintenance or use of any such vehicle within the United States of America or the Dominion of Canada, subject to the limits stated in such policy;
(c) state the name and address of the named insured, the coverage afforded by the policy, the premium charged and the policy period;
(d) contain an agreement or be endorsed that insurance is provided in accordance with the coverage required by this act;
(e) contain stated limits of liability, exclusive of interest and costs, with respect to each vehicle for which coverage is granted, not less than $25,000 because of bodily injury to, or death of, one person in any one accident and, subject to the limit for one person, to a limit of not less than $50,000 because of bodily injury to, or death of, two or more persons in any one accident, and to a limit of not less than $25,000 because of harm to or destruction of property of others in any one accident;
(f) include personal injury protection benefits to the named insured, relatives residing in the same household, persons operating the insured motor vehicle, passengers in such motor vehicle and other persons struck by such motor vehicle and suffering bodily injury while not an occupant of a motor vehicle, not exceeding the limits prescribed for each of such benefits, for loss sustained by any such person as a result of injury. The owner of a motorcycle, as defined by K.S.A.
8-1438, and amendments thereto or motor-driven cycle, defined by K.S.A.
8-1439, and amendments thereto, who is the named insured, shall have the right to reject in writing insurance coverage including such benefits for injury to a person which occurs while the named insured is operating or is a passenger on such motorcycle or motor-driven cycle; and unless the named insured requests such coverage in writing, such coverage need not be provided in or supplemental to a renewal policy when the named insured has rejected the coverage in connection with a policy previously issued by the same insurer. The fact that the insured has rejected such coverage shall not cause such motorcycle or motor-driven cycle to be an uninsured motor vehicle;
(g) notwithstanding any omitted or inconsistent language, any contract of insurance which an insurer represents as or which purports to be a motor vehicle liability insurance policy meeting the requirements of this act shall be construed to obligate the insurer to meet all the mandatory requirements and obligations of this act;
(h) notwithstanding any other provision contained in this section, any insurer may exclude coverage required by subsections (a), (b), (c) and (d) of this section while any insured vehicles are:
(1) Rented to others or used to carry persons for a charge, however, such exclusion shall not apply to the use of a private passenger car on a share the expense basis; or
(2) being repaired, serviced or used by any person employed or engaged in any way in the automobile business. This does not apply to the named insured, spouse or relative residents; or the agents, employers, employees or partners of the named insured, spouse or resident relative; and
(i) in addition to the provisions of subsection (h) and notwithstanding any other provision contained in subsections (a), (b), (c) and (d) of this section, any insurer may exclude coverage:
(1) For any damages for which the United States government might be liable for the insured's use of the vehicle;
(2) for any damages to property owned by, rented to, or in charge of or transported by an insured, however, this exclusion shall not apply to coverage for a rented residence or rented private garage;
(3) for any obligation of an insured, or the insured's insurer under any type of workers' compensation or disability or similar law;
(4) for liability assumed by an insured under any contract or agreement;
(5) if two or more vehicle liability policies apply to the same accident, the total limits of liability under all such policies shall not exceed that of the policy with the highest limit of liability;
(6) for any damages arising from an intentional act;
(7) for any damages to any person who would be covered for such damages under a nuclear energy liability policy;
(8) for any obligation of the insured to indemnify another for damages resulting from bodily injury to the insured's employee by accident arising out of and in the course of such employee's employment;
(9) for bodily injury to any fellow employee of the insured arising out of and in the course of such employee's employment;
(10) for bodily injury or property damage resulting from the handling of property:
(A) Before it is moved from the place where it is accepted by the insured for movement into or onto the covered auto; or
(B) after it is moved from the covered auto to the place where it is finally delivered by the insured;
(11) for bodily injury or property damage resulting from the movement of property by a mechanical device, other than a hand truck, not attached to the covered auto; and
(12) for bodily injury or property damage caused by the dumping, discharge or escape of irritants, pollutants or contaminants; however, this exclusion does not apply if the discharge is sudden and accidental.
(j) Commencing with the 2026 legislative interim period, and at least every 10 years thereafter, subject to authorization by the legislative coordinating council, a legislative interim study committee shall study the issue of whether the minimum limits of liability in subsection (e) should be adjusted.
History: L. 1974, ch. 193, § 7; L. 1981, ch. 191, § 2; L. 1984, ch. 167, § 2; L. 1984, ch. 175, § 1; L. 2016, ch. 72, § 1; January 1, 2017.
Any insurer may exclude benefits required by subsection (f) of K.S.A. 40-3107: (a) For injury sustained by the named insured and relatives residing in the same household while occupying another motor vehicle owned by the named insured and not insured under the policy, or for injury sustained by any person operating the insured motor vehicle without the expressed or implied consent of the insured; and
(b) to any person suffering injury, if such person: (1) Caused injury to himself intentionally; (2) was an intentional converter of a motor vehicle at the time the injury was sustained; (3) was injured as a result of conduct within the course of a business of repairing, servicing or otherwise maintaining motor vehicles, unless such conduct occurred off of the business premises; or (4) was injured as a result of conduct in the course of loading and unloading a motor vehicle, unless the conduct occurred while occupying, entering into or alighting from such vehicle.
History: L. 1974, ch. 193, § 8; February 22.
(a) A self-insurer or the insurer of the owner of a motor vehicle covered by a policy of motor vehicle liability insurance meeting the requirements of this act shall pay any personal injury protection benefits which are required to be provided by this act or in such owner's policy of motor vehicle liability insurance for any injury:
(1) Sustained within the United States of America, its territories or possessions or Canada by the owner while:
(A) Occupying a motor vehicle not excluded by subsection (a) of K.S.A. 40-3108, and amendments thereto; or
(B) not an occupant of a motor vehicle if the injury is caused by physical contact with a motor vehicle;
(2) sustained by a relative of the owner residing in the same household, under the circumstances described in paragraph (1) of this subsection, if the relative at the time of the accident is not the owner of a motor vehicle with respect to which a motor vehicle liability insurance policy is required by this act;
(3) sustained in this state by any other person while occupying such motor vehicle or, if a resident of this state, while not an occupant of such motor vehicle if the injury is caused by physical contact with such motor vehicle, and the injured person is not the owner of a motor vehicle with respect to which a motor vehicle liability insurance policy is required under this act.
(b) If two or more insurers or self-insurers are liable to pay personal injury protection benefits for the same injury to any one person, the maximum benefits payable from all applicable policies shall be the highest limit of any one policy providing such personal injury protection benefits. The primary personal injury protection coverage shall be provided by the policy covering:
(1) The motor vehicle occupied by the injured person at the time of the accident; or
(2) the motor vehicle causing such physical contact.
History: L. 1974, ch. 193, § 9; L. 1984, ch. 167, § 3; L. 1987, ch. 173, § 4; January 1, 1988.
(a) Except for benefits payable under any workmen's compensation law, which shall be credited against the personal injury protection benefits provided by subsection (f) of K.S.A. 40-3107, personal injury protection benefits due from an insurer or self-insurer under this act shall be primary and shall be due and payable as loss accrues, upon receipt of reasonable proof of such loss and the amount of expenses and loss incurred which are covered by the policy issued in compliance with this act. An insurer or self-insurer may require written notice to be given as soon as practicable after an accident involving a motor vehicle with respect to which the insurer's policy of motor vehicle liability insurance affords the coverage required by this act. No claim for personal injury protection benefits may be made after two (2) years from the date of the injury.
(b) Personal injury protection benefits payable under this act shall be overdue if not paid within thirty (30) days after the insurer or self-insurer is furnished written notice of the fact of a covered loss and of the amount of same, except that disability benefits payable under this act shall be paid not less than every two (2) weeks after such notice. If such written notice is not furnished as to the entire claim, any partial amounts supported by written notice is overdue if not paid within thirty (30) days after such written notice is furnished. Any part or all of the remainder of the claim that is subsequently supported by written notice is overdue if not paid within thirty (30) days after such written notice is so furnished: Provided, That no such payment shall be deemed overdue where the insurer or self-insurer has reasonable proof to establish that it is not responsible for the payment, notwithstanding that written notice has been furnished. For the purpose of calculating the extent to which any personal injury protection benefits are overdue, payment shall be treated as being made on the date a draft or other valid instrument which is equivalent to payment was placed in the United States mail in a properly addressed, postpaid envelope, or, if not so posted, on the date of delivery. All overdue payments shall bear simple interest at the rate of eighteen percent (18%) per annum.
History: L. 1974, ch. 193, § 10; February 22.
(a) A physician, hospital, clinic or other person or institution lawfully rendering treatment to an injured person for an injury covered by personal injury protection benefits and a person or institution providing rehabilitative occupational training following the injury, may charge a reasonable amount for the products, services and accommodations rendered. The charge shall not exceed the amount the person or institution customarily charges for like products, services and accommodations in cases not involving insurance, and allowances for medical benefits under this act do not include that portion of the charge for a room in any hospital, clinic, convalescent or nursing home, extended care facility or any similar facility in excess of the reasonable and customary charge for semiprivate accommodations unless intensive care is medically required.
(b) An attorney is entitled to a reasonable fee for advising and representing a claimant in an action for personal injury protection benefits which are overdue. The attorney's fee shall be a charge against the insurer or self-insurer in addition to the benefits recovered, if the court finds that the insurer or self-insurer unreasonably refused to pay the claim or unreasonably delayed in making proper payment.
Within the discretion of the court, an insurer or self-insurer may be allowed an award of a reasonable sum as attorney's fee, based upon actual time expended, and all reasonable costs of suit for its defense against a person making claim against such insurer or self-insurer where such claim was fraudulent, excessive or frivolous, and such attorney's fee and all such reasonable costs of suit so awarded may be treated as an offset against any benefits due or to become due to such person.
History: L. 1974, ch. 193, § 11; February 22.
Whenever an injured person claims entitlement to rehabilitation benefits, the insurer or self-insurer responsible for paying personal injury protection benefits to such injured person shall be responsible for rehabilitation procedures or treatment and rehabilitative occupational training or retraining for the injured person in accordance with the following standards:
(a) A procedure or treatment, whether or not involving surgery, shall be recognized and medically accepted;
(b) A course of occupational training or retraining shall be a recognized form of training and be reasonable and appropriate for the particular case;
(c) A procedure, treatment or training shall contribute substantially to rehabilitation; and
(d) The cost of a procedure, treatment or training shall be reasonable in relation to its probable rehabilitation effects.
History: L. 1974, ch. 193, § 12; February 22.
History: L. 1974, ch. 193, § 13; Repealed, L. 1977, ch. 164, § 5; July 1.
(a) When the injury for which personal injury protection benefits are payable under this act is caused under circumstances creating a legal liability against a tortfeasor pursuant to K.S.A. 40-3117 or the law of the appropriate jurisdiction, the injured person, such person's dependents or personal representatives shall have the right to pursue such person's remedy by proper action in a court of competent jurisdiction against such tortfeasor.
(b) In the event of recovery from such tortfeasor by the injured person, such person's dependents or personal representatives by judgment, settlement or otherwise, the insurer or self-insurer shall be subrogated to the extent of duplicative personal injury protection benefits provided to date of such recovery and shall have a lien therefor against such recovery and the insurer or self-insurer may intervene in any action to protect and enforce such lien. Whenever any judgment in any such action, settlement or recovery otherwise shall be recovered by the injured person, such person's dependents or personal representatives prior to the completion of personal injury protection benefits, the amount of such judgment, settlement or recovery otherwise actually paid and recovered which is in excess of the amount of personal injury protection benefits paid to the date of recovery of such judgment, settlement or recovery otherwise shall be credited against future payments of such personal injury protection benefits.
(c) In the event an injured person, such person's dependents or personal representative fails to commence an action against such tortfeasor within 18 months after the date of the accident resulting in the injury, such failure shall operate as an assignment to the insurer or self-insurer of any cause of action in tort which the injured person, the dependents of such person or personal representatives of such person may have against such tortfeasor for the purpose and to the extent of recovery of damages which are duplicative of personal injury protection benefits. Such insurer or self-insurer may enforce same in such person's own name or in the name of the injured person, representative or dependents of the injured person for their benefit as their interest may appear by proper action in any court of competent jurisdiction.
(d) In the event of a recovery pursuant to K.S.A. 60-258a, and amendments thereto, the insurer or self-insurer's right of subrogation shall be reduced by the percentage of negligence attributable to the injured person.
(e) Pursuant to this section, the court shall fix attorney fees which shall be paid proportionately by the insurer or self-insurer and the injured person, such person's dependents or personal representatives in the amounts determined by the court.
History: L. 1977, ch. 164, § 4; L. 1987, ch. 173, § 5; January 1, 1988.
(a) Whenever a request is made by a self-insurer or an insurer providing personal injury protection benefits under this act and against whom a claim has been made:
(1) Every employer shall furnish forthwith, in a form approved by the commissioner, a sworn statement of the earnings since the time of the injury, and for a reasonable period before the injury, of the employee upon whose injury the claim is based.
(2) Every physician, hospital, clinic or other medical institution providing, before or after injury upon which a claim for personal injury protection benefits is based, any products, services or accommodations in relation to that or any other injury, or in relation to a condition claimed to be connected with that or any other injury, shall furnish forthwith a written report of the history, condition, treatment and dates and costs of such treatment of the injured person, and produce forthwith and permit the inspection and copying of his or its records regarding such history, condition, treatment and dates and costs of treatment. The person requesting such records shall pay all reasonable costs connected therewith.
(b) In the event of any dispute regarding an insurer's or self-insurer's right to discovery of facts about an injured person's earnings or about his history, condition, treatment and dates and costs of such treatment, the insurer may petition the district court to enter an order permitting such discovery. The order may be made only on timely motion, for good cause shown and upon notice to all persons having an interest, and it shall specify the time, place, manner, conditions and scope of the discovery. In order to protect against annoyance, harassment, embarrassment or oppression, the court may enter an order refusing discovery, or specifying conditions of discovery, and may order payment of costs and expenses of the proceeding, including reasonable fees for the appearance of attorneys at the proceedings, as justice requires.
(c) The injured person shall be furnished upon demand a copy of all information obtained by the insurer or self-insurer under the provisions of this section, and shall pay a reasonable charge therefor, if so required.
History: L. 1974, ch. 193, § 14; February 22.
(a) Whenever the mental or physical condition of an injured person covered by personal injury protection benefits is material to any claim that has been or may be made for past or future personal injury protection benefits, such person, upon request of an insurer or self-insurer, shall submit to a mental or physical examination by a physician or physicians. The cost of any such examination requested by an insurer shall be borne entirely by the insurer or self-insurer. Any such examination shall be conducted within the city or county of residence of the insured, but if there is no qualified physician to conduct the examination within such city or county, then such examination shall be conducted in an area of the closest proximity to the insured's residence. Insurers are authorized to include reasonable provisions in motor vehicle liability insurance policies for mental and physical examination of those claiming personal injury protection benefits.
(b) If requested by the person examined, the insurer or self-insurer causing the examination to be made shall deliver to such person a copy of every written report concerning the examination rendered by the examining physician, at least one (1) of which shall set out his findings and conclusions in detail. After such request and delivery, the insurer or self-insurer causing the examination to be made shall be entitled upon request to receive from the person examined every written report available to him, or his representative, concerning any examination, previously or thereafter made, of the same mental or physical condition. By requesting and obtaining a report of the examination so ordered, or by taking the deposition of the examiner, the person examined shall be deemed to have waived any privilege he may have, with respect to the claim for personal injury protection benefits, regarding the testimony of every other person who has examined or may thereafter examine him in respect of the same mental or physical condition.
History: L. 1974, ch. 193, § 15; February 22.
(a) Insurers and self-insurers are hereby directed to organize and maintain an assigned claims plan to provide that any person who suffers injury in this state may obtain personal injury protection benefits through such plan if:
(1) Personal injury protection benefits are not available to the injured person, except that personal injury protection benefits shall not be deemed unavailable to any person suffering injury while such person was the operator of a motorcycle or motor-driven cycle, for which the owner thereof has rejected personal injury protection benefits pursuant to K.S.A. 40-3107, and amendments thereto;
(2) Motor vehicle liability insurance or self-insurance applicable to the injury cannot be identified;
(3) Personal injury protection benefits applicable to the injury are inadequate to provide the contracted-for benefits because of financial inability of an insurer or self-insurer to fulfill its obligation, except that benefits available through the assigned claims plan shall be excess over any benefits paid or payable through the Kansas insurance guaranty association. If the personal injury protection benefits are not paid by the Kansas insurance guaranty association within the limitation of time specified in this act, such benefits shall be paid by the assigned claims plan. Payments made by the assigned claims plan pursuant to this section shall constitute covered claims under K.S.A. 40-2901 et seq., and amendments thereto.
(b) If a claim qualifies for assignment under this section, the assigned claims plan or any insurer or self-insurer to whom the claim is assigned shall be subrogated to all of the rights of the claimant against any insurer or self-insurer, its successor in interest or substitute, legally obligated to provide personal injury protection benefits to the claimant, for any of such benefits provided by the assignment.
(c) A person shall not be entitled to personal injury protection benefits through the assigned claims plan with respect to injury that such person has sustained if, at the time of such injury, such person was the owner of a motor vehicle for which a policy of motor vehicle liability insurance is required under this act and such person failed to have such policy in effect.
(d) The assigned claims plan shall be governed by such rules and regulations as are necessary for its operation and for the assessment of costs, which shall be approved by the commissioner. Any claim brought through said plan shall be assigned to an insurer or self-insurer, in accordance with the approved regulations of operation, and such insurer or self-insurer, after the assignment, shall have the same rights and obligations as it would have if, prior to such assignment, it had issued a motor vehicle liability insurance policy providing personal injury protection benefits applicable to the loss or expenses incurred or was a self-insurer providing such benefits. Any party accepting benefits under this section shall have such rights and obligations as such person would have if a motor vehicle liability insurance policy providing personal injury protection benefits were issued to such person.
(e) No insurer shall write any motor vehicle liability insurance policy in this state unless the insurer participates in the assigned claims plan organized pursuant to this section, nor shall any person qualify as a self-insurer pursuant to K.S.A. 40-3104, and amendments thereto, unless such person agrees to participate in such assigned claims plan. Any insurer or self-insurer required to participate in the assigned claims plan who violates this subsection shall be assessed a civil penalty of not more than $5,000 for each policy issued or self-insurance certificate obtained in violation thereof.
(f) (1) On and after January 1, 2026, the governing committee of the assigned claims plan shall consist of five members, who shall be removable by the commissioner for inefficiency, neglect of duty or malfeasance. Members shall be appointed as follows:
(A) Three members shall be representatives of insurers;
(B) one member shall be a representative of independent insurance agents; and
(C) one member shall be a representative of the general public.
(2) In selecting the members who shall be representatives of insurers, the commissioner shall consider whether foreign and domestic insurers are fairly represented.
History: L. 1974, ch. 193, § 16; L. 1987, ch. 173, § 6; L. 2025, ch. 87, § 18; July 1.
In any action for tort brought against the owner, operator or occupant of a motor vehicle or against any person legally responsible for the acts or omissions of such owner, operator or occupant, a plaintiff may recover damages in tort for pain, suffering, mental anguish, inconvenience and other non-pecuniary loss because of injury only in the event the injury requires medical treatment of a kind described in this act as medical benefits, having a reasonable value of $2,000 or more, or the injury consists in whole or in part of permanent disfigurement, a fracture to a weightbearing bone, a compound, comminuted, displaced or compressed fracture, loss of a body member, permanent injury within reasonable medical probability, permanent loss of a bodily function or death. Any person who is entitled to receive free medical and surgical benefits shall be deemed in compliance with the requirements of this section upon a showing that the medical treatment received has an equivalent value of at least $2,000. Any person receiving ordinary and necessary services, normally performed by a nurse, from a relative or a member of such person's household shall be entitled to include the reasonable value of such services in meeting the requirements of this section. For the purpose of this section, the charges actually made for medical treatment expenses shall not be conclusive as to their reasonable value. Evidence that the reasonable value thereof was an amount different from the amount actually charged shall be admissible in all actions to which this subsection applies.
History: L. 1974, ch. 193, § 17; L. 1987, ch. 173, § 7; January 1, 1988.
(a) No motor vehicle shall be registered or reregistered in this state unless the owner, at the time of registration, has in effect a policy of motor vehicle liability insurance covering such motor vehicle, as provided in this act, or is a self-insurer thereof, or the motor vehicle is used as a driver training motor vehicle, as defined in K.S.A. 72-4005, and amendments thereto, in an approved driver training course by a school district or an accredited nonpublic school under an agreement with a motor vehicle dealer, and such policy of motor vehicle liability insurance is provided by the school district or accredited nonpublic school. As used in this section, the term "financial security" means such policy or self-insurance. The director shall require that the owner certify and provide verification of financial security, in the manner prescribed by K.S.A. 8-173, and amendments thereto, that the owner has such financial security, and the owner of each motor vehicle registered in this state shall maintain financial security continuously throughout the period of registration. In addition, when an owner certifies that such financial security is a motor vehicle liability insurance policy meeting the requirements of this act, the director may require that the owner or owner's insurance company produce records to prove the fact that such insurance was in effect at the time the vehicle was registered and has been maintained continuously from that date. Such records may be produced by displaying such records on a cellular phone or any other type of portable electronic device. Any person to whom such records are displayed on such cellular phone or other type of portable electronic device shall be prohibited from viewing any other content or information stored on such cellular phone or other type of portable electronic device. Failure to produce such records shall be prima facie evidence that no financial security exists with regard to the vehicle concerned. It shall be the duty of insurance companies, upon the request of the director, to notify the director within 30 calendar days of the date of the receipt of such request by the director of any insurance that was not in effect on the date of registration and maintained continuously from that date.
(b) Except as otherwise provided in K.S.A. 40-276, 40-276a and 40-277, and amendments thereto, and except for termination of insurance resulting from nonpayment of premium or upon the request for cancellation by the insured, no motor vehicle liability insurance policy, or any renewal thereof, shall be terminated by cancellation or failure to renew by the insurer until at least 30 days after mailing a notice of termination, by certified or registered mail, United States post office certificate of mailing, or any other mail tracking method currently used, approved or accepted by the United States postal service to the named insured at the latest address filed with the insurer by or on behalf of the insured. Time of the effective date and hour of termination stated in the notice shall become the end of the policy period. Every such notice of termination sent to the insured for any cause whatsoever shall include on the face of the notice a statement that financial security for every motor vehicle covered by the policy is required to be maintained continuously throughout the registration period, that the operation of any such motor vehicle without maintaining continuous financial security therefor is a class B misdemeanor and shall be subject to a fine of not less than $300 and not more than $1,000 and that the registration for any such motor vehicle for which continuous financial security is not provided is subject to suspension and the driver's license of the owner thereof is subject to suspension.
(c) The director of vehicles shall verify a sufficient number of insurance certifications each calendar year as the director deems necessary to insure compliance with the provisions of this act. The owner or owner's insurance company shall verify the accuracy of any owner's certification upon request, as provided in subsection (a).
(d) (1) In addition to any other requirements of this act, the director shall require a person to acquire insurance and for such person's insurance company to maintain on file with the division evidence of such insurance for a period of one year when a person has been convicted in this or another state of any of the violations enumerated in K.S.A. 8-285, and amendments thereto.
(2) The director shall also require any driver whose driving privileges have been suspended pursuant to this section to maintain such evidence of insurance as required above.
(3) The company of the insured shall immediately mail notice to the director whenever any policy required by this subsection to be on file with the division is terminated by the insured or the insurer for any reason. The receipt by the director of such termination shall be prima facie evidence that no financial security exists with regard to the person concerned.
(4) No cancellation notice shall be sent to the director if the insured adds or deletes a vehicle, adds or deletes a driver, renews a policy or is issued a new policy by the same company. No cancellation notice shall be sent to the director prior to the date the policy is terminated if the company allows a grace period for payment until such grace period has expired and the policy is actually terminated.
(5) For the purposes of this act, the term "conviction" includes pleading guilty or nolo contendere, being convicted or being found guilty of any violation enumerated in this subsection without regard to whether sentence was suspended or probation granted. A forfeiture of bail, bond or collateral deposited to secure a defendant's appearance in court, which forfeiture has not been vacated, shall be equivalent to a conviction.
(6) The requirements of this subsection shall apply whether or not such person owns a motor vehicle.
(e) Whenever the director shall receive prima facie evidence, as prescribed by this section, that continuous financial security covering any motor vehicle registered in this state is not in effect, the director shall notify the owner by registered or certified mail or United States post office certificate of mailing that, at the end of 30 days after the notice is mailed, the registration for such motor vehicle and the driving privileges of the owner of the vehicle shall be suspended or revoked, pursuant to such rules and regulations as the secretary of revenue shall adopt, unless within 10 days after the notice is mailed: (1) Such owner shall demonstrate proof of continuous financial security covering such vehicle to the satisfaction of the director. Such proof of continuous financial security may be provided by the owner by displaying such proof on a cellular phone or other portable electronic device; or (2) such owner shall mail a written request which is postmarked within 10 days after the notice is mailed requesting a hearing with the director. Any person to whom such proof of continuous financial security is displayed on a cellular phone or other portable electronic device shall view only such evidence of continuous financial security. Such person shall be prohibited from viewing any other content or information stored on such cellular phone or other portable electronic device. Upon receipt of a timely request for a hearing, the director shall afford such person an opportunity for hearing within the time and in the manner provided in K.S.A. 8-255, and amendments thereto. If, within the ten-day period or at the hearing, such owner is unable to demonstrate proof of continuous financial security covering the motor vehicle in question, the director shall revoke the registration of such motor vehicle and suspend the driving privileges of the owner of the vehicle.
(f) Whenever the registration of a motor vehicle or the driving privileges of the owner of the vehicle are suspended or revoked for failure of the owner to maintain continuous financial security, such suspension or revocation shall remain in effect until satisfactory proof of insurance has been filed with the director as required by subsection (d) and a reinstatement fee in the amount herein prescribed is paid to the division of vehicles. Such reinstatement fee shall be in the amount of $100 except that if the registration of a motor vehicle of any owner is revoked within one year following a prior revocation of the registration of a motor vehicle of such owner under the provisions of this act such fee shall be in the amount of $300. The division of vehicles shall remit such fees to the state treasurer in accordance with the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount in the state treasury to the credit of the state highway fund.
(g) In no case shall any motor vehicle, the registration of which has been revoked for failure to have continuous financial security, be reregistered in the name of the owner thereof, the owner's spouse, parent or child or any member of the same household, until the owner complies with subsection (f). In the event the registration plate has expired, no new plate shall be issued until the motor vehicle owner complies with the reinstatement requirements as required by this act.
(h) Evidence that an owner of a motor vehicle, registered or required to be registered in this state, has operated or permitted such motor vehicle to be operated in this state without having in force and effect the financial security required by this act for such vehicle, together with proof of records of the division of vehicles indicating that the owner did not have such financial security, shall be prima facie evidence that the owner did at the time and place alleged, operate or permit such motor vehicle to be operated without having in full force and effect financial security required by the provisions of this act.
(i) Any owner of a motor vehicle registered or required to be registered in this state who shall make a false certification concerning financial security for the operation of such motor vehicle as required by this act, shall be guilty of a class A misdemeanor. Any person, firm or corporation giving false information to the director concerning another's financial security for the operation of a motor vehicle registered or required to be registered in this state, knowing or having reason to believe that such information is false, shall be guilty of a class A misdemeanor.
(j) The director shall administer and enforce the provisions of this act relating to the registration of motor vehicles, and the secretary of revenue shall adopt such rules and regulations as may be necessary for its administration.
(k) Whenever any person has made application for insurance coverage and such applicant has submitted payment or partial payment with such application, the insurance company, if payment accompanied the application and if insurance coverage is denied, shall refund the unearned portion of the payment to the applicant or agent. Such refund may:
(1) Accompany the notice of denial of coverage; or
(2) be separately returned in not more than 10 days from the date of such notice.
If payment did not accompany the application to the insurance company but was made to the agent, the agent shall refund the unearned portion of the payment to the applicant upon receipt of the company's notice of denial.
(l) For the purpose of this act, "declination of insurance coverage" means a final denial, in whole or in part, by an insurance company or agent of requested insurance coverage.
History: L. 1974, ch. 193, § 18; L. 1974, ch. 194, § 1; L. 1975, ch. 247, § 1; L. 1976, ch. 221, § 1; L. 1977, ch. 164, § 3; L. 1979, ch. 149, § 2; L. 1981, ch. 198, § 1; L. 1982, ch. 206, § 1; L. 1984, ch. 174, § 3; L. 1985, ch. 48, § 18; L. 1987, ch. 174, § 2; L. 1996, ch. 51, § 3; L. 1999, ch. 162, § 12; L. 2001, ch. 5, § 123; L. 2013, ch. 19, § 4; L. 2014, ch. 19, § 1; L. 2015, ch. 83, § 2; July 1.
The commissioner of insurance is hereby authorized to adopt such rules and regulations as may be necessary to carry out the provisions of this act over which the commissioner has jurisdiction.
History: L. 1974, ch. 193, § 19; February 22.
Nothing in this act shall be construed as prohibiting or discouraging reasonable competition or the availability of motor vehicle liability insurance policies containing coverage exceeding that required to comply with K.S.A. 40-3118.
History: L. 1974, ch. 193, § 20; February 22.
If any provisions of this act, or the application thereof to any person or circumstance, is held unconstitutional, the remainder of this act and the application of such provision to other persons or circumstances shall not be affected thereby; and it shall be conclusively presumed that the legislature would have enacted the remainder of this act without such invalid or unconstitutional provision: Provided, That K.S.A. 40-3117 is expressly declared to be nonseverable.
History: L. 1974, ch. 193, § 21; February 22.
(a) Any person who, at the time of an automobile accident resulting in injuries to that person, is required but fails to maintain personal injury protection benefits coverage mandated by the Kansas automobile injury reparations act, article 31 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, shall have no cause of action for recovery of noneconomic loss sustained as a result of an accident while operating an uninsured automobile. The provisions of this subsection shall not apply and a cause of action for noneconomic loss may be maintained if the court finds by clear and convincing evidence that the person bringing the cause of action did not knowingly at the time of the accident drive a motor vehicle that was without personal injury protection benefits coverage mandated by the Kansas automobile injury reparations act. The provisions of this subsection shall not apply to any person who at the time of an automobile accident has failed to maintain coverage for a period of 45 days or less and who had maintained continuous coverage for at least one year immediately prior to such failure to maintain coverage.
(b) Any person who is convicted of, or pleads guilty to, a violation of K.S.A. 8-1014 or 8-1567, and amendments thereto, or a similar violation of law in another state or an ordinance of any city, or resolution of any county, in connection with an accident, shall have no cause of action for recovery of noneconomic loss sustained as a result of the accident.
(c) The provisions of this section shall apply to a cause of action arising on and after the effective date of this act.
History: L. 2011, ch. 59, § 1; July 1.
This act may be cited as the health maintenance organization act.
History: L. 1974, ch. 181, § 1; July 1.
As used in this act:
(a) "Commissioner" means the commissioner of insurance of the state of Kansas.
(b) "Basic health care services" means but is not limited to usual physician, hospitalization, laboratory, x-ray, emergency and preventive services and out-of-area coverage.
(c) "Capitated basis" means a fixed per member per month payment or percentage of premium payment wherein the provider assumes risk for the cost of contracted services without regard to the type, value or frequency of services provided. For purposes of this definition, capitated basis includes the cost associated with operating staff model facilities.
(d) "Carrier" means a health maintenance organization, an insurer, a nonprofit hospital and medical service corporation, or other entity responsible for the payment of benefits or provision of services under a group contract.
(e) "Certificate of coverage" means a statement of the essential features and services of the health maintenance organization coverage which is given to the subscriber by the health maintenance organization, medicare provider organization or by the group contract holder.
(f) "Copayment" means an amount an enrollee must pay in order to receive a specific service which is not fully prepaid.
(g) "Deductible" means an amount an enrollee is responsible to pay out-of-pocket before the health maintenance organization begins to pay the costs associated with treatment.
(h) "Director" means the secretary of health and environment.
(i) "Disability" means an injury or illness that results in a substantial physical or mental limitation in one or more major life activities such as working or independent activities of daily living that a person was able to do prior to the injury or illness.
(j) "Enrollee" means a person who has entered into a contractual arrangement or on whose behalf a contractual arrangement has been entered into with a health maintenance organization or the medicare provider organization for health care services.
(k) "Grievance" means a written complaint submitted in accordance with the formal grievance procedure by or on behalf of the enrollee regarding any aspect of the health maintenance organization or the medicare provider organization relative to the enrollee.
(l) "Group contract" means a contract for health care services which by its terms limits eligibility to members of a specified group. The group contract may include coverage for dependents.
(m) "Group contract holder" means the person to which a group contract has been issued.
(n) "Health care services" means basic health care services and other services, medical equipment and supplies which may include, but are not limited to, medical, surgical and dental care; psychological, obstetrical, osteopathic, optometric, optic, podiatric, nursing, occupational therapy services, physical therapy services, chiropractic services and pharmaceutical services; health education, preventive medical, rehabilitative and home health services; inpatient and outpatient hospital services, extended care, nursing home care, convalescent institutional care, laboratory and ambulance services, appliances, drugs, medicines and supplies; and any other care, service or treatment for the prevention, control or elimination of disease, the correction of defects or the maintenance of the physical or mental well-being of human beings.
(o) "Health maintenance organization" means an organization which:
(1) Provides or otherwise makes available to enrollees health care services, including at a minimum those basic health care services which are determined by the commissioner to be generally available on an insured or prepaid basis in the geographic area served;
(2) is compensated, except for reasonable copayments, for the provision of basic health care services to enrollees solely on a predetermined periodic rate basis;
(3) provides physician services directly through physicians who are either employees or partners of such organization or under arrangements with a physician or any group of physicians or under arrangements as an independent contractor with a physician or any group of physicians;
(4) is responsible for the availability, accessibility and quality of the health care services provided or made available.
(p) "Individual contract" means a contract for health care services issued to and covering an individual. The individual contract may include dependents of the subscriber.
(q) "Individual practice association" means a partnership, corporation, association or other legal entity which delivers or arranges for the delivery of basic health care services and which has entered into a services arrangement with persons who are licensed to practice medicine and surgery, dentistry, chiropractic, pharmacy, podiatry, optometry or any other health profession and a majority of whom are licensed to practice medicine and surgery. Such an arrangement shall provide:
(1) That such persons shall provide their professional services in accordance with a compensation arrangement established by the entity; and
(2) to the extent feasible for the sharing by such persons of medical and other records, equipment, and professional, technical and administrative staff.
(r) "Medical group" or "staff model" means a partnership, association or other group:
(1) Which is composed of health professionals licensed to practice medicine and surgery and of such other licensed health professionals, including but not limited to dentists, chiropractors, pharmacists, optometrists and podiatrists as are necessary for the provision of health services for which the group is responsible;
(2) a majority of the members of which are licensed to practice medicine and surgery; and
(3) the members of which: (A) As their principal professional activity over 50% individually and as a group responsibility are engaged in the coordinated practice of their profession for a health maintenance organization; (B) pool their income and distribute it among themselves according to a prearranged salary or drawing account or other plan, or are salaried employees of the health maintenance organization; (C) share medical and other records and substantial portions of major equipment and of professional, technical and administrative staff; and (D) establish an arrangement whereby the enrollee's enrollment status is not known to the member of the group who provides health services to the enrollee.
(s) "Medicare provider organization" means an organization which:
(1) Is a provider-sponsored organization as defined by Section 4001 of the Balanced Budget Act of 1997 (PL 105-33); and
(2) provides or otherwise makes available to enrollees basic health care services pursuant to Section 4001 of the Balanced Budget Act of 1997 (PL 105-33).
(t) "Net worth" means the excess of assets over liabilities as determined by the commissioner from the latest annual report filed pursuant to K.S.A. 40-3220 and amendments thereto.
(u) "Person" means any natural or artificial person including but not limited to individuals, partnerships, associations, trusts or corporations.
(v) "Physician" means a person licensed to practice medicine and surgery under the healing arts act.
(w) "Provider" means any physician, hospital or other person which is licensed or otherwise authorized in this state to furnish health care services.
(x) "Uncovered expenditures" means the costs of health care services that are covered by a health maintenance organization for which an enrollee would also be liable in the event of the organization's insolvency as determined by the commissioner from the latest annual statement filed pursuant to K.S.A. 40-3220 and amendments thereto and which are not guaranteed, insured or assumed by any person or organization other than the carrier.
History: L. 1974, ch. 181, § 2; L. 1975, ch. 248, § 1; L. 1984, ch. 176, § 1; L. 1996, ch. 169, § 6; L. 1998, ch. 174, § 13; L. 2000, ch. 147, § 37; July 1.
(a) Except as otherwise provided by this act, it shall be unlawful for any person to provide health care services in the manner prescribed in K.S.A. 40-3202(n) or (r), and amendments thereto, without first obtaining a certificate of authority from the commissioner.
(b) Applications for a certificate of authority shall be made in the form required by the commissioner and shall be verified by an officer or authorized representative of the applicant and shall set forth or be accompanied by:
(1) A copy of the basic organizational documents of the applicant such as articles of incorporation, partnership agreements, trust agreements or other applicable documents;
(2) a copy of the bylaws, regulations or similar document, if any, regulating the conduct of the internal affairs of the applicant;
(3) a list of the names, addresses, official capacity with the organization and biographical information for all of the persons who are to be responsible for the conduct of its affairs, including all members of the governing body, the officers and directors in the case of a corporation and the partners or members in the case of a partnership or corporation;
(4) a sample or representative copy of any contract or agreement made or to be made between the health maintenance organization or medicare provider organization and any class of providers and a copy of any contract made or agreement made or to be made, excluding individual employment contracts or agreements, between third party administrators, marketing consultants or persons listed in subsection (3) and the health maintenance organization or medicare provider organization;
(5) a statement generally describing the organization, its enrollment process, its operation, its quality assurance mechanism, its internal grievance procedures, in the case of a health maintenance organization the methods it proposes to use to offer its enrollees an opportunity to participate in matters of policy and operation, the geographic area or areas to be served, the location and hours of operation of the facilities at which healthcare services will be regularly available to enrollees in the case of staff and group practices, the type and specialty of healthcare personnel and the number of personnel in each specialty category engaged to provide healthcare services in the case of staff and group practices and a records system providing documentation of utilization rates for enrollees. In cases other than staff and group practices, the organization shall provide a list of names, addresses and telephone numbers of providers by specialty;
(6) copies of all contract forms the organization proposes to offer enrollees together with a table of rates to be charged;
(7) the following statements of the fiscal soundness of the organization:
(A) Descriptions of financing arrangements for operational deficits and for developmental costs if operational one year or less;
(B) a copy of the most recent unaudited financial statements of the health maintenance organization or medicare provider organization;
(C) financial projections in conformity with statutory accounting practices prescribed or otherwise permitted by the department of insurance of the state of domicile for a minimum of three years from the date of application. If the health maintenance organization or medicare provider organization is expected to incur a deficit, projections shall be made for each deficit year and for one year thereafter, up to a maximum of five years. All financial projections shall include:
(i) Statements of revenue and expense for each year;
(ii) a balance sheet for each year; and
(iii) a statement and justification of assumptions;
(8) a description of the procedure to be utilized by a health maintenance organization or medicare provider organization to provide for:
(A) Offering enrollees an opportunity to participate in matters of policy and operation of a health maintenance organization;
(B) monitoring of the quality of care provided by such organization including, as a minimum, peer review; and
(C) resolving complaints and grievances initiated by enrollees;
(9) a written irrevocable consent duly executed by such applicant, if the applicant is a nonresident, appointing the commissioner as the person upon whom lawful process in any legal action against such organization on any cause of action arising in this state may be served and that such service of process shall be valid and binding in the same extent as if personal service had been had and obtained upon said nonresident in this state;
(10) a plan, in the case of group or staff practices, that will provide for maintaining a medical records system that is adequate to provide an accurate documentation of utilization by every enrollee, such system to identify clearly, at a minimum, each patient by name, age and sex and to indicate clearly the services provided, when, where, and by whom, the diagnosis, treatment and drug therapy, and in all other cases, evidence that contracts with providers require that similar medical records systems be in place;
(11) evidence of adequate insurance coverage or an adequate plan for self-insurance to respond to claims for injuries arising out of the furnishing of healthcare;
(12) such other information as may be required by the commissioner to make the determinations required by K.S.A. 40-3204, and amendments thereto; and
(13) in lieu of any of the application requirements imposed by this section on a medicare provider organization, the commissioner may accept any report or application filed by the medicare provider organization with the appropriate examining agency or official of another state or agency of the federal government.
(c) The commissioner may promulgate rules and regulations the commissioner deems necessary to the proper administration of this act to require a health maintenance organization or medicare provider organization, subsequent to receiving its certificate of authority to submit the information, modifications or amendments to the items described in subsection (b) to the commissioner prior to the effectuation of the modification or amendment or to require the health maintenance organization to indicate the modifications to the commissioner. Any modification or amendment for which the approval of the commissioner is required shall be deemed approved unless disapproved within 30 days, except the commissioner may postpone the action for such further time, not exceeding an additional 30 days, as necessary for proper consideration.
History: L. 1974, ch. 181, § 3; L. 1976, ch. 280, § 22; L. 1985, ch. 208, § 3; L. 1988, ch. 162, § 1; L. 1996, ch. 169, § 7; L. 1997, ch. 13, § 1; L. 1998, ch. 174, § 14; L. 2023, ch. 41, § 8; July 1.
(a) The commissioner shall notify any person filing an application for a certificate of authority within 60 days of such filing if such application is not complete or sufficient and the reasons therefor, or that payment of the fees required by K.S.A. 40-3213 and amendments thereto has not been made or that the commissioner is not satisfied with the sufficiency of the information supplied pursuant to the provisions of K.S.A. 40-3203 and amendments thereto or that the organization has failed to demonstrate its ability to assure that health care services will be provided.
(b) The commissioner shall, within 60 days after the receipt of a completed application and any prescribed fees, issue a certificate of authority to any person filing such application if the commissioner finds that:
(1) The persons responsible for the conduct of the affairs of the applicant are competent, trustworthy and possess good reputations;
(2) any deficiencies identified by the commissioner in the application have been corrected;
(3) the health maintenance organization or medicare provider organization will effectively provide or arrange for the provision of basic health care services on a prepaid basis, through insurance or otherwise except to the extent of reasonable requirements for copayments and/or deductibles; and
(4) in the case of a health maintenance organization, that the health maintenance organization is in compliance with K.S.A. 40-3227 and amendments thereto and in the case of a medicare provider organization, that the medicare provider organization is in compliance with such deposit or solvency requirements as the commissioner may establish by rules and regulations.
History: L. 1974, ch. 181, § 4; L. 1996, ch. 169, § 8; L. 1998, ch. 174, § 15; July 1.
History: L. 1974, ch. 181, §§ 5, 6; Repealed, L. 1997, ch. 24, § 7; July 1.
When the commissioner has reasonable cause to believe that grounds for the denial, suspension or revocation of a certificate exists or when the commissioner levies an administrative penalty, such commissioner shall notify the health maintenance organization or medicare provider organization in writing stating the grounds upon which the commissioner believes the certificate should be denied, suspended or revoked or the penalty levied. The applicant may, within 15 days from receipt of such notice, make written request to the commissioner for a hearing thereon. The commissioner shall hear such party or parties within 20 days after receipt of such request in accordance with the provisions of the Kansas administrative procedure act.
Upon the request of the commissioner, a representative of the secretary of health and environment who is licensed to practice medicine and surgery shall be in attendance at the hearing and shall participate in the proceedings. Recommendations received pursuant to this subsection may be rejected or accepted in full or in part by the commissioner. Nothing in this subsection shall be construed to limit or modify in any way the authority given by the provisions of this act to the commissioner to deny, suspend or revoke a certificate or to levy an administrative penalty in lieu of suspension or revocation.
History: L. 1974, ch. 181, § 7; L. 1975, ch. 462, § 51; L. 1986, ch. 318, § 43; L. 1988, ch. 356, § 117; L. 1998, ch. 174, § 16; July 1.
(a) The powers of a health maintenance organization or medicare provider organization shall include but not be limited to the following:
(1) The purchase, lease, construction, renovation, operation, or maintenance of hospitals, medical facilities, or both, and their ancillary equipment, and such property as may reasonably be required for its principal office or for such other purposes as are necessary in the transaction of the business of the organization;
(2) the furnishing of health care services through providers which are under contract with or employed by the health maintenance organization;
(3) the contracting with any person for the performance on its behalf of certain functions such as marketing, enrollment and administration;
(4) the contracting with an insurance company licensed in this state, or with a hospital or medical service corporation or dental service corporation authorized to do business in this state, for the provision of insurance, indemnity or reimbursement against the cost of health care services provided by the health maintenance organization;
(5) the offering, in addition to health care services, of indemnity benefits covering out-of-area or emergency services; and
(6) receiving and accepting from governmental or private agencies payments covering all or part of the cost of the services provided or arranged for by the organization.
(b) Health maintenance organizations shall provide in their arrangements with all contracting parties and providers that if there be valid medicaid coverage, providing benefits for the same loss or condition, the medicaid coverage shall be the source of last resort of any provider payment.
History: L. 1974, ch. 181, § 8; L. 1993, ch. 132, § 8; L. 1998, ch. 174, § 17; July 1.
(a) All forms of group and individual certificates of coverage and contracts issued by the organization to enrollees or other marketing documents purporting to describe the organization's health care services shall contain as a minimum:
(1) A complete description of the health care services and other benefits to which the enrollee is entitled;
(2) The locations of all facilities, the hours of operation and the services which are provided in each facility in the case of individual practice associations or medical staff and group practices, and, in all other cases, a list of providers by specialty with a list of addresses and telephone numbers;
(3) the financial responsibilities of the enrollee and the amount of any deductible, copayment or coinsurance required;
(4) all exclusions and limitations on services or any other benefits to be provided including any deductible or copayment feature and all restrictions relating to pre-existing conditions;
(5) all criteria by which an enrollee may be disenrolled or denied reenrollment;
(6) service priorities in case of epidemic, or other emergency conditions affecting demand for medical services;
(7) in the case of a health maintenance organization, a provision that an enrollee or a covered dependent of an enrollee whose coverage under a health maintenance organization group contract has been terminated for any reason but who remains in the service area and who has been continuously covered by the health maintenance organization or under any group policy providing similar benefits which it replaces for at least three months immediately prior to termination shall be entitled to obtain a converted contract or have such coverage continued under the group contract for a period of 18 months following which such enrollee or dependent shall be entitled to obtain a converted contract in accordance with the provisions of this section. The employer shall give the employee and such employee's dependents reasonable notice of the right to continuation of coverage. The terminated employee shall pay the insurance carrier the premium for the continuation of coverage and such premium shall be the same as that applicable to members or employees remaining in the group. The converted contract shall provide coverage at least equal to the conversion coverage options generally available from insurers or mutual nonprofit hospital and medical service corporations in the service area at the applicable premium cost. The group enrollee or enrollees shall be solely responsible for paying the premiums for the alternative coverage. The frequency of premium payment shall be the frequency customarily required by the health maintenance organization, mutual nonprofit hospital and medical service corporation or insurer for the policy form and plan selected, except that the insurer, mutual nonprofit hospital and medical service corporation or health maintenance organization shall require premium payments at least quarterly. The coverage shall be available to all enrollees of any group without medical underwriting. The requirement imposed by this subsection shall not apply to a contract which provides benefits for specific diseases or for accidental injuries only, nor shall it apply to any employee or member or such employee's or member's covered dependents when:
(A) Such person was terminated for cause as permitted by the group contract approved by the commissioner;
(B) any discontinued group coverage was replaced by similar group coverage within 31 days; or
(C) the employee or member is or could be covered by any other insured or noninsured arrangement which provides expense incurred hospital, surgical or medical coverage and benefits for individuals in a group under which the person was not covered prior to such termination. Written application for the converted contract shall be made and the first premium paid not later than 31 days after termination of the group coverage or receipt of notice of conversion rights from the health maintenance organization, whichever is later, and shall become effective the day following the termination of coverage under the group contract. The health maintenance organization shall give the employee or member and such employee's or member's covered dependents reasonable notice of the right to convert at least once within 30 days of termination of coverage under the group contract. The group contract and certificates may include provisions necessary to identify or obtain identification of persons and notification of events that would activate the notice requirements and conversion rights created by this section but such requirements and rights shall not be invalidated by failure of persons other than the employee or member entitled to conversion to comply with any such provisions. In addition, the converted contract shall be subject to the provisions contained in paragraphs (2), (4), (5), (6), (7), (8), (9), (13), (14), (15), (16), (17) and (19) of subsection (j) of K.S.A. 40-2209, and amendments thereto;
(8) (A) group contracts shall contain a provision extending payment of such benefits until discharged or for a period not less than 31 days following the expiration date of the contract, whichever is earlier, for covered enrollees and dependents confined in a hospital on the date of termination;
(B) a provision that coverage under any subsequent replacement contract that is intended to afford continuous coverage will commence immediately following expiration of any prior contract with respect to covered services not provided pursuant to subparagraph (8)(A); and
(9) an individual contract shall provide for a 10-day period for the enrollee to examine and return the contract and have the premium refunded, but if services were received by the enrollee during the 10-day period, and the enrollee returns the contract to receive a refund of the premium paid, the enrollee must pay for such services.
(b) No health maintenance organization or medicare provider organization authorized under this act shall contract with any provider under provisions which require enrollees to guarantee payment, other than copayments and deductibles, to such provider in the event of nonpayment by the health maintenance organization or medicare provider organization for any services which have been performed under contracts between such enrollees and the health maintenance organization or medicare provider organization. Further, any contract between a health maintenance organization or medicare provider organization and a provider shall provide that if the health maintenance organization or medicare provider organization fails to pay for covered health care services as set forth in the contract between the health maintenance organization or medicare provider organization and its enrollee, the enrollee or covered dependents shall not be liable to any provider for any amounts owed by the health maintenance organization or medicare provider organization. If there is no written contract between the health maintenance organization or medicare provider organization and the provider or if the written contract fails to include the above provision, the enrollee and dependents are not liable to any provider for any amounts owed by the health maintenance organization or medicare provider organization. Any action by a provider to collect or attempt to collect from a subscriber or enrollee any sum owed by the health maintenance organization to a provider shall be deemed to be an unconscionable act within the meaning of K.S.A. 50-627, and amendments thereto.
(c) No group or individual certificate of coverage or contract form or amendment to an approved certificate of coverage or contract form shall be issued unless it is filed with the commissioner. Such contract form or amendment shall become effective within 30 days of such filing unless the commissioner finds that such contract form or amendment does not comply with the requirements of this section.
(d) Every contract shall include a clear and understandable description of the health maintenance organization's or medicare provider organization's method for resolving enrollee grievances.
(e) The provisions of subsections (A), (B), (C), (D) and (E) of K.S.A. 40-2209 and 40-2215, and amendments thereto, shall apply to all contracts issued under this section, and the provisions of such sections shall apply to health maintenance organizations.
(f) In lieu of any of the requirements of subsection (a), the commissioner may accept certificates of coverage issued by a medicare provider organization in conformity with requirements imposed by any appropriate federal regulatory agency.
History: L. 1974, ch. 181, § 9; L. 1988, ch. 163, § 1; L. 1990, ch. 172, § 1; L. 1991, ch. 137, § 1; L. 1991, ch. 134, § 10; L. 1992, ch. 196, § 3; L. 1993, ch. 231, § 3; L. 1996, ch. 169, § 9; L. 1997, ch. 190, § 4; L. 1998, ch. 174, § 18; L. 2000, ch. 147, § 38; L. 2006, ch. 124, § 9; L. 2008, ch. 164, § 7; L. 2009, ch. 136, § 11; July 1.
History: L. 1974, ch. 181, § 9; L. 1988, ch. 162, § 2; Repealed, L. 1990, ch. 172, § 2; July 1.
Any health maintenance organization or medicare provider organization issued a certificate and otherwise in compliance with this act may enter into contracts in this state to provide an agreed upon set of health care services to enrollees or groups of enrollees in exchange for a prepaid per capita or prepaid aggregate fixed sum.
History: L. 1974, ch. 181, § 10; L. 1991, ch. 134, § 11; L. 1998, ch. 174, § 19; July 1.
(a) The commissioner may make an examination of the affairs of any health maintenance organization or medicare provider organization and providers with whom such organization has contracts, agreements or other arrangements as often as the commissioner deems it necessary for the protection of the interests of the people of this state but not less frequently than once every five years.
(b) At least once every three years and at such other times as the commissioner may require, a health maintenance organization or medicare provider organization shall obtain an on-site quality of care assessment by an independent quality review organization acceptable to the commissioner for the purpose of evaluating levels of health care delivery according to industry standards as prevailing from time to time. The findings of such independent quality review organization shall be expressed by it in a written opinion relating to the general quality of care provided by the health maintenance organization or medicare provider organization and its related contractors of health care services. Failure to obtain such quality of care assessment or the rendering of an unfavorable opinion by the independent quality review organization shall give the commissioner cause to institute action in accordance with K.S.A. 40-3205, 40-3206 or 40-3207, and amendments thereto.
(c) Every health maintenance organization or medicare provider organization and any of the medicare provider organization providers shall submit its books and records relating its operation to such examinations. Medical records of individuals and records of providers under a contract to the health maintenance organization or medicare provider organization shall be subject to such examination, but the identity of patients shall not be disclosed in any report to the commissioner or the commissioner's agents or representatives. For the purpose of examinations, the commissioner may administer oaths to, and examine the officers and agents of the health maintenance organization or medicare provider organization and the principals of such providers.
(d) The fees and expenses of examinations under this section shall be assessed against the organization being examined and remitted to the commissioner. The fees and expenses of the commissioner shall be in accordance with K.S.A. 40-223, and amendments thereto.
(e) In lieu of such examination, the commissioner may accept the report of an examination made by the appropriate examining agency or official of another state or agency of the federal government.
History: L. 1974, ch. 181, § 11; L. 1975, ch. 462, § 52; L. 1987, ch. 175, § 1; L. 1998, ch. 174, § 20; L. 2012, ch. 72, § 1; July 1.
Except as provided by K.S.A. 40-3211 and 40-3226, all applications, filings and reports required under this act shall be treated as public documents.
History: L. 1974, ch. 181, § 12; July 1.
(a) (1) Every health maintenance organization and medicare provider organization subject to this act shall pay to the commissioner the following fees:
(A) For filing an application for a certificate of authority, an amount not to exceed $150;
(B) for filing each annual report, an amount not to exceed $50; and
(C) for filing an amendment to the certificate of authority, an amount not to exceed $10.
(2) Not later than December 1 of each year, the commissioner shall set and cause to be published in the Kansas register the fees required pursuant to this subsection for the next calendar year.
(b) Every health maintenance organization subject to this act shall pay annually to the commissioner at the time such organization files its annual report, a privilege fee in an amount equal to the following percentages of the total of all premiums, subscription charges or any other term that may be used to describe the charges made by such organization to enrollees: 3.31% during the reporting period beginning January 1, 2015, and ending December 31, 2017; and 5.77% on and after January 1, 2018. In such computations all such organizations shall be entitled to deduct therefrom any premiums or subscription charges returned on account of cancellations and dividends returned to enrollees. If the commissioner shall determine at any time that the application of the privilege fee, or a change in the rate of the privilege fee, would cause a denial of, reduction in or elimination of federal financial assistance to the state or to any health maintenance organization subject to this act, the commissioner is hereby authorized to terminate the operation of such privilege fee or the change in such privilege fee.
(c) For the purpose of insuring the collection of the privilege fee provided for by subsection (b), every health maintenance organization subject to this act and required by subsection (b) to pay such privilege fee shall at the time it files its annual report, as required by K.S.A. 40-3220, and amendments thereto, make a return, generated by or at the direction of its chief officer or principal managing director, under penalty of K.S.A. 21-5824, and amendments thereto, to the commissioner, stating the amount of all premiums, assessments and charges received by the health maintenance organization, whether in cash or notes, during the year ending on the last day of the preceding calendar year. Upon the receipt of such returns the commissioner of insurance shall verify such returns and reconcile the fees pursuant to subsection (f) upon such organization on the basis and at the rate provided in this section.
(d) Premiums or other charges received by an insurance company from the operation of a health maintenance organization subject to this act shall not be subject to any fee or tax imposed under the provisions of K.S.A. 40-252, and amendments thereto.
(e) Fees charged under this section shall be remitted to the state treasurer in accordance with the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount in the state treasury to the credit of the medical assistance fee fund created by K.S.A. 40-3236, and amendments thereto.
(f) (1) In addition to any other filing or return required by this section, each health maintenance organization shall submit a report to the commissioner on or before March 31 and September 30 of each year containing an estimate of the total amount of all premiums, subscription charges or any other term that may be used to describe the charges made by such organization to enrollees that the organization expects to collect during the current calendar year. Upon filing each March 31 report, the organization shall submit payment equal to ½ of the privilege fee that would be assessed by the commissioner for the current calendar year based upon the organization's reported estimate. Upon filing each September 30 report, the organization shall submit payment equal to the balance of the privilege fee that would be assessed by the commissioner for the current calendar year based upon the organization's reported estimates.
(2) Any amount of privilege fees actually owed by a health maintenance organization during any calendar year in excess of estimated privilege fees paid shall be assessed by the commissioner and shall be due and payable upon issuance of such assessment.
(3) Any amount of estimated privilege fees paid by a health maintenance organization during any calendar year in excess of privilege fees actually owed shall be reconciled when the commissioner assesses privilege fees in the ensuing calendar year. The commissioner shall credit such excess amount against future privilege fee assessments. Any such excess amount paid by a health maintenance organization that is no longer doing business in Kansas and that no longer has a duty to pay the privilege fee shall be refunded by the commissioner from funds appropriated by the legislature for such purpose.
History: L. 1974, ch. 181, § 13; L. 1980, ch. 140, § 1; L. 1998, ch. 174, § 21; L. 2001, ch. 5, § 124; L. 2007, ch. 122, § 5; L. 2010, ch. 81, § 1; L. 2011, ch. 30, § 179; L. 2015, ch. 98, § 3; L. 2017, ch. 94, § 4; L. 2025, ch. 87, § 19; July 1.
Except as otherwise provided in this act, health maintenance organizations and medicare provider organizations certificated under the provisions of this act shall not be subject to regulation under articles 18, 19 and 19a of chapter 40 of the Kansas Statutes Annotated or acts amendatory thereof or supplemental thereto.
Solicitation of enrollees by a duly certificated health maintenance organization or medicare provider organization or its representatives shall not be construed to be a violation of any provisions of law relating to solicitation or advertising by health professionals. A list of locations of services and a list of providers who have current agreements with the health maintenance organization may be made available to prospective enrollees, and shall be made available to prospective enrollees upon request.
Nothing in any professional practices act of any provider shall be construed to prohibit a provider from being employed by or under contract to provide health care services for a health maintenance organization or medicare provider organization granted a certificate of authority under the provisions of this act.
Any health maintenance organization authorized under this act shall not be deemed to be practicing any act for which a provider is licensed and shall be exempt from laws relating to the practice of any act for which a provider is licensed.
History: L. 1974, ch. 181, § 14; L. 1980, ch. 141, § 1; L. 1998, ch. 174, § 22; July 1.
The commissioner shall promulgate rules and regulations necessary to carry out the provisions of this act.
History: L. 1974, ch. 181, § 15; L. 1998, ch. 174, § 23; July 1.
Any person who violates any provision of this act or any rule or regulation issued pursuant thereto shall be guilty of a class C misdemeanor.
History: L. 1974, ch. 181, § 16; July 1.
History:
L. 1974, ch. 181, § 17; Repealed, L. 2025, ch. 87, § 39; July 1.
History: 40-3217.
The commissioner in carrying out his obligations under the provisions of this act may by agreement or by contract designate qualified persons to make recommendations concerning the findings and determinations required to be made by him. Recommendations received pursuant to this section may be rejected or accepted in full or in part by the commissioner.
History: L. 1974, ch. 181, § 18; July 1.
Nothing in this act shall prohibit any health maintenance organization or medicare provider organization from meeting the requirements of any federal law which would authorize the health maintenance organization or medicare provider organization to receive federal financial assistance or to enroll beneficiaries assisted by federal funds.
History: L. 1974, ch. 181, § 19; L. 1998, ch. 174, § 24; July 1.
Every health maintenance organization and medicare provider organization authorized under this act shall annually on or before the first day of March, file a verified report with the commissioner, showing its condition on the last day of the preceding calendar year, on forms prescribed by the commissioner. Such report shall include:
(a) A financial statement of the organization, including its balance sheet and receipts and disbursements for the preceding year; and
(b) such other information relating to the performance of health maintenance organizations as shall be required by the commissioner. Every health maintenance organization and medicare provider organization authorized under this act shall be subject to the provisions of K.S.A. 40-225 and amendments thereto.
History: L. 1974, ch. 181, § 20; L. 1998, ch. 174, § 25; L. 2000, ch. 147, § 39; July 1.
Any person who is an officer or principal managing director of the affairs of a health maintenance organization or medicare provider organization shall be fully and personally liable and accountable for any willful and intentional violations of the provisions of this act, by such person or by persons under such person's control. It is not intended through this legislation to modify the existing law of Kansas regarding personal or corporate liability for negligence or malpractice.
History: L. 1974, ch. 181, § 21; L. 1998, ch. 174, § 26; July 1.
No person shall use in its name, contracts or literature the phrase "health maintenance organization" or the initials HMO unless such person is certified under the provisions of this act.
History: L. 1974, ch. 181, § 22; July 1.
(a) After a health maintenance organization has been in operation twenty-four (24) months, it may have an annual open enrollment period of at least one month during which it accepts enrollees up to the limits of its capacity, as determined by the health maintenance organization, in the order in which they apply for enrollment. A health maintenance organization shall apply to the commissioner for authorization to impose such underwriting restrictions upon enrollment as may be deemed necessary by the health maintenance organization and the commissioner to preserve its financial stability, to prevent excessive adverse selection by prospective enrollees, or to avoid unreasonably high charges for enrollee coverage for health care services. The commissioner shall approve or deny such application within thirty (30) days of the receipt thereof from the health maintenance organization.
(b) Health maintenance organizations providing or arranging for services exclusively on a group contract basis may limit the open enrollment provided for in subsection (a) to all members of the group or groups covered by such contracts.
History: L. 1974, ch. 181, § 23; July 1.
With the exception of investments made in accordance with other provisions of this act, the investable funds of a health maintenance organization shall be invested only in securities or other instruments permitted by article 2a of chapter 40 of the Kansas Statutes Annotated, or acts amendatory thereof of supplemental thereto, or such other securities or investments as the commissioner may permit.
History: L. 1974, ch. 181, § 24; July 1.
(a) Any director, officer or partner of a health maintenance organization or medicare provider organization who receives, collects, disburses or invests funds in connection with the activities of such organization shall be responsible for such funds in a fiduciary relationship to the health maintenance organization or medicare provider organization.
(b) A health maintenance organization shall maintain in force a fidelity bond or fidelity insurance on such employees and officers, directors and partners in the amount not less than $250,000 for each health maintenance organization or a maximum of $5,000,000 in aggregate maintained on behalf of health maintenance organizations owned by a common parent corporation, or such sum as may be prescribed by the commissioner.
History: L. 1974, ch. 181, § 25; L. 1996, ch. 169, § 10; L. 1998, ch. 174, § 27; July 1.
(a) Notwithstanding the provisions of K.S.A. 40-3212, and amendments thereto, any data or information pertaining to the diagnosis, treatment or health of any enrollee or applicant obtained from such person or from any provider by any health maintenance organization shall be held in confidence and shall not be disclosed to any person except to the extent that it may be necessary to carry out the purposes of this act, or upon the express consent of the enrollee or applicant or as otherwise provided by law, except that in no case shall the name of an enrollee or applicant be disclosed in any data pertaining to the diagnosis, treatment or health of such enrollee or applicant in any medical review procedure or in any report required under the provisions of this act or the rules and regulations issued pursuant thereto unless such enrollee or applicant has expressly consented thereto. A health maintenance organization shall be entitled to claim any statutory privileges against such disclosure which the provider who furnished such information to the health maintenance organization is entitled to claim.
(b) Upon the express request of the enrollee, a complete record of any data or information pertaining to the diagnosis, treatment or health of such enrollee obtained from such person or from any provider by any health maintenance organization shall be provided to another health care provider designated by such enrollee when such enrollee is no longer an enrollee of such health maintenance organization.
History: L. 1974, ch. 181, § 26; L. 1994, ch. 81, § 2; July 1.
(a) Except as provided in paragraph (e), before issuing any certificate of authority, the commissioner shall require that the health maintenance organization have an initial net worth of $1,500,000 and shall thereafter maintain the minimum net worth required under subsection (b).
(b) Except as provided in subsections (c) and (d) of this section, every health maintenance organization shall maintain a minimum net worth equal to the greater of:
(1) $1,000,000; or
(2) two percent of annual premium revenues as reported on the most recent annual financial statement filed with the commissioner on the first $150,000,000 of premium and 1% of annual premium on the premium in excess of $150,000,000; or
(3) an amount equal to the sum of three months uncovered health care expenditures as reported on the most recent financial statement filed with the commissioner; or
(4) an amount equal to the sum of:
(A) Eight percent of annual health care expenditures except those paid on a capitated basis or managed hospital payment basis as reported on the most recent financial statement filed with the commissioner; and
(B) four percent of annual hospital expenditures paid on a managed hospital payment basis as reported on the most recent financial statement filed with the commissioner.
(c) A health maintenance organization licensed on or before the day preceding the effective date of this section must maintain a minimum net worth of:
(1) Twenty-five percent of the amount required by subsection (b) by December 31, 2000;
(2) 50% of the amount required by subsection (b) by December 31, 2001;
(3) 75% of the amount required by subsection (b) by December 31, 2002; and
(4) 100% of the amount required by subsection (b) by December 31, 2003.
(d) In determining net worth, no debt shall be considered fully subordinated unless the subordination clause is in a form acceptable to the commissioner. An interest obligation relating to the repayment of any subordinated debt shall be similarly subordinated. The interest expenses relating to the repayment of a fully subordinated debt shall be considered covered expenses. A debt incurred by a note meeting the requirements of this section, and otherwise acceptable to the commissioner, shall not be considered a liability and shall be recorded as equity.
(e) The net worth requirements of subsections (a) through (d) shall not apply to any health organization contracting with the Kansas department of health and environment to provide services provided under title XIX and title XXI of the social security act or any other public benefits, provided the public benefit contracts represent at least 90% of the premium volume of the health organization.
(f) Unless otherwise provided below, each health maintenance organization doing business in this state shall deposit with any organization or trustee acceptable to the commissioner through which a custodial or controlled account is utilized, cash, securities or any combination of these or other measures, for the benefit of all of the enrollees of the health maintenance organization, that are acceptable in the amount of $150,000 for a medical group or staff model health maintenance organization or $300,000 for an individual practice association.
(g) The commissioner may waive any of the deposit requirements set forth in subsection (f) whenever satisfied that: (1) The organization has sufficient net worth and an adequate history of generating net income to assure its financial viability for the next year; or (2) the organization's performance and obligations are guaranteed by an organization with sufficient net worth and an adequate history of generating net income; or (3) the assets of the organization or its contracts with insurers, hospital or medical service corporations, governments or other organizations are reasonably sufficient to assure the performance of its obligations.
(h) The deposit requirements imposed by this act shall not apply to health maintenance organizations not organized under the laws of this state to the extent an amount equal to or exceeding that required by this act has been deposited with the commissioner or an organization or trustee acceptable to the department of insurance of its state of domicile for the benefit of Kansas enrollees.
(i) All income from deposits shall belong to the depositing organization and shall be paid to it as it becomes available. A health maintenance organization that has made a securities deposit may withdraw that deposit or any part thereof after making a substitute deposit of cash, securities or any combination of these or other measures of equal amount and value. Any securities shall be approved by the commissioner before being substituted.
(j) Every health maintenance organization, when determining liability, shall include an amount estimated in the aggregate to provide for any unearned premium and for the payment of all claims for health care expenditures that have been incurred, whether reported or unreported, that are unpaid and for which the organization is or may be liable, and to provide for the expense of adjustment or settlement of those claims.
(k) The commissioner shall require that each health maintenance organization have a plan for handling insolvency which allows for continuation of benefits for the duration of the contract period for which premiums have been paid and continuation of benefits to members who are confined on the date of insolvency in an inpatient facility until their discharge or expiration of benefits. In considering such a plan, the commissioner may require:
(1) Insurance to cover the expenses to be paid for continued benefits after an insolvency;
(2) provisions in provider contracts that obligate the provider to provide services for the duration of the period after the health maintenance organization's insolvency for which premium payment has been made and until the enrollees' discharge from inpatient facilities;
(3) insolvency reserves;
(4) acceptable letters of credit; or
(5) any other arrangements to assure that benefits are continued as specified in this subsection (k).
History: L. 1984, ch. 176, § 2; L. 1988, ch. 162, § 3; L. 1996, ch. 169, § 11; L. 2000, ch. 147, § 40; L. 2014, ch. 115, § 190; July 1.
A health maintenance organization shall provide in its certificate of coverage the procedures for resolving enrollee grievances. At a minimum, the certificate of coverage shall include the following provisions:
(a) The definition of a grievance;
(b) how, where and to whom the enrollee should file such enrollee's grievance; and
(c) that upon receiving notification of a grievance related for payment of a bill for medical services, the health maintenance organization shall:
(1) Acknowledge receipt of the grievance in writing within 10 working days unless it is resolved within that period of time;
(2) conduct a complete investigation of the grievance within 20 working days after receipt of a grievance, unless the investigation cannot be completed within this period of time. If the investigation cannot be completed within 20 working days after receipt of a grievance, the enrollee shall be notified in writing within 30 working days time, and every 30 working days after that, until the investigation is completed. The notice shall state the reasons for which additional time is needed for the investigation;
(3) have within five working days after the investigation is completed, someone not involved in the circumstances giving rise to the grievance or its investigation decide upon the appropriate resolution of the grievance and notify the enrollee in writing of the decision of the health maintenance organization regarding the grievance and of any right to appeal. The notice shall explain the resolution of the grievance and any right to appeal. The notice shall explain the resolution of the grievance in terms which are clear and specific; and
(4) notify, if the health maintenance organization has established a grievance advisory panel, the enrollee of the enrollee's right to request the grievance advisory panel to review the decision of the health maintenance organization. This notice shall indicate that the grievance advisory panel is not obligated to conduct the review. This provision shall also state how, where and when the enrollee should make such enrollee's request for this review.
History: L. 1996, ch. 169, § 12; July 1.
(a) A health maintenance organization that requires prior authorization before making payment for the treatment of medical emergency conditions, as defined by the health maintenance organization, shall provide enrollees with a toll-free telephone number answered 24 hours per day, seven days a week. At least one person with medical training who is authorized to determine whether an emergency condition exists shall be available 24 hours per day, seven days a week to make these determinations.
(b) A health maintenance organization shall not base its denial of payment for emergency medical services solely on the failure of the enrollee to receive authorization prior to receiving the emergency medical service. The enrollee must notify the health maintenance organization of receipt of medical services for emergency conditions within 24 hours or as soon after that as is reasonably possible. Nothing shall require the health maintenance organization to authorize payment for any services provided during that 24 hour period, regardless of medical necessity, if those services do not otherwise constitute benefits under the certificate of coverage approved by the commissioner.
(c) If the participating provider is responsible for seeking prior authorization from the health maintenance organization before receiving payment for the treatment of emergency medical conditions and the enrollee is eligible at the time when covered services are provided, then the enrollee will not be held financially responsible for payment for covered services if the prior authorization for emergency medical services has not been sought and received, other than for what the enrollee would otherwise be responsible, such as copayments and deductibles.
(d) All disputes between an enrollee and a health maintenance organization arising under the provisions of this section shall be resolved by means of the grievance procedures established by the health maintenance organization.
History: L. 1996, ch. 169, § 13; July 1.
A health maintenance organization shall establish reasonable procedures for assuring a transition of enrollees to physicians or health care providers and for continuity of treatment, including providing immediate notice to the enrollee and making available to the enrollee a current listing of preferred providers, in the event a provider's participation in the plan is terminated for any reason. The plan shall include provisions for the continuation of care to enrollees for a period up to 90 days by a provider who is terminated from a network in those cases where the continuation of such care is medically necessary and in accordance with the dictates of medical prudence and where the enrollee has special circumstances such as a disability, a life threatening illness or is in the third trimester of pregnancy. The provisions for the continuation of care shall include guarantees that the enrollee will not be liable to the provider for any amounts owed for medical care other than any deductibles or copayment amounts specified in the certificate of coverage or other contract between the enrollee and the health maintenance organization. In the event the terminated provider is authorized to continue treating the enrollee pursuant to this subsection, the health maintenance organization shall have an obligation to pay the terminated provider at the previously contracted rate for services provided to the enrollee.
History: L. 1996, ch. 169, § 14; July 1.
(a) If uncovered expenditures exceed 10% of total health care expenditures for two consecutive months, a health maintenance organization shall place an uncovered expenditure insolvency deposit with the commissioner, with an organization or trustee acceptable to the commissioner through which a custodial or controlled account is maintained, cash or securities that are acceptable to the commissioner. The deposit at all times shall have a fair market value in an amount 120% of the health maintenance organization's outstanding liability for uncovered expenditures for enrollees in this state, including incurred but not reported claims, and shall be calculated as of the first day of the month and maintained for the remainder of the month. If a health maintenance organization is not otherwise required to file a quarterly report, such health maintenance organization shall file a report within 45 days of the end of the calendar quarter with information sufficient to demonstrate compliance with this section.
(b) The deposit required under this section shall be in addition to the deposit required under K.S.A. 40-3227, and amendments thereto, and shall be deemed to be an admitted asset of the health maintenance organization in the determination of such health maintenance organization's net worth. All income from deposits or trust accounts shall be deemed to be assets of the health maintenance organization and may be withdrawn from the deposit or account quarterly with the approval of the commissioner.
(c) A health maintenance organization that has made a deposit may withdraw that deposit or any part of the deposit if: (1) A substitute deposit of cash or securities of equal amount and value is made; (2) the fair market value of such substitute deposit exceeds the amount of the required deposit; or (3) the deposit required under subsection (a) is reduced or eliminated. Deposits, substitutions or withdrawals may be made only with the prior written approval of the commissioner.
(d) The deposit required under this section shall be held in trust and may be used only as provided under this section. The commissioner may use all or any portion of the deposit of an insolvent health maintenance organization for administrative costs associated with administering such deposit and the payment of any claim of an enrollee of this state for uncovered expenditures in this state. Each claim for uncovered expenditures shall be paid on a pro rata basis based on assets available to pay the ultimate liability for incurred expenditures. A partial distribution may be made pending final distribution. Any amount of such deposit remaining shall be paid into the liquidation or receivership of the health maintenance organization.
(e) The commissioner by regulation may prescribe the time, manner and form for filing claims under subsection (d).
(f) The commissioner by regulation or order may require health maintenance organizations to file annual, quarterly or more frequent reports deemed necessary to demonstrate compliance with this section. The commissioner may require that the reports include liability for uncovered expenditures as well as an audit opinion.
(g) The deposit required under this section may be satisfied through other arrangement acceptable to the commissioner including parental guarantees and letters of credit.
(h) The commissioner may adopt rules and regulations to implement this section.
History: L. 2000, ch. 147, § 32; July 1.
(a) In the event of an insolvency of a health maintenance organization, the commissioner may order that all other carriers that participated in the enrollment process with the insolvent health maintenance organization at a group's last regular enrollment period shall offer the group's enrollees of the insolvent health maintenance organization a 30-day enrollment period commencing upon the date of insolvency. Under such order each carrier shall offer to each enrollee of the insolvent health maintenance organization the same coverages that such insolvent health maintenance organization had offered to each enrollee of the group at such group's last regular enrollment period at rates determined in accordance with the successor health maintenance organization's existing rating methodology.
(b) Any individual or enrollee who has health insurance coverage involuntarily terminated because of the insolvency of such individual's or enrollee's health maintenance organization shall be treated as the equivalent of a federally defined eligible individual for the purposes of the Kansas uninsurable health insurance plan act, K.S.A. 40-2117 et seq. and amendments thereto.
History: L. 2000, ch. 147, § 33; July 1.
(a) A rehabilitation liquidation or conservation of a health maintenance organization shall be deemed to be the rehabilitation, liquidation or conservation of an insurance company and shall be conducted under the supervision of the commissioner pursuant to the law governing the rehabilitation, liquidation or conservation of insurance companies. The commissioner may apply for an order directing the commissioner to rehabilitate, liquidate or conserve a health maintenance organization upon any one or more grounds set out in the insurers supervision, rehabilitation and liquidation act, K.S.A. 40-3605 et seq., and amendments thereto, or when in the commissioner's discretion the continued operation of such health maintenance organization would be hazardous either to the enrollees of such health maintenance organization or to the people of this state. Each enrollee of such health maintenance organization shall have the same priority in the event of liquidation or rehabilitation as the law provides to policy holders of an health organization.
(b) For purpose of determining the priority of distribution of general assets, any claim of any enrollee or enrollees' beneficiary shall have the same priority as established by K.S.A. 40-3641, and amendments thereto, for policyholders and beneficiaries of insureds of insurance companies. If an enrollee is liable to a nonparticipating provider for services provided pursuant to and covered by the health maintenance organization, such liability shall have the status of such enrollee's claim for distribution of general assets. A provider who is obligated by statute or agreement to hold any enrollee harmless from liability for services provided pursuant to and covered by a health maintenance organization shall have a priority of distribution of the general assets immediately following that of enrollees and enrollees' beneficiaries as described herein, and immediately preceding the priority of distribution described in subsection (d) of K.S.A. 40-3641 and amendments thereto.
History: L. 2000, ch. 147, § 34; July 1.
(a) Whenever the commissioner determines that the financial condition of a health maintenance organization is such that its continued operation might be hazardous to its enrollees, creditors or the general public, or that such health maintenance organization has violated any provisions of this act, the commissioner, after notice and hearing, may order such health maintenance organization to take action reasonably necessary to rectify the condition or violation. Such action may include, but not limited to one or more of the following:
(1) Reduce the total amount of present and potential liability for benefits by reinsurance or other method acceptable to the commissioner;
(2) reduce the volume of any new business being accepted;
(3) reduce expenses by specified methods acceptable to the commissioner;
(4) suspend or limit the writing of any new business for a period of time;
(5) increase the health maintenance organization's capital and surplus by contribution; or
(6) take such other steps the commissioner may deem appropriate under the circumstances.
(b) The commissioner may adopt rules and regulations which set uniform standards and criteria for early warning that the continued operation of any health maintenance organization might be hazardous to its enrollees, creditors or the general public and set standards for evaluating the financial condition of any health maintenance organization.
History: L. 2000, ch. 147, § 35; July 1.
K.S.A. 40-3231 through 40-3234, and amendments thereto, shall be part of and supplemental to the health maintenance organization act cited at K.S.A. 40-3201 et seq., and amendments thereto.
History: L. 2000, ch. 147, § 36; July 1.
(a) There is hereby created in the state treasury the medical assistance fee fund. The commissioner of insurance shall remit to the state treasurer, in accordance with the provisions of K.S.A. 75-4215, and amendments thereto, all moneys collected or received by the commissioner from health maintenance organizations and medicare provider organizations for the fees specified in K.S.A. 40-3213, and amendments thereto. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount in the state treasury to the credit of the medical assistance fee fund.
(b) (1) Moneys in the medical assistance fee fund shall be expended subject to the following priorities:
(A) First, to restore any reductions initiated during calendar year 2016 to provider reimbursement rates for state medicaid services;
(B) second, on July 1, 2017, or as soon thereafter as moneys are available, the director of accounts and reports shall transfer the amount of $3,500,000 to the community mental health center improvement fund created by K.S.A. 39-2018, and amendments thereto, and on July 1 of each year thereafter, or as soon after each such date as moneys are available, the director of accounts and reports shall transfer the amount of $5,000,000 to the community mental health center improvement fund established by K.S.A. 39-2018, and amendments thereto;
(C) third, to transfer moneys to the Kansas newborn screening fund pursuant to K.S.A. 65-180, and amendments thereto; and
(D) fourth, if any moneys remain, for the purpose of medicaid medical assistance payments.
(2) All expenditures from the medical assistance fee fund shall be made in accordance with appropriation acts upon warrants of the director of accounts and reports issued pursuant to vouchers approved by the secretary of health and environment or the secretary's designee.
(c) On or before the 10th
day of each month, the director of accounts and reports shall transfer from the state general fund to the medical assistance fee fund interest earnings based on:
(1) The average daily balance of moneys in the medical assistance fee fund for the preceding month; and
(2) the net earnings rate of the pooled money investment portfolio for the preceding month.
(d) The medical assistance fee fund shall be used for the purposes set forth in this act and for no other governmental purposes. It is the intent of the legislature that the fund shall remain intact and inviolate for the purposes set forth in this act, and moneys in the fund shall not be subject to the provisions of K.S.A. 75-3722, 75-3725a and 75-3726a, and amendments thereto.
(e) The secretary of health and environment shall prepare and deliver to the legislature on or before the first day of each regular legislative session a report that summarizes all expenditures from the medical assistance fee fund, fund revenues and recommendations regarding the adequacy of the fund to support necessary medical assistance programs.
History: L. 2015, ch. 98, § 1; L. 2017, ch. 94, § 5; July 1.
(a) It is hereby found and declared that it may not be inconsistent with the public interest and the interest of policyholders to permit insurers to:
(1) Engage in activities which would enable them to make better use of management skills and facilities;
(2) diversify into new lines of business through acquisition or organization of subsidiaries;
(3) have free access to capital markets which could provide funds for insurers to use in diversification programs;
(4) implement sound tax planning conclusions; and
(5) serve the changing needs of the public and adapt to changing conditions of the social, economic and political environment, so that insurers are able to compete effectively and to meet the growing public demand for institutions capable of providing a comprehensive range of financial services.
(b) It is further found and declared that the public interest and the interests of policyholders are or may be adversely affected when:
(1) Control of an insurer is sought by persons who would utilize such control adversely to the interests of policyholders;
(2) acquisition of control of an insurer would substantially lessen competition or create a monopoly in the insurance business in this state;
(3) an insurer which is part of a holding company system is caused to enter into transactions or relationships with affiliated companies on terms which are not fair and reasonable; or
(4) an insurer pays dividends which jeopardize the financial condition of such insurer.
(c) It is hereby declared that the policies and purposes of this act are to promote the public interest by:
(1) Facilitating the achievement of the objectives enumerated in subsection (a) of this section;
(2) requiring disclosure of pertinent information relating to changes in control of an insurer;
(3) requiring disclosure by an insurer of material transactions and relationships between the insurer and its affiliates, including certain dividends paid by the insurer; and
(4) providing standards governing material transactions between the insurer and its affiliates.
(d) It is further declared that it is desirable to prevent unnecessary multiple and conflicting regulation of insurers. Therefore, this state shall exercise regulatory authority over domestic insurers and, unless otherwise provided in this act, not over nondomestic insurers, with respect to the matters contained herein.
History: L. 1974, ch. 183, § 1; L. 1990, ch. 173, § 1; April 12.
As used in the insurance holding company act, unless the context otherwise requires:
(a) "Affiliate" of, or person "affiliated" with, a specific person, means a person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the person specified.
(b) "Commissioner of insurance" or "commissioner" means the commissioner of insurance, the commissioner's deputies, or the insurance department, as appropriate.
(c) "Control" including the terms "controlling," "controlled by" and "under common control with," means the possession, direct or indirect, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing 10% or more of the voting securities of any other person. This presumption may be rebutted by a showing made in the manner provided by K.S.A. 40-3305(k), and amendments thereto, that control does not exist in fact. The commissioner of insurance may determine, after a hearing in accordance with the provisions of the Kansas administrative procedure act, that control exists in fact, notwithstanding the absence of a presumption to that effect.
(d) "Enterprise risk" means any activity, circumstance, event or series of events involving one or more affiliates of an insurer that, if not remedied promptly, is likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole, including, but not limited to, anything that would cause the insurer's risk-based capital to fall into company action level RBC, as such term is defined in either K.S.A. 40-2c01 et seq. or 40-2d01 et seq., and amendments thereto, as appropriate, or would cause the insurer to be in hazardous financial condition as set forth in K.S.A. 40-222b, 40-222c and 40-222d, and amendments thereto.
(e) "Financial analysis handbook" means the version of the NAIC financial analysis handbook adopted by the NAIC and in effect that has been selected and noticed by the commissioner pursuant to K.S.A. 2025 Supp. 40-2,256, and amendments thereto.
(f) "Group capital calculation instructions" means the group capital calculation instructions selected and announced by the commissioner pursuant to K.S.A. 2025 Supp. 40-2,256, and amendments thereto.
(g) "Group-wide supervisor" means the regulatory official authorized to engage in conducting and coordinating group-wide supervision activities who is determined or acknowledged by the commissioner under K.S.A. 40-3318, and amendments thereto, to have sufficient significant contacts with the internationally active insurance group.
(h) "Insurance holding company system" means two or more affiliated persons, one or more of which is an insurer.
(i) "Insurer" means any corporation, company, association, society, fraternal benefit society, health maintenance organization, nonprofit medical and hospital service corporation, nonprofit dental service corporation, reciprocal exchange, person or partnership writing contracts of insurance, indemnity or suretyship in this state upon any type of risk or loss except lodges, societies, persons or associations transacting business pursuant to the provisions of K.S.A. 40-202, and amendments thereto.
(j) "Internationally active insurance group" means an insurance holding company system that:
(1) Includes an insurer registered under K.S.A. 40-3305, and amendments thereto; and
(2) meets the following criteria:
(A) Has premiums written in at least three countries;
(B) the percentage of gross premiums written outside the United States is at least 10% of the insurance holding company system's total gross written premiums; and
(C) based on a three-year rolling average, the total assets of the insurance holding company system are at least $50,000,000,000 or the total gross written premiums of the insurance holding company system are at least $10,000,000,000.
(k) "NAIC" means the national association of insurance commissioners.
(l) "NAIC liquidity stress test framework" means the separate NAIC publication that includes the history of the NAIC's development of regulatory liquidity stress testing, the scope criteria applicable for a specific data year and the liquidity stress test instructions and reporting templates for a specific data year and such scope criteria, instructions and reporting templates as adopted by the NAIC and as amended by the NAIC from time to time in accordance with the procedures adopted by the NAIC and as selected and announced by the commissioner pursuant to K.S.A. 2025 Supp. 40-2,256, and amendments thereto.
(m) "Person" means an individual, corporation, a partnership, an association, a joint stock company, a trust, an unincorporated organization, any similar entity or any combination of the foregoing acting in concert.
(n) "Scope criteria," as detailed in the NAIC liquidity stress test framework, are the designated exposure bases along with minimum magnitudes thereof for the specified data year, used to establish a preliminary list of insurers considered scoped into the NAIC liquidity stress test framework for such specified data year.
(o) "Securityholder" of a specified person means one who owns any security of such person, common stock, preferred stock, debt obligations and any other security convertible into or evidencing the right to acquire any of the foregoing.
(p) "Subsidiary" of a specified person means an affiliate controlled by such person, directly or indirectly, through one or more intermediaries.
(q) "Voting security" means any security convertible into or evidencing a right to acquire a voting security.
History: L. 1974, ch. 183, § 2; L. 1976, ch. 217, § 1; L. 1988, ch. 356, § 118; L. 1992, ch. 288, § 1; L. 1996, ch. 169, § 15; L. 1997, ch. 166, § 2; L. 2013, ch. 15, § 3; L. 2021, ch. 108, § 10; L. 2025, ch. 99, § 19; July 1.
History: L. 1974, ch. 183, § 2; L. 1976, ch. 217, § 1; L. 1988, ch. 356, § 118; L. 1992, ch. 288, § 1; L. 1996, ch. 169, § 15; L. 1997, ch. 8, § 11; Repealed, L. 1999, ch. 149, § 14; July 1.
(a) Any domestic insurer, either by itself or in cooperation with one or more persons, may organize or acquire one or more subsidiaries otherwise permitted under Kansas law.
(b) In addition to investments in common stock, preferred stock, debt obligations and other securities permitted under all other sections of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, a domestic insurer may also:
(1) Invest in common stock, preferred stock, debt obligations and other securities of one or more subsidiaries, amounts which do not exceed the lesser of 10% of the insurer's assets or 50% of the insurer's surplus as regards policyholders, if after such investments, the insurer's surplus as regards policyholders will be reasonable in relation to the insurer's outstanding liabilities and adequate to meet its financial needs. In calculating the amount of such investments, investments in domestic or foreign insurance subsidiaries and health maintenance organizations shall be excluded, and there shall be included:
(A) Total net moneys or other consideration expended and obligations assumed in the acquisition or formation of a subsidiary, including all organizational expenses and contributions to capital and surplus of the subsidiary whether or not represented by the purchase of capital stock or issuance of other securities; and
(B) all amounts expended in acquiring additional common stock, preferred stock, debt obligations and other securities; and all contributions to the capital or surplus of a subsidiary subsequent to its acquisition or formation.
(2) Invest any amount in common stock, preferred stock, debt obligations and other securities of one or more subsidiaries engaged or organized to engage exclusively in the ownership and management of assets authorized as investments for the insurer provided that each subsidiary agrees to limit its investments in any asset so that such investments will not cause the amount of the total investment of the insurer to exceed any of the investment limitations specified in article 2a or article 2b of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, applicable to the insurer. For the purpose of this paragraph, "the total investment of the insurer" shall include:
(A) Any direct investment by the insurer in an asset; and
(B) the insurer's proportionate share of any investment in an asset by any subsidiary of the insurer, which shall be calculated by multiplying the amount of the subsidiary's investment by the percentage of the ownership of the subsidiary.
(3) With the approval of the commissioner, invest any greater amount in common stock, preferred stock, debt obligations or other securities of one or more subsidiaries; provided that after the investment the insurer's surplus as regards policyholders will be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs.
(c) Investments in common stock, preferred stock, debt obligations or other securities of subsidiaries made pursuant to subsection (b) shall not be subject to any of the otherwise applicable restrictions or prohibitions contained in chapter 40 of the Kansas Statutes Annotated, and amendments thereto, applicable to such investments of insurers.
(d) Whether any investment made pursuant to subsection (b) meets the applicable requirements of that subsection is to be determined before the investment is made, by calculating the applicable investment limitations as though the investment had already been made, taking into account the then outstanding principal balance on all previous investments in debt obligations, and the value of all previous investments in equity securities as of the day they were made, net of any return of capital invested, not including dividends.
(e) If an insurer ceases to control a subsidiary, it shall dispose of any investment therein made pursuant to this section within three years from the time of the cessation of control or within such further time as the commissioner may prescribe, unless at any time after the investment shall have been made, the investment shall have met the requirements for investment under any other section of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, including, without limitation, K.S.A. 40-2a16 or K.S.A. 40-2b13, and amendments thereto.
History: L. 1974, ch. 183, § 3; L. 1991, ch. 138, § 1; L. 2007, ch. 79, § 1; July 1.
(a) (1) No person other than the issuer shall make a tender offer for or a request or invitation for tenders of, or enter into any agreement to exchange securities or, seek to acquire, or acquire, in the open market or otherwise, any voting security of a domestic insurer if, after the consummation thereof, such person would, directly or indirectly, or by conversion or by exercise of any right to acquire, be in control of such insurer, and no person shall enter into an agreement to merge with or otherwise to acquire control of a domestic insurer or any person controlling a domestic insurer unless, at the time any such offer, request, or invitation is made or any such agreement is entered into, or prior to the acquisition of such securities if no offer or agreement is involved, such person has filed with the commissioner of insurance and has sent to such insurer, a statement containing the information required by this section and such offer, request, invitation, agreement or acquisition has been approved by the commissioner of insurance in the manner hereinafter prescribed. The requirements of this section shall not apply to the merger or consolidation of those companies subject to the requirements of K.S.A. 40-507 and 40-1216 through 40-1225, and amendments thereto.
(2) For purposes of this section, any controlling person of a domestic insurer seeking to divest its controlling interest in the domestic insurer, in any manner, shall file with the commissioner, with a copy to the insurer, confidential notice of its proposed divestiture at least 30 days prior to the cessation of control. The commissioner shall determine those instances in which each party seeking to divest or to acquire a controlling interest in an insurer shall be required to file for and obtain approval of the transaction. The information shall remain confidential until the conclusion of the transaction unless the commissioner, in the commissioner's discretion, determines that confidential treatment will interfere with enforcement of this section. If the statement referred to in paragraph (1) is otherwise filed, this paragraph shall not apply.
(3) With respect to a transaction subject to this section, the acquiring person shall also be required to file a preacquisition notification with the commissioner, and such preacquistion notification shall contain the information in the form and manner prescribed by the commissioner through rules and regulations.
(4) As used in this section:
(A) "Domestic" insurer includes any person controlling a domestic insurer unless such person, as determined by the commissioner of insurance, is either directly or through its affiliates primarily engaged in business other than the business of insurance.
(B) "Person" does not include any securities broker holding, in the usual and customary broker's function, less than 20% of the voting securities of the insurance company or of any person that controls the insurance company.
(b) (1) The statement to be filed with the commissioner of insurance shall be made under oath or affirmation, shall be accompanied by a nonrefundable filing fee not to exceed $1,000 and shall contain the following information:
(A) The name and address of each person by whom or on whose behalf the merger or other acquisition of control referred to in subsection (a) is to be effected, hereinafter called "acquiring party," and:
(i) If such person is an individual, such individual's principal occupation, all offices and positions held by such individual during the past five years and any conviction of crimes other than minor traffic violations during the past 10 years; and
(ii) if such person is not an individual, a report of the nature of its business operations during the past five years or for such shorter period as such person and any predecessors thereof shall have been in existence, an informative description of the business intended to be done by such person and such person's subsidiaries and a list of all individuals who are or who have been selected to become directors or executive officers of such person, or who perform or will perform functions appropriate to such positions. Such list shall include for each such individual the information required by clause (i);
(B) the source, nature and amount of the consideration used or to be used in effecting the merger or other acquisition of control, a description of any transaction wherein funds were or are to be obtained for any such purpose including any pledge of the insurer's stock, or the stock of any of its subsidiaries or controlling affiliates, and the identity of persons furnishing such consideration, except that where a source of such consideration is a loan made in the lender's ordinary course of business, the identity of the lender shall remain confidential, if the person filing such statement so requests;
(C) fully audited financial information as to the earnings and financial condition of each acquiring party for the preceding five fiscal years of each such acquiring party or for such lesser period as such acquiring party and any predecessors thereof shall have been in existence and similar unaudited information as of a date not earlier than 90 days prior to the filing of the statement;
(D) any plans or proposals that each acquiring party may have to liquidate such insurer, to sell its assets, merge or consolidate it with any person or to make any other material change to its business, corporate structure or management;
(E) the number of shares of any security referred to in subsection (a) that each acquiring party proposes to acquire and the terms of the offer, request, invitation, agreement or acquisition referred to in subsection (a) and a statement regarding the method utilized to determine the fairness of the proposal;
(F) the amount of each class of any security referred to in subsection (a) that is beneficially owned or concerning which there is a right to acquire beneficial ownership by each acquiring party;
(G) a full description of any contracts, arrangements or understandings with respect to any security referred to in subsection (a) in which any acquiring party is involved, including, but not limited to, transfer of any of the securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or guarantees of profits, division of losses or profits, or the giving or withholding of proxies. Such description shall identify the persons with whom such contracts, arrangements or understandings have been entered into;
(H) a description of the purchase of any security referred to in subsection (a) during the 12 calendar months preceding the filing of the statement, by any acquiring party, including the dates of purchase, names of the purchasers and consideration paid or agreed to be paid therefor;
(I) a description of any recommendations to purchase any security referred to in subsection (a) made during the 12 calendar months preceding the filing of the statement, by any acquiring party, or by anyone based upon interviews or at the suggestion of such acquiring party;
(J) copies of all tender offers for, requests or invitations for tenders of, exchange offers for and agreements to acquire or exchange any securities referred to in subsection (a) and, if distributed, of additional soliciting material relating thereto;
(K) the terms of any agreement, contract or understanding made with or proposed to be made with any broker-dealer as to solicitation of securities referred to in subsection (a) for tender and the amount of any fees, commissions or other compensation to be paid to broker-dealers with regard thereto;
(L) an agreement by the person required to file the statement referred to in subsection (a) that such person shall provide the annual report, as specified in K.S.A. 40-3305(l), and amendments thereto, for so long as control exists;
(M) an acknowledgment by the person required to file the statement referred to in subsection (a) that the person and all subsidiaries within its control in the insurance holding company system will provide to the commissioner of insurance upon request such information as the commissioner of insurance deems necessary to evaluate enterprise risk to the insurer; and
(N) such additional information as the commissioner of insurance may by rule or regulation prescribe as necessary or appropriate for the protection of policyholders of the insurer or in the public interest.
(2) If the person required to file the statement referred to in subsection (a) is a partnership, limited partnership, syndicate or other group, the commissioner of insurance may require that the information required pursuant to subparagraphs (A) through (N) shall be provided with respect to each partner of such partnership or limited partnership, each member of such syndicate or group and each person who controls such partner or member. If any such partner, member or person is a corporation or the person required to file the statement referred to in subsection (a) is a corporation, the commissioner of insurance may require that the information required pursuant to subparagraphs (A) through (N) shall be provided with respect to such corporation, each officer and director of such corporation and each person who is directly or indirectly the beneficial owner of more than 10% of the outstanding voting securities of such corporation.
(3) If any material change occurs in the facts set forth in the statement filed with the commissioner of insurance and sent to such insurer pursuant to this section, an amendment setting forth such change, together with copies of all documents and other material relevant to such change, shall be filed with the commissioner of insurance and sent to such insurer within two business days after such person learns of such change.
(4) Not later than December 1 of each year, the commissioner shall set and cause to be published in the Kansas register the fee required pursuant to this subsection for the next calendar year.
(c) If any offer, request, invitation, agreement or acquisition referred to in subsection (a) is proposed to be made by means of a registration statement under the securities act of 1933 or in circumstances requiring the disclosure of similar information under the securities exchange act of 1934, or under a state law requiring similar registration or disclosure, the person required to file the statement referred to in subsection (a) may utilize such documents in furnishing the information called for by that statement.
(d) (1) The commissioner of insurance shall approve any merger or other acquisition of control referred to in subsection (a) unless, after a public hearing thereon conducted in accordance with the provisions of the Kansas administrative procedure act, the commissioner of insurance finds that:
(A) After the change of control the domestic insurer referred to in subsection (a) would not be able to satisfy the requirements for the issuance of a license to write the line or lines of insurance for which it is presently licensed;
(B) the financial condition of any acquiring party is such as might jeopardize the financial stability of the insurer or prejudice the interest of its policyholders;
(C) the plans or proposals which the acquiring party has to liquidate the insurer, sell its assets, consolidate or merge it with any person, or to make any other material change in its business, corporate structure or management, are unfair and unreasonable to policyholders of the insurer or are not in the public interest;
(D) the competence, experience and integrity of those persons who would control the operation of the insurer are such that it would not be in the interest of policyholders of the insurer or of the public to permit the merger or other acquisition of control; or
(E) the acquisition is likely to be hazardous or prejudicial to the insurance-buying public.
(2) The public hearing referred to in subsection (d)(1) shall be held as soon as practicable after the statement required by this subsection (a) is filed, and at least 20 days' notice thereof shall be given by the commissioner of insurance to the person filing the statement. Not less than seven days' notice of such public hearing shall be given by the person filing the statement to the insurer and to such other persons as may be designated by the commissioner of insurance. At such hearing, the person filing the statement, the insurer, any person to whom notice of hearing was sent and any other person whose interests may be affected thereby shall have the right to present evidence, examine and cross-examine witnesses and offer oral and written arguments in accordance with the Kansas administrative procedure act. In the absence of intervention, such insurer or person shall have the right to present oral or written statements in accordance with K.S.A. 77-523(c), and amendments thereto.
(3) If the proposed acquisition of control will require the approval of more than one commissioner of insurance, the public hearing referred to in paragraph (2) may be held on a consolidated basis upon request of the person filing the statement referred to in subsection (a). Such person shall file the statement referred to in subsection (a) with the national association of insurance commissioners within five days of making the request for a public hearing. A commissioner of insurance may opt out of a consolidated hearing and shall provide notice to the applicant of the opt-out within 10 days of the receipt of the statement referred to in subsection (a). A hearing conducted on a consolidated basis shall be public and shall be held within the United States before the commissioners of insurance of the states in which the insurers are domiciled. Such commissioners of insurance shall hear and receive evidence. A commissioner of insurance may attend such hearing in person or by telecommunication.
(4) As a condition of a change of control of a domestic insurer, any determination by the commissioner of insurance that the person acquiring control of the insurer shall be required to maintain or restore the capital of the insurer to the level required by the laws and regulations of this state shall be made not later than 60 days after the date of notification of the change in control submitted pursuant to subsection (a).
(5) The commissioner of insurance may retain at the acquiring person's expense any attorneys, actuaries, accountants and other experts not otherwise a part of the staff of the commissioner of insurance as the commissioner of insurance deems to be reasonably necessary to assist the commissioner of insurance in reviewing the proposed acquisition of control.
(e) The provisions of this section shall not apply to any offer, request, invitation, agreement or acquisition that the commissioner of insurance by order shall exempt therefrom as:
(1) Not having been made or entered into for the purpose and not having the effect of changing or influencing the control of a domestic insurer; or
(2) as otherwise not comprehended within the purposes of this section.
(f) The following shall be violations of this section:
(1) The failure to file any statement, amendment or other material required to be filed pursuant to subsection (a) or (b); or
(2) the effectuation or any attempt to effectuate an acquisition of control of, or merger with, a domestic insurer unless the commissioner of insurance has given the requisite approval thereto.
(g) The courts of this state are hereby vested with jurisdiction over every securityholder of a domestic insurer and every person not resident, domiciled or authorized to do business in this state who files a statement with the commissioner of insurance under this section and over all actions involving such person arising out of violations of this section. Each such person shall be deemed to have performed acts equivalent to and constituting an appointment by such a person of the commissioner of insurance to be such person's true and lawful attorney upon whom may be served all lawful process in any action, suit or proceeding arising out of violations of this section. Copies of all such lawful process shall be served on the commissioner of insurance and transmitted by registered or certified mail by the commissioner of insurance to such person at such person's last known address.
History: L. 1974, ch. 183, § 4; L. 1976, ch. 217, § 2; L. 1983, ch. 159, § 1; L. 1988, ch. 356, § 119; L. 1990, ch. 173, § 2; L. 1992, ch. 288, § 2; L. 1997, ch. 166, § 3; L. 2013, ch. 15, § 4; L. 2021, ch. 108, § 11; L. 2025, ch. 87, § 20; July 1.
(a) Every insurer that is authorized to do business in this state and is a member of an insurance holding company system shall register with the commissioner of insurance, except a foreign insurer subject to registration requirements and standards adopted by statute or regulation in the jurisdiction of its domicile that are substantially similar to those contained in this section. Any insurer that is subject to registration under this section shall register within 15 days after it becomes subject to registration and annually thereafter by May 1 of each year for the previous calendar year the commissioner of insurance for good cause shown extends the time for registration, and then within such extended time. The commissioner of insurance may require any authorized insurer that is a member of an insurance holding company system and is not subject to registration under this section to furnish a copy of the registration statement, the summary specified in subsection (c) or other information filed by such insurance company with the insurance regulatory authority of domiciliary jurisdiction.
(b) Pursuant to subsection (a), every insurer subject to registration shall file a registration statement on a form provided by the commissioner of insurance that shall contain current information regarding:
(1) The capital structure, general financial condition, ownership and management of the insurer and any person controlling the insurer;
(2) the identity and relationship of every member of the insurance holding company system;
(3) the following agreements in force and transactions currently outstanding or that occurred during the last calendar year between such insurer and its affiliates:
(A) Loans, other investments, or purchases, sales or exchanges of securities of the affiliates by the insurer or of the insurer by its affiliates;
(B) purchases, sales or exchanges of assets;
(C) transactions not in the ordinary course of business;
(D) guarantees or undertakings for the benefit of an affiliate that result in an actual contingent exposure of the insurer's assets to liability, other than insurance contracts entered into in the ordinary course of the insurer's business;
(E) all management agreements, service contracts and cost sharing arrangements;
(F) reinsurance agreements;
(G) dividends and other distributions to shareholders; and
(H) consolidated tax allocation agreements;
(4) other matters concerning transactions between registered insurers and any affiliates as may be included from time to time in any registration forms adopted or approved by the commissioner of insurance;
(5) any pledge of the insurer's stock, including stock of any subsidiary or controlling affiliate, for a loan made to any member of the insurance holding company system;
(6) financial statements of or within an insurance holding company system, including all affiliates, if requested by the commissioner of insurance. Financial statements may include, but not be limited to, annual audited financial statements filed with the U.S. securities and exchange commission, SEC, pursuant to the securities act of 1933, as amended, or the securities exchange act of 1934, as amended. An insurer required to file financial statements pursuant to this paragraph may satisfy the request by providing the commissioner of insurance with the most recently filed parent corporation financial statements that have been filed with the SEC;
(7) statements that the insurer's board of directors and principal officers oversee corporate governance and internal controls and that the insurer's principal officers have approved, implemented and continue to maintain and monitor corporate governance and internal control procedures; and
(8) any other information required by the commissioner of insurance by rules and regulations.
(c) All registration statements shall be accompanied by a summary outlining all items in the current registration statement representing changes from the prior registration statement.
(d) No information need be disclosed on the registration statement filed pursuant to subsection (b) if such information is not material for the purpose of this section. Unless the commissioner of insurance by rules and regulations or order provides otherwise, sales, purchases, exchanges, loans or extensions of credit, investments or guarantees, involving 0.5% or less of an insurer's admitted assets as of the December 31 next preceding shall be deemed immaterial for purposes of this section.
(e) Each registered insurer shall keep current the information required to be disclosed in such insurer's registration statement by reporting all material changes or additions on amendment forms provided by the commissioner of insurance within 15 days after the end of the month in which it learns of each such change or addition, except that each registered insurer shall report all dividends and other distributions to shareholders within five business days following its declaration. Any such dividend or distribution shall not be paid for at least 10 business days from the commissioner's receipt of the notice of its declaration.
(f) Any person within an insurance holding company system subject to registration shall provide complete and accurate information to an insurer if such information is reasonably necessary to enable the insurer to comply with the provisions of this act.
(g) The commissioner shall terminate the registration of any insurer that demonstrates that such insurer is no longer a member of an insurance holding company system.
(h) The commissioner may require or allow two or more affiliated insurers subject to registration hereunder to file a consolidated registration statement.
(i) The commissioner may allow an insurer that is authorized to do business in this state and part of an insurance holding company system to register on behalf of any affiliated insurer that is required to register under subsection (a) and file all information and material required to be filed under this section.
(j) The provisions of this section shall not apply to any information or transaction if and to the extent the commissioner by rule and regulation or order exempts the same from the provisions of this section.
(k) Any person may file with the commissioner a disclaimer of affiliation with any authorized insurer or such a disclaimer may be filed by such insurer or any member of an insurance holding company system. The disclaimer shall fully disclose all material relationships and bases for affiliation between such person and such insurer as well as the basis for disclaiming such affiliation. After a disclaimer has been filed, the insurer shall be relieved of any duty to register or report under this section that may arise out of the insurer's relationship with such person unless and until the commissioner disallows such a disclaimer. The commissioner shall disallow such a disclaimer only after furnishing all parties in interest with notice and opportunity to be heard in accordance with the provisions of the Kansas administrative procedure act.
(l) (1) Except as provided in paragraph (2), the ultimate controlling person of every insurer subject to registration also shall file an annual enterprise risk report. The report, to the best of the ultimate controlling person's knowledge and belief, shall identify the material risks within the insurance holding company system that could pose enterprise risk to the insurer. The report shall be appropriate to the nature, scale and complexity of the insurer. The report shall be filed with the lead state commissioner of insurance of the insurance holding company system as determined by the procedures within the financial analysis handbook adopted by the NAIC. The first enterprise risk report shall be filed not later than May 1 of each year unless the commissioner extends the time for filing for good cause shown.
(2) (A) Except as provided hereunder, the ultimate controlling person of every insurer subject to registration shall concurrently file with the registration an annual group capital calculation as directed by the lead state commissioner. The report shall be completed in accordance with the NAIC group capital calculation instructions, which may permit the lead state commissioner to allow a controlling person that is not the ultimate controlling person to file the group capital calculation. The report shall be filed with the lead state commissioner of the insurance holding company system as determined by the commissioner of insurance in accordance with the procedures within the financial analysis handbook. An insurance holding company system shall be exempt from filing the group capital calculation if:
(i) It has only one insurer within its holding company structure, only writes business is only licensed in its domestic state and assumes no business from any other insurer;
(ii) it is required to perform a group capital calculation specified by the board of governors of the federal reserve system. The lead state commissioner shall request the calculation from the federal reserve board under the terms of information sharing agreements in effect. If the federal reserve board cannot share the calculation with the lead state commissioner, the insurance holding company shall not be exempt from the group capital calculation filing;
(iii) its non-United States group-wide supervisor is located within a reciprocal jurisdiction, as defined in K.S.A. 40-221a, and amendments thereto, that recognizes the United States regulatory approach to group supervision and group capital; and
(iv) it is an insurance holding company system:
(a) That provides information to the lead state that meets the requirements for accreditation under the NAIC financial standards and accreditation program, either directly or indirectly through the group-wide supervisor, who has determined that such information is satisfactory to allow the lead state to comply with the NAIC group supervision approach, as detailed in the NAIC financial analysis handbook; and
(b) whose non-United States group-wide supervisor who is not in a reciprocal jurisdiction recognizes and accepts, as specified by the commissioner in rules and regulations, the group capital calculation as the worldwide group capital assessment for United States insurance groups that operate in that jurisdiction.
(B) Notwithstanding the provisions of K.S.A. 40-3305, and amendments thereto, a lead state commissioner shall require the group capital calculation for the United States operations of any non-United States based insurance holding company system if, after any necessary consultation with other supervisors or officials, it is deemed appropriate by the lead state commissioner for prudential oversight and solvency monitoring purposes or for ensuring the competitiveness of the insurance marketplace.
(C) Notwithstanding the exemptions from filing the group capital calculation stated in K.S.A. 40-3305, and amendments thereto, the lead state commissioner has the discretion to exempt the ultimate controlling person from filing the annual group capital calculation or to accept a limited group capital filing or report in accordance with criteria specified by the commissioner in regulation.
(D) If the lead state commissioner determines that an insurance holding company system no longer meets one or more of the requirements for an exemption from filing the group capital calculation under this section, the insurance holding company system shall file the group capital calculation at the next annual filing date unless given an extension by the lead state commissioner based on reasonable grounds shown.
(E) The ultimate controlling person of every insurer subject to registration and also scoped into the NAIC liquidity stress test framework shall file the results of a specific year's liquidity stress test. The filing shall be made to the lead state insurance commissioner of the insurance holding company system as determined by the procedures within the financial analysis handbook and that:
(i) The NAIC liquidity stress test framework includes scope criteria applicable to a specific data year. These scope criteria are reviewed at least annually by the financial stability task force or its successor. Any change to the NAIC liquidity stress test framework or to the data year for which the scope criteria are to be measured shall be effective on January 1 of the year following the calendar year in which such changes are adopted. Insurers meeting at least one threshold of the scope criteria are considered scoped into the NAIC liquidity stress test framework for the specified data year, unless the lead state insurance commissioner, in consultation with the NAIC financial stability task force or its successor, determines that such insurer should not be scoped into the framework for that data year. Similarly, insurers that do not trigger at least one threshold of the scope criteria are considered scoped out of the NAIC liquidity stress test framework for the specified data year, unless the lead state insurance commissioner, in consultation with the NAIC financial stability task force or its successor, determines that the insurer should be scoped into the framework for that data year.
(ii) The lead state insurance commissioner, in consultation with the financial stability task force or its successor, shall assess the concerns of regulators that wish to avoid having insurers scoped in and out of the NAIC liquidity stress test framework on a frequent basis as part of the determination for an insurer.
(F) The performance and filing of the results of a specific year's liquidity stress test shall comply with the NAIC liquidity stress test framework instructions and reporting templates for that year and any lead state insurance commissioner determinations, in consultation with the financial stability task force or its successor, provided within the framework.
(m) The failure of an insurer or an ultimate controlling person of the insurer to file a registration statement, any summary of the registration statement or enterprise risk filing within the specified time for filing shall be a violation by the insurer or by the ultimate controlling person of the insurer, as applicable.
History: L. 1974, ch. 183, § 5; L. 1988, ch. 356, § 120; L. 1991, ch. 138, § 4; L. 1992, ch. 288, § 3; L. 1993, ch. 45, § 2; L. 2013, ch. 15, § 5; L. 2019, ch. 46, § 3; L. 2025, ch. 99, § 20; July 1.
(a) Transactions by registered insurers with their affiliates shall be subject to the following standards:
(1) The terms shall be fair and reasonable;
(2) agreements for cost-sharing services and management shall include such provisions as required by rules and regulations adopted by the commissioner of insurance;
(3) the charges or fees for services performed shall be reasonable;
(4) expenses incurred and payment received with respect to such transactions shall be allocated to the insurer in conformity with the requirements of K.S.A. 40-225, and amendments thereto;
(5) the books, accounts and records of each party to all such transactions shall be so maintained as to clearly and accurately disclose the nature and details of the transactions including such accounting information necessary to support the reasonableness of the charges or fees to the respective parties; and
(6) the insurer's surplus as regards policyholders following any transactions, dividends or distributions to shareholder affiliates shall be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs.
(b) (1) If an insurer subject to this act is deemed by the commissioner of insurance to be in a hazardous financial condition as defined by K.S.A. 40-222d, and amendments thereto, or a condition that would be grounds for supervision, conservation or a delinquency proceeding, then the commissioner may require the insurer to secure and maintain either a deposit, held by the commissioner, or a bond, as determined by the insurer at the insurer's discretion, for the protection of the insurer for the duration of the contract or agreement or the existence of the condition for which the commissioner required the deposit or the bond.
(2) In determining whether a deposit or a bond is required, the commissioner shall consider whether concerns exist with respect to the affiliated person's ability to fulfill the contract or agreement if the insurer were to be put into liquidation. Once the insurer is deemed to be in a hazardous financial condition or a condition that would be grounds for supervision, conservation or a delinquency proceeding and a deposit or bond is necessary, the commissioner shall have the discretion to determine the amount of the deposit or bond, not to exceed the value of the contract or agreement in any one year, and whether such deposit or bond should be required for a single contract, multiple contracts or a contract only with a specific person;
(c) All records and data of the insurer held by an affiliate are and shall remain the property of the insurer, are subject to control of the insurer, are identifiable and are segregated or readily capable of segregation, at no additional cost to the insurer from all other persons' records and data. All records and data that are otherwise the property of the insurer, in whatever form maintained, including, but not limited to, claims and claim files, policyholder lists, application files, litigation files, premium records, rate books, underwriting manuals, personnel records, financial records or similar records within the possession, custody or control of the affiliate shall remain the property of the insurer. At the request of the insurer, the affiliate shall provide that the receiver may obtain a complete set of all records of any type that pertain to the insurer's business, obtain access to the operating systems upon which the data is maintained, obtain the software that runs those systems either through assumption of licensing agreements or otherwise and restrict the use of the data by the affiliate if it is not operating the insurer's business. The affiliate shall provide a waiver of any landlord lien or other encumbrance to provide the insurer with access to all records and data in the event of the affiliate's default under a lease or other agreement; and
(d) Premiums or other funds belonging to the insurer that are collected or held by an affiliate shall be deemed the exclusive property of and subject to the control of such insurer. Any right of offset in the event that an insurer is placed into receivership shall be subject to K.S.A. 40-3605 et seq., and amendments thereto.
(e) The following transactions involving a domestic insurer and any person in such insurer's insurance holding company system, including amendments or modifications of affiliate agreements previously filed pursuant to this section, may not be entered into unless the insurer has notified the commissioner of insurance in writing of such insurer's intention to enter into such transaction at least 30 days prior thereto, or such shorter period as the commissioner of insurance may permit, and the commissioner of insurance has not disapproved such transaction within such period.
(1) Sales, purchases, exchanges, loans or extensions of credit, guarantees or investments provided such transactions are equal to or exceed:
(A) With respect to nonlife insurers, the lesser of 3% of the insurer's admitted assets or 25% of surplus as regards policyholders; or
(B) with respect to life insurers, 3% of the insurer's admitted assets, each as of December 31 immediately preceding.
(2) Loans or extensions of credit to any person who is not an affiliate, if the insurer makes such loans or extensions of credit with the agreement or understanding that the proceeds of such transactions, in whole or in substantial part, are to be used to make loans or extensions of credit to, purchase assets of or make investments in any affiliate of the insurer making such loans or extensions of credit if such transactions are equal to or exceed:
(A) With respect to nonlife insurers, the lesser of 3% of the insurer's admitted assets or 25% of surplus as regards policyholders;
(B) with respect to life insurers, 3% of the insurer's admitted assets, each as of December 31 immediately preceding.
(3) Reinsurance agreements or modifications thereto, including:
(A) All reinsurance pooling agreements; and
(B) agreements in which the reinsurance premium or a change in the insurer's liabilities, or the projected reinsurance premium or a projected change in the insurer's liabilities in any of the next three consecutive years equals or exceeds 5% of the insurer's surplus as regards policyholders, as of December 31 immediately preceding, including those agreements that may require as consideration the transfer of assets from an insurer to a nonaffiliate, if an agreement or understanding exists between the insurer and nonaffiliate that any portion of such assets will be transferred to one or more affiliates of the insurer;
(4) all management agreements, service contracts, tax allocation agreements and all cost-sharing arrangements; and
(5) any material transactions, specified by rules and regulations, that the commissioner of insurance determines may adversely affect the interests of an insurer's policyholders.
Nothing contained in this subsection shall be deemed to authorize or permit any transactions that in the case of an insurer not a member of the same insurance holding company system, would be otherwise contrary to law.
(f) A domestic insurer shall not enter into transactions that are part of a plan or series of like transactions with persons within the insurance holding company system if the purpose of those separate transactions is to avoid the threshold amount required under this section and thus avoid the review that would occur otherwise. If the commissioner of insurance determines that such separate transactions were entered into over any 12-month period for such purpose, the commissioner of insurance may exercise authority under K.S.A. 40-3311, and amendments thereto.
(g) The commissioner of insurance, in reviewing transactions pursuant to subsection (e), shall consider whether the transactions comply with the standards set forth in subsection (a), and whether such transactions may adversely affect the interests of policyholders.
(h) The commissioner of insurance shall be notified within 30 days of any investment of the domestic insurer in any one corporation if the total investment in such corporation by the insurance holding company system exceeds 10% of such corporation's voting securities.
(i) A transaction subject to approval by the commissioner of insurance pursuant to K.S.A. 40-3304, and amendments thereto, shall not be subject to the requirements of this section.
(j) (1) No insurer subject to registration under K.S.A. 40-3305, and amendments thereto, shall pay any extraordinary dividend or make any other extraordinary distribution to such insurer's shareholders until:
(A) 30 days after the commissioner of insurance has received notice of the declaration thereof and has not within such period disapproved such payment; or
(B) the commissioner of insurance has approved such payment within such 30-day period.
(2) (A) For purposes of this section, an extraordinary dividend or distribution includes any dividend or distribution of cash or other property, the fair market value of which, together with that of other dividends or distributions made within the preceding 12 months, exceeds the greater of:
(i) 10% of such insurer's surplus as regards policyholders as of December 31 immediately preceding; or
(ii) the net gain from operations of such insurer, if such insurer is a life insurer, or the net income, if such insurer is not a life insurer, not including realized capital gains for the 12-month period ending December 31 next preceding, but shall not include pro rata distributions of any class of the insurer's own securities.
(B) In determining whether a dividend or distribution is extraordinary, an insurer, other than a life insurer, may carry forward net income from the previous two calendar years that has not already been paid out as dividends. This carryforward shall be computed by taking the net income from the second and third preceding calendar years, not including realized capital gains, less dividends paid in the second and immediately preceding calendar years.
(C) An extraordinary dividend or distribution shall also include any dividend or distribution made or paid out of any funds other than earned surplus arising from the insurer's business, as defined in K.S.A. 40-233, and amendments thereto. The provisions of K.S.A. 40-233, and amendments thereto, shall not be construed so as to prohibit an insurer, subject to registration under K.S.A. 40-3305, and amendments thereto, from making or paying an extraordinary dividend or distribution in accordance with this section.
(3) Notwithstanding any other provisions of law, an insurer may declare an extraordinary dividend or distribution that is conditional upon the approval of the commissioner of insurance. No declaration shall confer any rights upon shareholders until:
(A) The commissioner of insurance has approved the payment of such dividend or distribution; or
(B) the commissioner of insurance has not disapproved such payment within the 30-day period referred to above.
(k) (1) Notwithstanding the control of a domestic insurer by any person, the officers and directors of the insurer shall not thereby be relieved of any obligation or liability to which they would otherwise be subject by law, and the insurer shall be managed so as to assure its separate operating identity consistent with this act.
(2) Nothing herein shall preclude a domestic insurer from having or sharing a common management or cooperative or joint use of personnel, property or services with one or more other persons under arrangements meeting the standards of K.S.A. 40-3306, and amendments thereto.
(i) For purposes of this act, in determining whether an insurer's surplus as regards policyholders is reasonable in relation to the insurer's outstanding liabilities and adequate to such insurer's financial needs, the following factors, among others, shall be considered:
(1) The size of the insurer as measured by such insurer's assets, capital and surplus, reserves, premium writings, insurance in force and other appropriate criteria;
(2) the extent to which the insurer's business is diversified among the several lines of insurance;
(3) the number and size of risks insured in each line of business;
(4) the extent of the geographical dispersion of the insurer's insured risks;
(5) the nature and extent of the insurer's reinsurance program;
(6) the quality, diversification and liquidity of the insurer's investment portfolio;
(7) the recent past and projected future trend in the size and performance of the insurer's surplus as regards policyholders;
(8) the surplus as regards policyholders maintained by other comparable insurers;
(9) the adequacy of the insurer's reserves;
(10) the quality and liquidity of investments in affiliates. The commissioner of insurance may treat any such investment as a disallowed asset for purposes of determining the adequacy of surplus as regards policyholders whenever in the judgment of the commissioner of insurance such investment so warrants; and
(11) the quality of the insurer's earnings and the extent to which the reported earnings include extraordinary items.
History: L. 1974, ch. 183, § 6; L. 1988, ch. 164, § 1; L. 1991, ch. 138, § 5; L. 1992, ch. 288, § 4; L. 1993, ch. 45, § 3; L. 2013, ch. 15, § 6; L. 2021, ch. 108, § 12; L. 2025, ch. 99, § 21; July 1.
(a) Subject to the limitation contained in this section and in addition to the powers that the commissioner of insurance has under K.S.A. 40-222 and K.S.A. 40-222a, and amendments thereto, relating to the examination of insurers, the commissioner of insurance shall have the power to examine any insurer registered under K.S.A. 40-3305, and amendments thereto, and such insurer's affiliates to ascertain the financial condition of such insurer including the enterprise risk to the insurer by the ultimate controlling party or by any entity or combination of entities within the insurance holding company system or by the insurance holding company system on a consolidated basis.
(b) (1) The commissioner of insurance may order any insurer registered under K.S.A. 40-3305, and amendments thereto, to produce such records, books or other information in the possession of the insurer or its affiliates as are reasonably necessary to determine compliance with this act.
(2) To determine compliance with this act, the commissioner of insurance may order any insurer registered under K.S.A. 40-3305, and amendments thereto, to produce information not in the possession of the insurer, if the insurer can obtain access to such information pursuant to contractual relationships, statutory obligations or another method. In the event that the insurer cannot obtain the information requested by the commissioner of insurance, the insurer shall provide the commissioner of insurance a detailed explanation of the reason that the insurer cannot obtain the information and the identity of the holder of information. Whenever it appears to the commissioner of insurance that the detailed explanation is without merit, the commissioner of insurance may require, after notice and hearing, the insurer to pay a penalty of not more than $1,000 for each day's delay or may suspend or revoke the license of the insurer.
(c) The commissioner of insurance may retain at the registered insurer's expense such attorneys, actuaries, accountants and other experts not otherwise a part of the staff of the commissioner of insurance as the commissioner of insurance shall determine to be reasonably necessary to assist in the conduct of the examination under subsection (a). Any persons so retained shall be under the direction and control of the commissioner of insurance and shall act in a purely advisory capacity.
(d) Each registered insurer producing examination records, books and papers pursuant to subsection (a) shall be liable for and shall pay the expense of such examination in accordance with K.S.A. 40-223 and 40-253, and amendments thereto.
(e) The commissioner of insurance shall have the power to issue subpoenas, administer oaths and examine under oath any person for purposes of determining compliance with this section. Upon the failure or refusal of any person to obey a subpoena, the commissioner of insurance may petition a court of competent jurisdiction, and upon proper showing, the court may enter an order compelling the witness to appear and testify or produce documentary evidence. Failure to obey the court order shall be punishable as contempt of court. Every person subpoenaed shall be obliged to attend as a witness at the place specified in the subpoena, when subpoenaed, anywhere within the state. Such subpoenaed person shall be entitled to the same fees and mileage, if claimed, as a witness in K.S.A. 28-125, and amendments thereto. Fees, mileage and actual expense, if any, necessarily incurred in securing the attendance and testimony of witnesses shall be itemized, charged against and paid by the company being examined.
History: L. 1974, ch. 183, § 7; L. 2013, ch. 15, § 7; L. 2025, ch. 99, § 22; July 1.
(a) Documents, materials or other information obtained by or disclosed to the commissioner of insurance or any other person in the course of an examination or investigation made pursuant to K.S.A. 40-3307, and amendments thereto, and all information reported pursuant to K.S.A. 40-3304, 40-3305 and 40-3306, and amendments thereto, shall:
(1) Be confidential and privileged;
(2) not be subject to disclosure under the Kansas open records act, K.S.A. 45-215 et seq., and amendments thereto;
(3) not be subject to subpoena; and
(4) not be subject to discovery or admissible in evidence in any private civil action.
(b) (1) The commissioner of insurance shall not otherwise make the documents, materials or other information public without the prior written consent of the insurer to which it pertains unless the commissioner of insurance, after giving the insurer and its affiliates who would be affected thereby notice and opportunity to be heard in accordance with the provisions of the Kansas administrative procedure act, determines that the interests of policyholders, shareholders or the public would be served by the publication thereof, in which event, the commissioner of insurance may publish all or any part thereof in such a manner as the commissioner of insurance may deem appropriate. In making such determination, the commissioner of insurance also shall take into consideration any potential adverse consequences of the disclosure thereof.
(2) For purposes of the information reported and provided to the commissioner pursuant to K.S.A. 40-3304 through 40-3307, and amendments thereto, the commissioner shall maintain the confidentiality of the:
(A) Group capital calculation and group capital ratio produced within the calculation and any group capital information received from an insurance holding company supervised by the federal reserve board or any United States group-wide supervisor; and
(B) liquidity stress test results and supporting disclosures and any liquidity stress test information received from an insurance holding company supervised by the federal reserve board and non-United States group-wide supervisors.
(c) Neither the commissioner of insurance nor any person who received documents, materials or other information while acting under the authority of the commissioner of insurance or with whom such documents, materials or other information are shared pursuant to this section shall be permitted or required to testify in any private civil action concerning any confidential documents, materials or information subject to subsection (a).
(d) In order to assist in the performance of the commissioner of insurance's duties, the commissioner of insurance:
(1) May share documents, materials or other information, including the confidential and privileged documents, materials or information subject to subsection (a), with other state, federal and international regulatory agencies, the national association of insurance commissioners and its affiliates and subsidiaries, and state, federal and international law enforcement authorities, including members of any supervisory college described in K.S.A. 40-3316, and amendments thereto, provided that the recipient agrees in writing to maintain the confidentiality and privileged status of the document, material or other information, and has verified in writing the legal authority to maintain confidentiality;
(2) notwithstanding the provisions of paragraph (1), the commissioner of insurance may only share confidential and privileged documents, material or information reported pursuant to subsection (1) of K.S.A. 40-3305, and amendments thereto, with the commissioner of insurance or corresponding official of any state having statutes or regulations substantially similar to subsections (a), (b) and (c), and who has agreed in writing to not disclose such information;
(3) may receive documents, materials or information, including otherwise confidential and privileged documents, materials or information from the national association of insurance commissioners, and its affiliates and subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information. Documents received pursuant to this section shall not be subject to disclosure pursuant to the open records act, K.S.A. 45-215 et seq., and amendments thereto; and
(4) shall enter into written agreements with the national association of insurance commissioners governing sharing and use of information provided pursuant to this act consistent with this subsection that shall:
(i) Specify procedures and protocols regarding the confidentiality and security of information shared with the national association of insurance commissioners and its affiliates and subsidiaries pursuant to this act, including procedures and protocols for sharing by the national association of insurance commissioners with other state, federal or international regulators;
(ii) specify that ownership of information shared with the national association of insurance commissioners and its affiliates and subsidiaries pursuant to this act remains with the commissioner of insurance and that the NAIC's use of the information is subject to the direction of the commissioner of insurance;
(iii) exclude documents, material or information reported pursuant to K.S.A. 40-3305, and amendments thereto, and prohibit the NAIC and its affiliates and subsidiaries from storing the information shared pursuant to the insurance holding company act in a permanent database after the underlying analysis is completed;
(iv) require prompt notice to be given to an insurer and its affiliates whose confidential information in the possession of the NAIC, pursuant to this act, is subject to a request or subpoena to the NAIC for disclosure or production;
(v) require the NAIC and its affiliates and subsidiaries to consent to intervention by an insurer in any judicial or administrative action in which the NAIC and its affiliates and subsidiaries may be required to disclose confidential information about the insurer and its affiliates that are shared with the NAIC and its affiliates and subsidiaries pursuant to the insurance holding company act; and
(vi) for documents, material or information reporting pursuant to K.S.A. 40-3305, and amendments thereto, in the case of an agreement involving a third-party consultant, provide for notification of the identity of the consultant to the applicable insurers.
(e) The sharing of information by the commissioner of insurance, pursuant to this act, shall not constitute a delegation of regulatory authority or rulemaking authority, and the commissioner of insurance is solely responsible for the administration, execution and enforcement of the provisions of this act.
(f) No waiver of any applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the commissioner of insurance under this act or as a result of sharing as authorized in subsection (d).
(g) Documents, materials or other information in the possession or control of the national association of insurance commissioners shall be confidential by law and privileged, shall not be subject to the open records act, K.S.A. 45-215 et seq., and amendments thereto, shall not be subject to subpoena and shall not be subject to discovery or admissible in evidence in any private civil action.
(h) (1) The group capital calculation and resulting group capital ratio required under K.S.A. 40-3305, and amendments thereto, and the liquidity stress test along with its results and supporting disclosures required under K.S.A. 40-3305, and amendments thereto, shall be deemed regulatory tools for assessing group risks and capital adequacy and group liquidity risks, respectively, and shall not be construed as a means to rank insurers or insurance holding company systems.
(2) Except as otherwise may be required under the provisions of the insurance holding company act, the making, publishing, disseminating, circulating, placing before the public or causing directly or indirectly to be made, published, disseminated, circulated or placed before the public in a newspaper, magazine or other publication, in the form of a notice, circular, pamphlet, letter or poster, broadcast by any radio or television station or by any electronic means of communication available to the public, or in any other way as an advertisement, announcement or statement containing a representation or statement with regard to the group capital calculation, group capital ratio, the liquidity stress test results, or supporting disclosures for the liquidity stress test of any insurer or any insurer group, or of any component derived in the calculation by any insurer, broker, or other person engaged in any manner in the insurance business could be misleading and is therefore prohibited.
(3) If any materially false statement with respect to the group capital calculation, resulting group capital ratio, an inappropriate comparison of any amount to an insurer's or insurance group's group capital calculation or resulting group capital ratio, liquidity stress test result, supporting disclosures for the liquidity stress test or an inappropriate comparison of any amount to an insurer's or insurance group's liquidity stress test result or supporting disclosures is published in any written publication and the insurer is able to demonstrate to the commissioner with substantial proof the falsity or inappropriateness of such statement, then the insurer may publish announcements in a written publication if the sole purpose of the announcement is to rebut the materially false statement.
(i) The provisions of this section shall not be subject to the provisions of K.S.A. 45-229, and amendments thereto.
History: L. 1974, ch. 183, § 8; L. 1988, ch. 356, § 121; L. 1992, ch. 288, § 5; L. 2013, ch. 15, § 8; L. 2025, ch. 99, § 23; July 1.
The commissioner of insurance, upon notice and opportunity for all interested persons to be heard, may issue such rules and regulations and orders as shall be necessary to carry out the provisions of this act. Hearings on orders, as defined in subsection (d) of K.S.A. 77-502, and amendments thereto, shall be conducted in accordance with the provisions of the Kansas administrative procedure act.
History: L. 1974, ch. 183, § 9; L. 1988, ch. 356, § 122; L. 2013, ch. 15, § 9; July 1.
(a) Whenever it appears to the commissioner of insurance that any insurer or any director, officer, employee or agent thereof has committed or is about to commit a violation of this act or of any rule, regulation, or order issued by the commissioner of insurance hereunder, the commissioner of insurance may apply to the district court in and for the county in which the principal office of the insurer is located or if such insurer has no such office in this state then to the district court of Shawnee county for an order enjoining such insurer or such director, officer, employee or agent thereof from violating or continuing to violate this act or any such rule, regulation or order, and for such other equitable relief as the nature of the case and the interests of the insurer's policyholders, creditors and shareholders or the public may require.
(b) No security which is the subject of any agreement or arrangement regarding acquisition, or which is acquired or to be acquired, in contravention of the provisions of this act or of any rules and regulations or order issued by the commissioner of insurance hereunder may be voted at any shareholders' meeting, or may be counted for quorum purposes, and any action of shareholders requiring the affirmative vote of a percentage of shares may be taken as though such securities were not issued and outstanding. However, no action taken at any such meeting shall be invalidated by the voting of such securities, unless the action would materially affect control of the insurer or unless the courts of this state have so ordered. If an insurer or the commissioner of insurance has reason to believe that any security of the insurer has been or is about to be acquired in contravention of the provisions of this act or of any rule, regulation or order issued by the commissioner of insurance hereunder the insurer or the commissioner of insurance may apply to the district court of Shawnee county or to the district court for the county in which the insurer has its principal place of business to enjoin any offer, request, invitation, agreement or acquisition made in contravention of K.S.A. 40-3304, and amendments thereto, or any rules and regulations, or order issued by the commissioner of insurance thereunder to enjoin the voting of any security so acquired, to void any vote of such security already cast at any meeting of shareholders, and for such other equitable relief as the nature of the case and the interests of the insurer's policyholders, creditors and shareholders or the public may require.
(c) In any case where a person has acquired or is proposing to acquire any voting securities in violation of this act or any rule, regulation or order issued by the commissioner of insurance hereunder, the district court of Shawnee county or the district court for the county in which the insurer has its principal place of business may, on such notice as the court deems appropriate, upon the application of the insurer or the commissioner of insurance seize or sequester any voting securities of the insurer owned directly or indirectly by such person, and issue such orders with respect thereto as may be appropriate to effectuate the provisions of this act. Notwithstanding any other provisions of law, for the purposes of this act the situs of the ownership of the securities of domestic insurers shall be deemed to be in this state.
History: L. 1974, ch. 183, § 10; L. 1992, ch. 288, § 6; July 1, 1993.
(a) Every director or officer of an insurance holding company system who knowingly violates, participates in, or assents to, or who knowingly shall permit any of the officers or agents of the insurer to engage in transactions or make investments which have not been properly reported or submitted pursuant to subsection (a) of K.S.A. 40-3305 or subsections (c) or (d) of K.S.A. 40-3306, and amendments thereto, or which otherwise violates this act, shall pay, in such directors' or officers' individual capacity, a civil forfeiture of not more than $5,000 per violation, after notice and hearing before the commissioner of insurance. In determining the amount of the civil forfeiture, the commissioner of insurance shall take into account the appropriateness of the forfeiture with respect to the gravity of the violation, the history of previous violations, and such other matters as justice may require.
(b) Whenever it appears to the commissioner of insurance that any insurer subject to this act or any director, officer, employee or agent thereof has engaged in any transaction or entered into a contract which is subject to K.S.A. 40-3306, and amendments thereto, and which would not have been approved had such approval been requested, the commissioner of insurance may order the insurer to cease and desist immediately any further activity under that transaction or contract. After notice and hearing the commissioner of insurance also may order the insurer to void any such contracts and restore the status quo if such action is in the best interest of the policyholders, creditors or the public.
(c) Whenever it appears to the commissioner of insurance that any insurer or any director, officer, employee or agent thereof has committed a willful violation of this act, the commissioner of insurance may cause criminal proceedings to be instituted by the district court for the county in which the principal office of the insurer is located or if such insurer has no such office in this state, then by the district court for Shawnee county against such insurer or the responsible director, officer, employee or agent thereof. Any insurer which willfully violates this act may be fined not more than $50,000. Any individual who willfully violates this act may be fined in individual capacity not more than $10,000 or, be imprisoned for not more than one to three years, or both.
(d) Any officer, director or employee of an insurance holding company system who knew or reasonably should have known they were subscribing to or making or causing to be made any false statements, false reports or false filings with the intent to deceive the commissioner of insurance in the performance of duties under this act, upon conviction thereof, shall be imprisoned for not more than five to 10 years or fined $100,000, or both. Any fines imposed shall be paid by the officer, director or employee in such person's individual capacity.
History: L. 1974, ch. 183, § 11; L. 1976, ch. 217, § 3; L. 1991, ch. 138, § 6; L. 1992, ch. 288, § 7; L. 1997, ch. 24, § 6; L. 2013, ch. 15, § 10; July 1.
On and after July 1, 1993, when it appears to the commissioner of insurance that any person has committed a violation of this act which makes the continued operation of an insurer contrary to the interests of policyholders or the public, the commissioner of insurance may, after giving notice and an opportunity to be heard, determine to suspend, revoke or refuse to renew such insurer's license or authority to do business in this state for such period as the commissioner of insurance finds is required for the protection of policyholders or the public. Any such determination shall be accompanied by specific findings of fact and conclusions of law.
History: L. 1992, ch. 288, § 8; L. 2013, ch. 15, § 11; July 1.
History: L. 1974, ch. 183, § 12; Repealed, L. 1986, ch. 318, § 146; July 1.
History: L. 1976, ch. 217, § 4; Repealed, L. 1988, ch. 356, § 361; July 1, 1989.
History: L. 1991, ch. 138, § 2; L. 1992, ch. 288, § 9; Repealed, L. 1997, ch. 166, § 4; July 1.
(a) If an order for liquidation or rehabilitation of a domestic insurer has been entered, the receiver appointed under such order shall have a right to recover on behalf of the insurer:
(1) From any parent corporation or holding company or person or affiliate who otherwise controlled the insurer, the amount of distributions, other than distributions of shares of the same class of stock, paid by the insurer on its capital stock; or
(2) any payment in the form of a bonus, termination settlement or extraordinary lump-sum salary adjustment made by the insurer or its subsidiary or subsidiaries to a director, officer or employee, where the distribution or payment pursuant to paragraph (1) or this paragraph (2) is made at any time during the one year preceding the petition for liquidation, conservation or rehabilitation, as the case may be, subject to the limitations of subsections (b), (c) and (d).
(b) No such distribution shall be recoverable if the parent or affiliate shows that when paid such distribution was lawful and reasonable, and that the insurer did not know and could not reasonably have known that such distribution might adversely affect the ability of the insurer to fulfill such insurer's contractual obligations.
(c) Any person who was a parent corporation or holding company or a person who otherwise controlled the insurer or affiliate at the time such distributions were paid shall be liable up to the amount of distributions or payments under subsection (a) such person received. Any person who otherwise controlled the insurer at the time such distributions were declared shall be liable up to the amount of distributions such person would have received if they had been paid immediately. If two or more persons are liable with respect to the same distributions, they shall be jointly and severally liable.
(d) The maximum amount recoverable under this subsection shall be the amount needed in excess of all other available assets of the impaired or insolvent insurer to pay the contractual obligations of the impaired or insolvent insurer and to reimburse any guaranty funds.
(e) To the extent that any person liable under subsection (c) is insolvent or otherwise fails to pay claims due from such person pursuant to such paragraph, such person's parent corporation or holding company or person who otherwise controlled it at the time the distribution was paid, shall be jointly and severally liable for any resulting deficiency in the amount recovered from such parent corporation or holding company or person who otherwise controlled such person.
History: L. 1991, ch. 138, § 3; July 1.
(a) With respect to any insurer registered under K.S.A. 40-3305, and amendments thereto, and in accordance with subsection (d), the commissioner of insurance shall have the power to participate in a supervisory college for any domestic insurer that is part of an insurance holding company system with international operations in order to determine compliance by the insurer with this act.
(b) The powers of the commissioner of insurance with respect to supervisory colleges include, but are not limited to, the following:
(1) Initiating the establishment of a supervisory college;
(2) clarifying the membership and participation of other supervisors in the supervisory college;
(3) clarifying the functions of the supervisory college and the role of other regulators, including the establishment of a group-wide supervisor;
(4) coordinating the ongoing activities of the supervisory college, including planning meetings, supervisory activities and processes for information sharing;
(5) establishing a crisis management plan; and
(6) establishing a regular assessment to the insurer for the payment of expenses incurred pursuant to subsection (c).
(c) Each registered insurer subject to this section shall be liable for and shall pay the expenses, including reasonable expenses for necessary travel, the commissioner of insurance reasonably incurred with respect to the participation in a supervisory college in accordance with subsection (d). A supervisory college may be convened as either a temporary or permanent forum for communication and cooperation between the regulators charged with the supervision of the insurer or its affiliates.
(d) In order to assess the business strategy, financial position, legal and regulatory position, risk exposure, risk management and governance processes, and as part of the examination of individual insurers in accordance with K.S.A. 40-3307, and amendments thereto, the commissioner of insurance may participate in a supervisory college with other regulators charged with supervision of the insurer or its affiliates, including other state, federal and international regulatory agencies. The commissioner of insurance may enter into agreements in accordance with K.S.A. 40-3308, and amendments thereto, providing the basis for cooperation between the commissioner of insurance and the other regulatory agencies, and the activities of the supervisory college. Nothing in this section shall delegate to the supervisory college the authority of the commissioner of insurance to regulate or supervise the insurer or its affiliates within the jurisdiction of the supervisory college.
History: L. 2013, ch. 15, § 1; July 1.
K.S.A. 40-3301 through 40-3315, and K.S.A. 40-3316 and 40-3317, and amendments thereto, shall be known and may be cited as the insurance holding company act.
History: L. 2013, ch. 15, § 2; July 1.
(a) The commissioner is authorized to act as the group-wide supervisor for any internationally active insurance group in accordance with the provisions of this section. However, the commissioner may acknowledge another regulatory official as the group-wide supervisor where the internationally active insurance group:
(1) Does not have substantial insurance operations in the United States;
(2) has substantial insurance operations in the United States, but not in this state; or
(3) has substantial insurance operations in the United States and this state, but the commissioner has determined pursuant to the factors set forth in subsections (b) and (f) that the other regulatory official is the appropriate group-wide supervisor.
An insurance holding company system that does not otherwise qualify as an internationally active insurance group may request that the commissioner make a determination or acknowledgment as to a group-wide supervisor pursuant to this section.
(b) In cooperation with other state, federal and international regulatory agencies, the commissioner shall identify a single group-wide supervisor for an internationally active insurance group. The commissioner may determine that the commissioner is the appropriate group-wide supervisor for an internationally active insurance group that conducts substantial insurance operations concentrated in this state. However, the commissioner may acknowledge that a regulatory official from another jurisdiction is the appropriate group-wide supervisor for the internationally active insurance group. The commissioner shall consider the following factors when making a determination or acknowledgment under this subsection:
(1) The place of domicile of the insurers within the internationally active insurance group that hold the largest share of the group's written premiums, assets or liabilities;
(2) the place of domicile of the top-tiered insurers in the insurance holding company system of the internationally active insurance group;
(3) the location of the executive offices or largest operational offices of the internationally active insurance group;
(4) whether another regulatory official is acting or is seeking to act as the group-wide supervisor under a regulatory system that the commissioner determines to be:
(A) Substantially similar to the system of regulation provided under the laws of this state; or
(B) otherwise sufficient in terms of providing for group-wide supervision, enterprise risk analysis and cooperation with other regulatory officials; and
(5) whether another regulatory official acting or seeking to act as the group-wide supervisor provides the commissioner with reasonably reciprocal recognition and cooperation.
A commissioner identified under this section as the group-wide supervisor may determine that it is appropriate to acknowledge another supervisor to serve as the group-wide supervisor. The acknowledgment of the group-wide supervisor shall be made after consideration of the factors listed in subsections (b)(1) through (b)(5), and shall be made in cooperation with and subject to the acknowledgment of other regulatory officials involved with the supervision of members of the internationally active insurance group, and in consultation with the internationally active insurance group.
(c) Notwithstanding any other provision of law, when another regulatory official is acting as the group-wide supervisor of an internationally active insurance group, the commissioner shall acknowledge that regulatory official as the group-wide supervisor. However, pursuant to subsection (b), the commissioner shall make a determination or acknowledgment as to the appropriate group-wide supervisor for an internationally active insurance group, if it makes a material change in such internationally active insurance group that results in:
(1) The internationally active insurance group's insurers domiciled in this state holding the largest share of the group's premiums, assets or liabilities; or
(2) this state being the place of domicile of the top-tiered insurers in the insurance holding company system of the internationally active insurance group.
(d) Pursuant to K.S.A. 40-3307, and amendments thereto, the commissioner is authorized to collect from any insurer registered pursuant to K.S.A. 40-3305, and amendments thereto, all information necessary to determine whether the commissioner may act as the group-wide supervisor of an internationally active insurance group or if the commissioner may acknowledge another regulatory official to act as the group-wide supervisor. Prior to issuing a determination that an internationally active insurance group is subject to group-wide supervision by the commissioner, the commissioner shall notify the insurer registered pursuant to K.S.A. 40-3305, and amendments thereto, and the ultimate controlling person within the internationally active insurance group. The internationally active insurance group shall have not less than 30 days to provide the commissioner with additional information pertinent to the pending determination. The commissioner shall publish on its Kansas insurance department website the identities of internationally active insurance groups that the commissioner has determined are subject to group-wide supervision by the commissioner.
(e) If the commissioner is the group-wide supervisor for an internationally active insurance group, the commissioner is authorized to engage in any of the following group-wide supervision activities:
(1) Assessing the enterprise risks within the internationally active insurance group to ensure that:
(A) The material financial condition and liquidity risks to the members of the internationally active insurance group that are engaged in the business of insurance are identified by management; and
(B) reasonable and effective mitigation measures are in place;
(2) requesting, from any member of an internationally active insurance group, subject to the commissioner's supervision, information necessary and appropriate to assess enterprise risk, including, but not limited to, information about the members of the internationally active insurance group regarding:
(A) Governance, risk assessment and management;
(B) capital adequacy; and
(C) material intercompany transactions;
(3) coordinating and, through the authority of the regulatory officials of the jurisdictions where members of the internationally active insurance group are domiciled, compelling development and implementation of reasonable measures designed to ensure that the internationally active insurance group is able to timely recognize and mitigate enterprise risks to members of such internationally active insurance group that are engaged in the business of insurance;
(4) communicating with other state, federal and international regulatory agencies for members within the internationally active insurance group and sharing relevant information subject to the confidentiality provisions of K.S.A. 40-3308, and amendments thereto, through supervisory colleges as set forth in K.S.A. 40-3316, and amendments thereto, or otherwise;
(5) entering into agreements with or obtaining documentation from any insurer registered under subsection (e)(3), any member of the internationally active insurance group, and any other state, federal and international regulatory agencies for members of the internationally active insurance group, providing the basis for or otherwise clarifying the commissioner's role as group-wide supervisor, including provisions for resolving disputes with other regulatory officials. Such agreements or documentation shall not serve as evidence in any proceeding that any insurer or person within an insurance holding company system not domiciled or incorporated in this state is doing business in this state or is otherwise subject to jurisdiction in this state; and
(6) participating in other group-wide supervision activities, consistent with the authorities granted and purposes enumerated above, as considered necessary by the commissioner.
(f) If the commissioner acknowledges that another regulatory official from a jurisdiction that is not accredited by the national association of insurance commissioners is the group-wide supervisor, the commissioner is authorized to reasonably cooperate, through supervisory colleges or otherwise, with group-wide supervision undertaken by the group-wide supervisor, provided that:
(1) The commissioner's cooperation is in compliance with the laws of this state; and
(2) the regulatory official acknowledged as the group-wide supervisor also recognizes and cooperates with the commissioner's activities as a group-wide supervisor for other internationally active insurance groups where applicable. Where such recognition and cooperation is not reasonably reciprocal, the commissioner is authorized to refuse recognition and cooperation.
(g) The commissioner is authorized to enter into agreements with, or obtain documentation from, any insurer registered under K.S.A. 40-3305, and amendments thereto, any affiliate of the insurer, and other state, federal and international regulatory agencies for members of the internationally active insurance group that provide the basis for or otherwise clarify a regulatory official's role as group-wide supervisor.
(h) The commissioner may promulgate such rules and regulations as are necessary for the administration of this section. Such rules and regulations shall be adopted no later than July 1, 2018.
(i) A registered insurer subject to this section shall be liable for and shall pay the reasonable expenses of the commissioner's participation in the administration of this section, including the engagement of attorneys, actuaries and any other professionals and all reasonable travel expenses.
(j) This section shall be a part of and supplemental to the insurance holding company act.
History: L. 2017, ch. 72, § 1; July 1.
As used in this act:
(a) "Applicant" means any healthcare provider.
(b) "Basic coverage" means a policy of professional liability insurance required to be maintained by each healthcare provider pursuant to the provisions of K.S.A. 40-3402(a) or (b), and amendments thereto.
(c) "Commissioner" means the commissioner of insurance.
(d) "Fiscal year" means the year commencing on the effective date of this act and each year, commencing on the first day of July thereafter.
(e) "Fund" means the healthcare stabilization fund established pursuant to K.S.A. 40-3403(a), and amendments thereto.
(f) (1) "Healthcare provider" means a:
(A) Person licensed to practice any branch of the healing arts by the state board of healing arts;
(B) person who holds a temporary permit to practice any branch of the healing arts issued by the state board of healing arts;
(C) person engaged in a postgraduate training program approved by the state board of healing arts;
(D) medical care facility licensed by the state of Kansas;
(E) podiatrist licensed by the state board of healing arts;
(F) health maintenance organization issued a certificate of authority by the commissioner;
(G) optometrist licensed by the board of examiners in optometry;
(H) pharmacist licensed by the state board of pharmacy;
(I) licensed professional nurse who is authorized to practice as a registered nurse anesthetist;
(J) licensed professional nurse who has been granted a temporary authorization to practice nurse anesthesia under K.S.A. 65-1153, and amendments thereto;
(K) professional corporation organized pursuant to the professional corporation law of Kansas by persons who are authorized by such law to form such a corporation and are healthcare providers as defined by this subsection;
(L) Kansas limited liability company organized for the purpose of rendering professional services by its members who are healthcare providers as defined by this subsection and legally authorized to render the professional services for which the limited liability company is organized;
(M) partnership of persons who are healthcare providers under this subsection;
(N) Kansas not-for-profit corporation organized for the purpose of rendering professional services by persons who are healthcare providers as defined by this subsection;
(O) nonprofit corporation organized to administer the graduate medical education programs of community hospitals or medical care facilities affiliated with the university of Kansas school of medicine;
(P) dentist certified by the state board of healing arts to administer anesthetics under K.S.A. 65-2899, and amendments thereto;
(Q) psychiatric hospital licensed prior to January 1, 1988, and continuously thereafter under K.S.A. 2015 Supp. 75-3307b, prior to its repeal, and K.S.A. 39-2001 et seq., and amendments thereto, or a mental health center or mental health clinic licensed by the state of Kansas;
(R) physician assistant licensed by the state board of healing arts;
(S) licensed advanced practice registered nurse who is authorized by the board of nursing to practice as an advanced practice registered nurse in the classification of a nurse-midwife;
(T) maternity center, if such maternity center has been granted accreditation by the commission for accreditation of birth centers and is a maternity center as defined in K.S.A. 65-503, and amendments thereto;
(U) licensed advanced practice registered nurse who has been granted a temporary authorization by the board of nursing to practice as an advanced practice registered nurse in the classification of a nurse-midwife;
(V) nursing facility licensed by the state of Kansas;
(W) assisted living facility licensed by the state of Kansas; or
(X) a residential healthcare facility licensed by the state of Kansas.
(2) "Healthcare provider" does not include:
(A) Any state institution for people with intellectual disability;
(B) any state psychiatric hospital;
(C) any person holding an exempt license issued by the state board of healing arts or the board of nursing;
(D) any person holding a visiting clinical professor license from the state board of healing arts;
(E) any person holding an inactive license issued by the state board of healing arts;
(F) any person holding a federally active license issued by the state board of healing arts;
(G) an advanced practice registered nurse who is authorized by the board of nursing to practice as an advanced practice registered nurse in the classification of nurse-midwife or nurse anesthetist and who practices solely in the course of employment or active duty in the United States government or any of its departments, bureaus or agencies or provides professional services as a charitable healthcare provider as defined under K.S.A. 75-6102, and amendments thereto; or
(H) a physician assistant licensed by the state board of healing arts who practices solely in the course of employment or active duty in the United States government or any of its departments, bureaus or agencies or provides professional services as a charitable healthcare provider as defined under K.S.A. 75-6102, and amendments thereto.
(g) "Inactive healthcare provider" means a person or other entity who purchased basic coverage or qualified as a self-insurer on or subsequent to the effective date of this act but who, at the time a claim is made for personal injury or death arising out of the rendering of or the failure to render professional services by such healthcare provider, does not have basic coverage or self-insurance in effect solely because such person is no longer engaged in rendering professional service as a healthcare provider.
(h) "Insurer" means any corporation, association, reciprocal exchange, inter-insurer and any other legal entity authorized to write bodily injury or property damage liability insurance in this state, including workers compensation and automobile liability insurance, pursuant to the provisions of the acts contained in article 9, 11, 12 or 16 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto.
(i) "Plan" means the operating and administrative rules and procedures developed by insurers and rating organizations or the commissioner to make professional liability insurance available to healthcare providers.
(j) "Professional liability insurance" means insurance providing coverage for legal liability arising out of the performance of professional services rendered or that should have been rendered by a healthcare provider.
(k) "Rating organization" means a corporation, an unincorporated association, a partnership or an individual licensed pursuant to K.S.A. 40-956, and amendments thereto, to make rates for professional liability insurance.
(l) "Self-insurer" means a healthcare provider who qualifies as a self-insurer pursuant to K.S.A. 40-3414, and amendments thereto.
(m) "Medical care facility" means the same when used in the healthcare provider insurance availability act as defined in K.S.A. 65-425, and amendments thereto, except that, as used in the healthcare provider insurance availability act, such term, as it relates to insurance coverage under the healthcare provider insurance availability act, also includes any director, trustee, officer or administrator of a medical care facility.
(n) "Mental health center" means a mental health center licensed by the state of Kansas under K.S.A. 39-2001 et seq., and amendments thereto, except that, as used in the healthcare provider insurance availability act, such term, as it relates to insurance coverage under the healthcare provider insurance availability act, also includes any director, trustee, officer or administrator of a mental health center.
(o) "Mental health clinic" means a mental health clinic licensed by the state of Kansas under K.S.A. 39-2001 et seq., and amendments thereto, except that, as used in the healthcare provider insurance availability act, such term, as it relates to insurance coverage under the healthcare provider insurance availability act, also includes any director, trustee, officer or administrator of a mental health clinic.
(p) "State institution for people with intellectual disability" means Parsons state hospital and the Kansas neurological institute.
(q) "State psychiatric hospital" means Larned state hospital, Osawatomie state hospital and south central regional mental health hospital.
(r) "Person engaged in residency training" means:
(1) A person engaged in a postgraduate training program approved by the state board of healing arts who is employed by and is studying at the university of Kansas medical center only when such person is engaged in medical activities that do not include extracurricular, extra-institutional medical service for which such person receives extra compensation and that have not been approved by the dean of the school of medicine and the executive vice-chancellor of the university of Kansas medical center. Persons engaged in residency training shall be considered resident healthcare providers for purposes of K.S.A. 40-3401 et seq., and amendments thereto; and
(2) a person engaged in a postgraduate training program approved by the state board of healing arts who is employed by a nonprofit corporation organized to administer the graduate medical education programs of community hospitals or medical care facilities affiliated with the university of Kansas school of medicine or who is employed by an affiliate of the university of Kansas school of medicine as defined in K.S.A. 76-367, and amendments thereto, only when such person is engaged in medical activities that do not include extracurricular, extra-institutional medical service for which such person receives extra compensation and that have not been approved by the chief operating officer of the nonprofit corporation or the chief operating officer of the affiliate and the executive vice-chancellor of the university of Kansas medical center.
(s) "Full-time physician faculty employed by the university of Kansas medical center" means a person licensed to practice medicine and surgery who holds a full-time appointment at the university of Kansas medical center when such person is providing healthcare. A person licensed to practice medicine and surgery who holds a full-time appointment at the university of Kansas medical center may also be employed part-time by the United States department of veterans affairs if such employment is approved by the executive vice-chancellor of the university of Kansas medical center.
(t) "Sexual act" or "sexual activity" means sexual conduct that constitutes a criminal or tortious act under the laws of the state of Kansas.
(u) "Board" means the board of governors created by K.S.A. 40-3403, and amendments thereto.
(v) "Board of directors" means the governing board created by K.S.A. 40-3413, and amendments thereto.
(w) "Locum tenens contract" means a temporary agreement not exceeding 182 days per calendar year that employs a healthcare provider to actively render professional services in this state.
(x) "Professional services" means patient care or other services authorized under the act governing licensure of a healthcare provider.
(y) "Healthcare facility" means a nursing facility, an assisted living facility or a residential healthcare facility as all such terms are defined in K.S.A. 39-923, and amendments thereto.
(z) "Charitable healthcare provider" means the same as defined in K.S.A. 75-6102, and amendments thereto.
History: L. 1976, ch. 231, § 1; L. 1977, ch. 165, § 1; L. 1979, ch. 186, § 22; L. 1980, ch. 142, § 1; L. 1981, ch. 199, § 1; L. 1982, ch. 207, § 1; L. 1984, ch. 177, § 1; L. 1985, ch. 166, § 1; L. 1986, ch. 183, § 14; L. 1986, ch. 229, § 24; L. 1986, ch. 231, § 4; L. 1986, ch. 184, § 1; L. 1986, ch. 181, § 2; L. 1986, ch. 181, § 3; L. 1986, ch. 181, § 4; L. 1987, ch. 176, § 1; L. 1987, ch. 177, § 1; L. 1987, ch. 242, § 1; L. 1987, ch. 178, § 1; L. 1987, ch. 178, § 2; L. 1988, ch. 246, § 12; L. 1989, ch. 143, § 1; L. 1990, ch. 174, § 1; L. 1990, ch. 175, § 1; L. 1991, ch. 139, § 1; L. 1992, ch. 156, § 2; L. 1994, ch. 181, § 3; L. 2000, ch. 162, § 14; L. 2001, ch. 204, § 1; L. 2003, ch. 128, § 19; L. 2012, ch. 91, § 33; L. 2014, ch. 56, § 5; L. 2015, ch. 45, § 7; L. 2017, ch. 35, § 2; L. 2018, ch. 71, § 16; L. 2025, ch. 85, § 1; L. 2025, ch. 125, § 7; July 1.
(a) Prior to January 1, 2022, a policy of professional liability insurance approved by the commissioner and issued by an insurer duly authorized to transact business in this state in which the limit of the insurer's liability is not less than $200,000 per claim, subject to not less than a $600,000 annual aggregate for all claims made during the policy period, shall be maintained in effect by each resident healthcare provider as a condition of active licensure or other statutory authorization to render professional service as a healthcare provider in this state, unless such healthcare provider is a self-insurer. For all new policies and policies that renew on and after January 1, 2022, a policy of professional liability insurance approved by the commissioner and issued by an insurer duly authorized to transact business in this state in which the limit of the insurer's liability is not less than $500,000 per claim, subject to not less than a $1,500,000 annual aggregate for all claims made during the policy period, shall be maintained by each resident healthcare provider as a condition of active licensure or other statutory authorization to render professional service as a healthcare provider in this state, unless such healthcare provider is a self-insurer. This provision shall not apply to optometrists and pharmacists on and after July 1, 1991, to physical therapists on and after July 1, 1995, or to health maintenance organizations on and after July 1, 1997. Such policy shall provide as a minimum coverage for claims made during the term of the policy that were incurred during the term of such policy or during the prior term of a similar policy. Any insurer offering such policy of professional liability insurance to any healthcare provider may offer to such healthcare provider a policy as prescribed in this section with deductible options. Such deductible shall be within such policy limits.
(1) Each insurer providing basic coverage shall, within 30 days after the effective date of any policy issued in accordance with this subsection, notify the board of governors that such coverage is or will be in effect. Such notification shall be on a form approved by the board of governors and shall include information identifying the professional liability policy issued or to be issued, the name and address of all healthcare providers covered by the policy, the amount of the annual premium, the effective and expiration dates of the coverage and such other information as the board of governors shall require. A copy of the notice required by this subsection shall be furnished to the named insured.
(2) In the event of termination of basic coverage by cancellation, nonrenewal, expiration or otherwise by either the insurer or named insured, notice of such termination shall be furnished by the insurer to the board of governors, the state agency which licenses, registers or certifies the named insured and the named insured. Such notice shall be provided no less than 30 days prior to the effective date of any termination initiated by the insurer or within 10 business days after the date coverage is terminated at the request of the named insured and shall include the name and address of the healthcare provider or providers for whom basic coverage is terminated and the date basic coverage will cease to be in effect. No basic coverage shall be terminated by cancellation or failure to renew by the insurer unless such insurer provides a notice of termination as required by this subsection.
(3) Any professional liability insurance policy issued, delivered or in effect in this state on and after July 1, 1976, shall contain or be endorsed to provide basic coverage as required by subsection (a). Notwithstanding any omitted or inconsistent language, any contract of professional liability insurance shall be construed to obligate the insurer to meet all the mandatory requirements and obligations of this act. The liability of an insurer for claims made prior to July 1, 1984, shall not exceed those limits of insurance provided by such policy prior to July 1, 1984.
(b) A nonresident healthcare provider shall not be licensed to actively render professional service as a healthcare provider in this state unless such healthcare provider maintains continuous coverage in effect as prescribed by subsection (a), except such coverage may be provided by a nonadmitted insurer who has filed the form required by subsection (b)(1). This provision shall not apply to optometrists and pharmacists on and after July 1, 1991, or to physical therapists on and after July 1, 1995.
(1) Every insurance company authorized to transact business in this state, that is authorized to issue professional liability insurance in any jurisdiction, shall file with the commissioner, as a condition of its continued transaction of business within this state, a form prescribed by the commissioner declaring that its professional liability insurance policies, wherever issued, shall be deemed to provide at least the insurance required by this subsection when the insured is rendering professional services as a nonresident healthcare provider in this state. Any nonadmitted insurer may file such a form.
(2) Every nonresident healthcare provider that is required to maintain basic coverage pursuant to this subsection shall pay the surcharge levied by the board of governors pursuant to K.S.A. 40-3404(a), and amendments thereto, directly to the board of governors and shall furnish to the board of governors the information required in subsection (a)(1).
(c) Every healthcare provider that is a self-insurer, the university of Kansas medical center for persons engaged in residency training, as described in K.S.A. 40-3401(r)(1), and amendments thereto, the employers of persons engaged in residency training, as described in K.S.A. 40-3401(r)(2), and amendments thereto, the private practice corporations or foundations and their full-time physician faculty employed by the university of Kansas medical center or a medical care facility or mental health center for self-insurers under K.S.A. 40-3414(e), and amendments thereto, shall pay the surcharge levied by the board of governors pursuant to K.S.A. 40-3404(a), and amendments thereto, directly to the board of governors and shall furnish to the board of governors the information required in subsections (a)(1) and (a)(2).
(d) In lieu of a claims made policy otherwise required under this section, a person engaged in residency training who is providing services as a healthcare provider but, while providing such services, is not covered by the self-insurance provisions of K.S.A. 40-3414(d), and amendments thereto, may obtain basic coverage under an occurrence form policy, if such policy provides professional liability insurance coverage and limits that are substantially the same as the professional liability insurance coverage and limits required by K.S.A. 40-3402(a), and amendments thereto. Where such occurrence form policy is in effect, the provisions of the healthcare provider insurance availability act referring to claims made policies shall be construed to mean occurrence form policies.
(e) In lieu of a claims made policy otherwise required under this section, a nonresident healthcare provider employed pursuant to a locum tenens contract to provide services in this state as a healthcare provider may obtain basic coverage under an occurrence form policy, if such policy provides professional liability insurance coverage and limits that are substantially the same as the professional liability insurance coverage and limits required by K.S.A. 40-3402, and amendments thereto. Where such occurrence form policy is in effect, the provisions of the healthcare provider insurance availability act referring to claims made policies shall be construed to mean occurrence form policies.
History: L. 1976, ch. 231, § 2; L. 1984, ch. 238, § 2; L. 1985, ch. 166, § 2; L. 1986, ch. 229, § 26; L. 1986, ch. 179, § 3; L. 1986 ch. 184, § 2; L. 1989, ch. 143, § 2; L. 1990, ch. 175, § 2; L. 1991, ch. 139, § 2; L. 1994, ch. 155, § 1; L. 1995, ch. 145, § 1; L. 1997, ch. 134, § 1; L. 2014, ch. 56, § 6; L. 2021, ch. 108, § 13; July 1.
(a) For the purpose of paying damages for personal injury or death arising out of the rendering of or the failure to render professional services by a healthcare provider, self-insurer or inactive health care provider subsequent to the time that such healthcare provider or self-insurer has qualified for coverage under the provisions of this act, there is hereby established the healthcare stabilization fund. The fund shall be held in trust in the state treasury and accounted for separately from other state funds. The board of governors shall administer the fund or contract for the administration of the fund with an insurance company authorized to do business in this state.
(b) (1) There is hereby created a board of governors that shall be composed of such members and shall have such powers, duties and functions as are prescribed by this act. The board of governors shall:
(A) Administer the fund and exercise and perform other powers, duties and functions required of the board under the healthcare provider insurance availability act;
(B) provide advice, information and testimony to the appropriate licensing or disciplinary authority regarding the qualifications of a healthcare provider;
(C) prepare and publish, on or before October 1 of each year, a report for submission to the healthcare stabilization fund oversight committee that includes a summary of the fund's activity during the preceding fiscal year, including, but not limited to, the amount collected from surcharges, the highest and lowest surcharges assessed, the amount paid from the fund, the number of judgments paid from the fund, the number of settlements paid from the fund and the fund balance at the end of the fiscal year; and
(D) have the authority to grant temporary exemptions from the provisions of K.S.A.
40-3402
and
40-3404, and amendments thereto, to healthcare providers who have exceptional circumstances and verify in writing that the healthcare provider will not render professional services in this state during the period of exemption. Whenever the board grants such an exemption, the board shall notify the state agency that licenses the exempted healthcare provider.
(2) The board shall consist of 11 persons appointed by the commissioner of insurance, as provided by this subsection and as follows:
(A) Three members who are on a list of nominees submitted to the commissioner by the Kansas medical society, at least two of whom are doctors of medicine who are licensed to practice medicine and surgery in Kansas;
(B) three members who are on a list of nominees submitted to the commissioner by the Kansas hospital association and who are representatives of Kansas hospitals;
(C) two members who are on a list of nominees submitted to the commissioner by the Kansas association of osteopathic medicine, who are licensed to practice medicine and surgery in Kansas and who are doctors of osteopathic medicine;
(D) one member who is on a list of nominees submitted to the commissioner by the Kansas chiropractic association and who is licensed to practice chiropractic in Kansas;
(E) one member who is on a list of nominees submitted to the commissioner by the Kansas association of nurse anesthetists and who is a licensed professional nurse authorized to practice as a registered nurse anesthetist; and
(F) one member who is on a list of nominees submitted to the commissioner by statewide associations comprised of members who represent adult care homes and who is a representative of adult care homes.
(3) When a vacancy occurs in the membership of the board of governors created by this act, the commissioner shall appoint a successor of like qualifications from a list of three nominees submitted to the commissioner by the professional society or association prescribed by this section for the category of healthcare provider required for the vacant position on the board of governors. All appointments made shall be for a term of office of four years, but no member shall be appointed for more than two successive four-year terms. Each member shall serve until a successor is appointed and qualified. Whenever a vacancy occurs in the membership of the board of governors created by this act for any reason other than the expiration of a member's term of office, the commissioner shall appoint a successor of like qualifications to fill the unexpired term. In each case of a vacancy occurring in the membership of the board of governors, the commissioner shall notify the professional society or association that represents the category of healthcare provider required for the vacant position and request a list of three nominations of healthcare providers from which to make the appointment.
(4) The board of governors shall organize in July of each year and shall elect a chairperson and vice-chairperson from among its membership. Meetings shall be called by the chairperson or by a written notice signed by three members of the board.
(5) The board of governors, in addition to other duties imposed by this act, shall study and evaluate the operation of the fund and make such recommendations to the legislature as may be appropriate to ensure the viability of the fund.
(6) (A) The board shall appoint an executive director who shall be in the unclassified service under the Kansas civil service act and may employ attorneys and other employees who shall also be in the unclassified service under the Kansas civil service act. Such executive director, attorneys and other employees shall receive compensation fixed by the board, in accordance with appropriation acts of the legislature, not subject to approval of the governor.
(B) The board may provide all office space, services, equipment, materials and supplies, and all budgeting, personnel, purchasing and related management functions required by the board in the exercise of the powers, duties and functions imposed or authorized by the healthcare provider insurance availability act or may enter into a contract with the commissioner of insurance for the provision, by the commissioner, of all or any part thereof.
(7) The commissioner shall:
(A) Provide technical and administrative assistance to the board of governors with respect to administration of the fund upon request of the board; and
(B) provide such expertise as the board may reasonably request with respect to evaluation of claims or potential claims.
(c) Except as otherwise provided by any other provision of this act, the fund shall be liable to pay:
(1) Any amount due from a judgment or settlement that is in excess of the basic coverage liability of all liable resident healthcare providers or resident self-insurers for any personal injury or death arising out of the rendering of or the failure to render professional services within or without this state;
(2) subject to the provisions of subsection (f), any amount due from a judgment or settlement that is in excess of the basic coverage liability of all liable nonresident healthcare providers or nonresident self-insurers for any such injury or death arising out of the rendering or the failure to render professional services within this state but in no event shall the fund be obligated for claims against nonresident healthcare providers or nonresident self-insurers who have not complied with this act or for claims against nonresident healthcare providers or nonresident self-insurers that arose outside of this state;
(3) subject to the provisions of subsection (f), any amount due from a judgment or settlement against a resident inactive healthcare provider for any such injury or death arising out of the rendering of or failure to render professional services;
(4) subject to the provisions of subsection (f), any amount due from a judgment or settlement against a nonresident inactive healthcare provider for any injury or death arising out of the rendering or failure to render professional services within this state, but in no event shall the fund be obligated for claims against nonresident inactive healthcare providers:
(A) Who have not complied with this act; or
(B) for claims that arose outside of this state, unless such healthcare provider was a resident healthcare provider or resident self-insurer at the time such act occurred;
(5) subject to K.S.A.
40-3411(b), and amendments thereto, reasonable and necessary expenses for attorney fees, depositions, expert witnesses and other costs incurred in defending the fund against claims, and such expenditures shall not be subject to the provisions of K.S.A.
75-3738
through
75-3744, and amendments thereto;
(6) any amounts expended for reinsurance obtained to protect the best interests of the fund purchased by the board of governors, which purchase shall be subject to the provisions of K.S.A.
75-3738
through
75-3744, and amendments thereto, but shall not be subject to the provisions of K.S.A.
75-4101, and amendments thereto;
(7) reasonable and necessary actuarial expenses incurred in administering the act, including expenses for any actuarial studies contracted for by the legislative coordinating council, and such expenditures shall not be subject to the provisions of K.S.A.
75-3738
through
75-3744, and amendments thereto;
(8) periodically to the plan or plans, any amount due pursuant to K.S.A.
40-3413(a)(3), and amendments thereto;
(9) reasonable and necessary expenses incurred by the board of governors in the administration of the fund or in the performance of other powers, duties or functions of the board under the healthcare provider insurance availability act;
(10) surcharge refunds payable when the notice of cancellation requirements of K.S.A.
40-3402, and amendments thereto, are met;
(11) subject to K.S.A.
40-3411(b), and amendments thereto, reasonable and necessary expenses for attorney fees and other costs incurred in defending a person engaged or who was engaged in residency training or the private practice corporations or foundations and their full-time physician faculty employed by the university of Kansas medical center or any nonprofit corporation organized to administer the graduate medical education programs of community hospitals or medical care facilities affiliated with the university of Kansas school of medicine from claims for personal injury or death arising out of the rendering of or the failure to render professional services by such healthcare provider;
(12) any amount due from a judgment or settlement for an injury or death arising out of the rendering of or failure to render professional services by a person engaged or who was engaged in residency training or the private practice corporations or foundations and their full-time physician faculty employed by the university of Kansas medical center or any nonprofit corporation organized to administer the graduate medical education programs of community hospitals or medical care facilities affiliated with the university of Kansas school of medicine;
(13) subject to the provisions of K.S.A.
65-429, and amendments thereto, reasonable and necessary expenses for the development and promotion of risk management education programs and for the medical care facility licensure and risk management survey functions carried out under K.S.A.
65-429, and amendments thereto;
(14) any amount, but not less than the required basic coverage limits, owed pursuant to a judgment or settlement for any injury or death arising out of the rendering of or failure to render professional services by a person, other than a person described in paragraph (12), who was engaged in a postgraduate program of residency training approved by the state board of healing arts but who, at the time the claim was made, was no longer engaged in such residency program;
(15) subject to K.S.A.
40-3411(b), and amendments thereto, reasonable and necessary expenses for attorney fees and other costs incurred in defending a person described in paragraph (14);
(16) expenses incurred by the commissioner in the performance of duties and functions imposed upon the commissioner by the healthcare provider insurance availability act, and expenses incurred by the commissioner in the performance of duties and functions under contracts entered into between the board and the commissioner as authorized by this section; and
(17) periodically to the state general fund reimbursements of amounts paid to members of the healthcare stabilization fund oversight committee for compensation, travel expenses and subsistence expenses pursuant to K.S.A.
40-3403b(e), and amendments thereto.
(d) All amounts for which the fund is liable pursuant to subsection (c) shall be paid promptly and in full except that, if the amount for which the fund is liable is $500,000 or more, it shall be paid by installment payments of $500,000 or 10% of the amount of the judgment including interest thereon, whichever is greater, per fiscal year, the first installment to be paid within 60 days after the fund becomes liable and each subsequent installment to be paid annually on the same date of the year the first installment was paid, until the claim has been paid in full.
(e) In no event shall the fund be liable to pay in excess of $3,000,000 pursuant to any one judgment or settlement against any one healthcare provider relating to any injury or death arising out of the rendering of or the failure to render professional services on and after July 1, 1984, and before July 1, 1989, subject to an aggregate limitation for all judgments or settlements arising from all claims made in any one fiscal year in the amount of $6,000,000 for each healthcare provider.
(f) In no event shall the fund be liable to pay in excess of the amounts specified in the option selected by an active or inactive healthcare provider pursuant to subsection (l) for judgments or settlements relating to injury or death arising out of the rendering of or failure to render professional services by such healthcare provider on or after July 1, 1989.
(g) A healthcare provider shall be deemed to have qualified for coverage under the fund:
(1) On and after July 1, 1976, if basic coverage is then in effect;
(2) subsequent to July 1, 1976, at such time as basic coverage becomes effective; or
(3) upon qualifying as a self-insurer pursuant to K.S.A.
40-3414, and amendments thereto.
(h) A healthcare provider who is qualified for coverage under the fund shall have no vicarious liability or responsibility for any injury or death arising out of the rendering of or the failure to render professional services inside or outside this state by any other healthcare provider who is also qualified for coverage under the fund. The provisions of this subsection shall apply to all claims filed on or after July 1, 1986.
(i) Notwithstanding the provisions of K.S.A.
40-3402, and amendments thereto, if the board of governors determines due to the number of claims filed against a healthcare provider or the outcome of those claims that an individual healthcare provider presents a material risk of significant future liability to the fund, the board of governors is authorized by a vote of a majority of the members thereof, after notice and an opportunity for hearing in accordance with the provisions of the Kansas administrative procedure act, to terminate the liability of the fund for all claims against the healthcare provider for damages for death or personal injury arising out of the rendering of or the failure to render professional services after the date of termination. The date of termination shall be 30 days after the date of the determination by the board of governors. The board of governors, upon termination of the liability of the fund under this subsection, shall notify the licensing or other disciplinary board having jurisdiction over the healthcare provider involved of the name of the healthcare provider and the reasons for the termination.
(j) (1) Subject to the provisions of paragraph (7), upon the payment of moneys from the healthcare stabilization fund pursuant to subsection (c)(11), the board of governors shall certify to the secretary of administration the amount of such payment, and the secretary of administration shall transfer an amount equal to the amount certified, reduced by any amount transferred pursuant to paragraph (3) or (4), from the state general fund to the healthcare stabilization fund.
(2) Subject to the provisions of paragraph (7), upon the payment of moneys from the healthcare stabilization fund pursuant to subsection (c)(12), the board of governors shall certify to the secretary of administration the amount of such payment that is equal to the basic coverage liability of self-insurers, and the secretary of administration shall transfer an amount equal to the amount certified, reduced by any amount transferred pursuant to paragraph (3) or (4), from the state general fund to the healthcare stabilization fund.
(3) The university of Kansas medical center private practice foundation reserve fund is hereby established in the state treasury. If the balance in such reserve fund is less than $500,000 on July 1 of any year, the private practice corporations or foundations referred to in K.S.A.
40-3402(c), and amendments thereto, shall remit the amount necessary to increase such balance to $500,000 to the state treasurer for credit to such reserve fund as soon after such July 1 date as is practicable. Upon receipt of each such remittance, the state treasurer shall credit the same to such reserve fund. When compliance with the foregoing provisions of this paragraph have been achieved on or after July 1 of any year in which the same are applicable, the state treasurer shall certify to the board of governors that such reserve fund has been funded for the year in the manner required by law. Moneys in such reserve fund may be invested or reinvested in accordance with the provisions of K.S.A.
40-3406, and amendments thereto, and any income or interest earned by such investments shall be credited to such reserve fund. Upon payment of moneys from the healthcare stabilization fund pursuant to subsection (c)(11) or (c)(12) with respect to any private practice corporation or foundation or any of its full-time physician faculty employed by the university of Kansas, the secretary of administration shall transfer an amount equal to the amount paid from the university of Kansas medical center private practice foundation reserve fund to the healthcare stabilization fund or, if the balance in such reserve fund is less than the amount so paid, an amount equal to the balance in such reserve fund.
(4) The graduate medical education administration reserve fund is hereby established in the state treasury. If the balance in such reserve fund is less than $40,000 on July 1 of any year, the nonprofit corporations organized to administer the graduate medical education programs of community hospitals or medical care facilities affiliated with the university of Kansas school of medicine shall remit the amount necessary to increase such balance to $40,000 to the state treasurer for credit to such reserve fund as soon after such July 1 date as is practicable. Upon receipt of each such remittance, the state treasurer shall credit the same to such reserve fund. When compliance with the foregoing provisions of this paragraph have been achieved on or after July 1 of any year in which the same are applicable, the state treasurer shall certify to the board of governors that such reserve fund has been funded for the year in the manner required by law. Moneys in such reserve fund may be invested or reinvested in accordance with the provisions of K.S.A.
40-3406, and amendments thereto, and any income or interest earned by such investments shall be credited to such reserve fund. Upon payment of moneys from the healthcare stabilization fund pursuant to subsection (c)(11) or (c)(12) with respect to any nonprofit corporations organized to administer the graduate medical education programs of community hospitals or medical care facilities affiliated with the university of Kansas school of medicine the secretary of administration shall transfer an amount equal to the amount paid from the graduate medical education administration reserve fund to the healthcare stabilization fund or, if the balance in such reserve fund is less than the amount so paid, an amount equal to the balance in such reserve fund.
(5) Upon payment of moneys from the healthcare stabilization fund pursuant to subsection (c)(14) or (c)(15), the board of governors shall certify to the secretary of administration the amount of such payment, and the secretary of administration shall transfer an amount equal to the amount certified from the state general fund to the healthcare stabilization fund.
(6) Transfers from the state general fund to the healthcare stabilization fund pursuant to this subsection shall not be subject to the provisions of K.S.A.
75-3722, and amendments thereto.
(7) The funds required to be transferred from the state general fund to the healthcare stabilization fund pursuant to paragraphs (1) and (2) for the fiscal years ending June 30, 2010, June 30, 2011, June 30, 2012, and June 30, 2013, shall not be transferred prior to July 1, 2013. The secretary of administration shall maintain a record of the amounts certified by the board of governors pursuant to paragraphs (1) and (2) for the fiscal years ending June 30, 2010, June 30, 2011, June 30, 2012, and June 30, 2013. Beginning July 1, 2013, in addition to any other transfers required pursuant to subsection (j), the state general fund transfers that are deferred pursuant to this paragraph shall be transferred from the state general fund to the healthcare stabilization fund in the following manner: On July 1, 2013, and annually thereafter through July 1, 2018, an amount equal to 20% of the total amount of state general fund transfers deferred pursuant to this paragraph for the fiscal years ending June 30, 2010, June 30, 2011, June 30, 2012, and June 30, 2013. The amounts deferred pursuant to this paragraph shall not accrue interest thereon.
(k) Notwithstanding any other provision of the healthcare provider insurance availability act, no psychiatric hospital licensed under K.S.A.
39-2001
et seq., and amendments thereto, shall be assessed a premium surcharge or be entitled to coverage under the fund if such hospital has not paid any premium surcharge pursuant to K.S.A.
40-3404, and amendments thereto, prior to January 1, 1988.
(l) (1) On or after July 1, 1989, and prior to January 1, 2022, every healthcare provider shall make an election to be covered by one of the following options provided in subparagraph (A) that shall limit the liability of the fund with respect to judgments or settlements relating to injury or death arising out of the rendering of or failure to render professional services on or after July 1, 1989. On and after January 1, 2022, every healthcare provider shall make an election to be covered by one of the following options provided in subparagraph (B) that shall limit the liability of the fund with respect to judgments or settlements relating to injury or death arising out of the rendering of or failure to render professional services on or after January 1, 2022. Such election shall be made at the time the healthcare provider renews the basic coverage, or, if basic coverage is not in effect, such election shall be made at the time such coverage is acquired pursuant to K.S.A.
40-3402, and amendments thereto. A medical care facility or a healthcare facility deemed qualified as a self-insurer under K.S.A.
40-3414(a), and amendments thereto, may opt out of the requirements set forth in subparagraph (B) if such medical care facility or healthcare facility substantially meets the minimum coverage requirements of this section through coverage provided by the captive insurance company of such medical care facility or healthcare facility. Notice of the election shall be provided by the insurer providing the basic coverage in the manner and form prescribed by the board of governors and shall continue to be effective from year to year unless modified by a subsequent election made prior to the anniversary date of the policy. The healthcare provider may at any subsequent election reduce the dollar amount of the coverage for the next and subsequent fiscal years, but may not increase the same, unless specifically authorized by the board of governors. Any election of fund coverage limits, whenever made, shall be with respect to judgments or settlements relating to injury or death arising out of the rendering of or failure to render professional services on or after the effective date of such election of fund coverage limits. Such election shall be made for persons engaged in residency training and persons engaged in other postgraduate training programs approved by the state board of healing arts at medical care facilities or mental health centers in this state by the agency or institution paying the surcharge levied under K.S.A.
40-3404, and amendments thereto, for such persons. The election of fund coverage limits for a nonprofit corporation organized to administer the graduate medical education programs of community hospitals or medical care facilities affiliated with the university of Kansas school of medicine shall be deemed to be effective at the highest option. Such options shall be as follows:
(A) (i)
OPTION 1.
The fund shall not be liable to pay in excess of $100,000 pursuant to any one judgment or settlement for any party against such healthcare provider, subject to an aggregate limitation for all judgments or settlements arising from all claims made in the fiscal year in an amount of $300,000 for such provider.
(ii)
OPTION 2.
The fund shall not be liable to pay in excess of $300,000 pursuant to any one judgment or settlement for any party against such healthcare provider, subject to an aggregate limitation for all judgments or settlements arising from all claims made in the fiscal year in an amount of $900,000 for such provider.
(iii)
OPTION 3.
The fund shall not be liable to pay in excess of $800,000 pursuant to any one judgment or settlement for any party against such healthcare provider, subject to an aggregate limitation for all judgments or settlements arising from all claims made in the fiscal year in an amount of $2,400,000 for such healthcare provider.
(B) (i)
OPTION 1.
The fund shall not be liable to pay in excess of $500,000 pursuant to any one judgment or settlement for any party against such healthcare provider, subject to an aggregate limitation for all judgments or settlements arising from all claims made in the fiscal year in an amount of $1,500,000 for such healthcare provider.
(ii)
OPTION 2.
The fund shall not be liable to pay in excess of $1,500,000 pursuant to any one judgment or settlement for any party against such healthcare provider, subject to an aggregate limitation for all judgments or settlements arising from all claims made in the fiscal year in an amount of $4,500,000 for such healthcare provider.
(2) The board of governors shall have the authority to adjust the amounts provided in subparagraph (B) as the board deems necessary to effectuate the provisions of the healthcare provider insurance availability act, except that the minimum coverage for a healthcare provider shall not be less than $1,000,000 per claim and $3,000,000 in the aggregate.
(m) In the event of a claim against a healthcare provider for personal injury or death arising out of the rendering of or the failure to render professional services by such healthcare provider, the liability of the fund shall be limited to the amount of coverage selected by the healthcare provider at the time of the incident giving rise to the claim.
(n) Notwithstanding anything in article 34 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, to the contrary, the fund shall in no event be liable for any claims against any healthcare provider based upon or relating to the healthcare provider's sexual acts or activity, but in such cases the fund may pay reasonable and necessary expenses for attorney fees incurred in defending the fund against such claim. The fund may recover all or a portion of such expenses for attorney fees if an adverse judgment is returned against the healthcare provider for damages resulting from the healthcare provider's sexual acts or activity.
History: L. 1976, ch. 231, § 3; L. 1980, ch. 143, § 1; L. 1983, ch. 160, § 1; L. 1984, ch. 238, § 3; L. 1984, ch. 178, § 1; L. 1986, ch. 229, § 27; L. 1986, ch. 179, § 2; L. 1986, ch. 184, § 3; L. 1986, ch. 181, § 5; L. 1986, ch. 181, § 6; L. 1987, ch. 176, § 2; L. 1987, ch. 177, § 2; L. 1987, ch. 178, § 3; L. 1988, ch. 155, § 8; L. 1988, ch. 356, § 123; L. 1989, ch. 143, § 3; L. 1990, ch. 174, § 2; L. 1990, ch. 175, § 3; L. 1991, ch. 139, § 3; L. 1992, ch. 23, § 1; L. 1994, ch. 155, § 2; L. 1994, ch. 328, § 1; L. 1995, ch. 145, § 2; L. 1996, ch. 254, § 7; L. 1996, ch. 254, § 8; L. 1997, ch. 134, § 2; L. 1998, ch. 58, § 1; L. 2001, ch. 204, § 2; L. 2010, ch. 55, § 1; L. 2014, ch. 56, § 7; L. 2018, ch. 71, § 17; L. 2021, ch. 108, § 14; July 1.
Any health care provider whose fund coverage has been terminated under subsection (i) of K.S.A. 40-3403, and amendments thereto, shall, as a condition of licensure, maintain continuous professional liability insurance coverage equivalent to that provided by the fund and shall submit to the board of governors satisfactory proof of such coverage, as required by the board.
History: L. 1986, ch. 229, § 21; L. 1995, ch. 145, § 3; L. 2014, ch. 56, § 8; July 1.
(a) There is hereby created a health care stabilization fund oversight committee to consist of eleven members, one of whom shall be the chairperson of the board of governors or another member of the board of governors designated by the chairperson, one of whom shall be appointed by the president of the state senate, one of whom shall be appointed by the minority leader of the state senate, one of whom shall be appointed by the speaker of the state house of representatives, one of whom shall be appointed by the minority leader of the state house of representatives and six of whom shall be persons appointed by the legislative coordinating council. The four members appointed by the president and minority leader of the state senate and the speaker and minority leader of the state house of representatives shall be members of the state legislature. Of the six members appointed by the legislative coordinating council, four shall either be health care providers or be employed by health care providers, one shall be a representative of the insurance industry and one shall be appointed from the public at large who is not affiliated with any health care provider or the insurance industry, but none of such six members shall be members of the state legislature. Members serving on the committee on July 1, 2014, shall continue to serve at the pleasure of the appointing authority.
(b) The legislative coordinating council shall designate a chairperson of the committee from among the members thereof. The committee shall meet upon the call of the chairperson. It shall be the responsibility of the committee to make an annual report to the legislative coordinating council on or before January 1 of each year and to perform such additional duties as the legislative coordinating council shall direct. The report required to be made to the legislative coordinating council shall include recommendations to the legislature on the advisability of continuation or termination of the fund or any provisions of this act, an analysis of the market for insurance for health care providers, recommendations on ways to reduce claim and operational costs of the fund, and legislation necessary to implement recommendations of the committee.
(c) The board of governors shall provide any consulting actuarial firm contracting with the legislative coordinating council with such information or materials pertaining to the health care stabilization fund deemed necessary by the actuarial firm for performing the requirements of any actuarial reviews for the health care stabilization fund oversight committee notwithstanding any confidentiality prohibition, restriction or limitation imposed on such information or materials by any other law. The consulting actuarial firm and all employees and former employees thereof shall be subject to the same duty of confidentiality imposed by law on other persons or state agencies with regard to information and materials so provided and shall be subject to any civil or criminal penalties imposed by law for violations of such duty of confidentiality. Any reports of the consulting actuarial firm shall be made in a manner which will not reveal directly or indirectly the name of any persons or entities or individual reserve information involved in claims or actions for damages for personal injury or loss due to error, omission or negligence in the performance of professional services by health care providers. Information provided to the actuary shall not be subject to discovery, subpoena or other means of legal compulsion in any civil proceedings and shall be returned by the actuary to the health care stabilization fund.
(d) The staff of the legislative research department, the office of the revisor of statutes and the division of legislative administrative services shall provide such assistance as may be requested by the committee and to the extent authorized by the legislative coordinating council.
(e) Members of the committee attending meetings of the committee, or attending a subcommittee meeting thereof authorized by the committee, shall be paid compensation, travel expenses and subsistence expenses as provided in K.S.A. 75-3212, and amendments thereto.
(f) This section shall be a part of and supplemental to the health care provider insurance availability act.
History: L. 1989, ch. 143, § 6; L. 1990, ch. 176, § 1; L. 1991, ch. 139, § 4; L. 1994, ch. 155, § 3; L. 2014, ch. 56, § 9; July 1.
(a) Except for any health care provider whose participation in the fund has been terminated pursuant to subsection (i) of K.S.A. 40-3403, and amendments thereto, the board of governors shall levy an annual premium surcharge on each health care provider who has obtained basic coverage and upon each self-insurer for each year. This provision shall not apply to optometrists and pharmacists on or after July 1, 1991, nor to physical therapists on or after July 1, 1995, nor to health maintenance organizations on and after July 1, 1997. Such premium surcharge shall be an amount based upon a rating classification system established by the board of governors which is reasonable, adequate and not unfairly discriminating. The annual premium surcharge upon the university of Kansas medical center for persons engaged in residency training, as described in paragraph (1) of subsection (r) of K.S.A. 40-3401, and amendments thereto, shall be based on an assumed aggregate premium of $600,000. The annual premium surcharge upon the employers of persons engaged in residency training, as described in paragraph (2) of subsection (r) of K.S.A. 40-3401, and amendments thereto, shall be based on an assumed aggregate premium of $400,000. The surcharge on such $400,000 amount shall be apportioned among the employers of persons engaged in residency training, as described in paragraph (2) of subsection (r) of K.S.A. 40-3401, and amendments thereto, based on the number of residents employed as of July 1 of each year. The annual premium surcharge upon any nonprofit corporation organized to administer the graduate medical education programs of community hospitals or medical care facilities affiliated with the university of Kansas school of medicine shall be based upon an assumed aggregate premium of $10,000. The surcharge on such assumed aggregate premium shall be apportioned among all such nonprofit corporations.
(b) In the case of a resident health care provider who is not a self-insurer, the premium surcharge shall be collected in addition to the annual premium for the basic coverage by the insurer and shall not be subject to the provisions of K.S.A. 40-252, 40-955 and 40-2801 et seq., and amendments thereto. The amount of the premium surcharge shall be shown separately on the policy or an endorsement thereto and shall be specifically identified as such. Such premium surcharge shall be due and payable by the insurer to the board of governors within 30 days after the annual premium for the basic coverage is received by the insurer. Within 15 days immediately following the effective date of this act, the board of governors shall send to each insurer information necessary for their compliance with this subsection. The certificate of authority of any insurer who fails to comply with the provisions of this subsection shall be suspended pursuant to K.S.A. 40-222, and amendments thereto, until such insurer shall pay the annual premium surcharge due and payable to the board of governors. In the case of a nonresident health care provider or a self-insurer, the premium surcharge shall be paid upon submitting documentation of compliance with K.S.A. 40-3402, and amendments thereto.
(c) In setting the amount of such surcharge, the board of governors may require any health care provider who has paid a surcharge for less than 24 months to pay a higher surcharge than other health care providers.
History: L. 1976, ch. 231, § 4; L. 1980, ch. 143, § 2; L. 1983, ch. 160, § 2; L. 1984, ch. 238, § 4; L. 1985, ch. 166, § 3; L. 1986, ch. 229, § 29; L. 1986, ch. 179, § 4; L. 1986, ch. 184, § 4; L. 1986, ch. 181, § 7; L. 1987, ch. 176, § 3; L. 1990, ch. 175, § 4; L. 1991, ch. 139, § 5; L. 1994, ch. 155, § 4; L. 1995, ch. 145, § 4; L. 1997, ch. 134, § 3; L. 2001, ch. 204, § 4; L. 2010, ch. 55, § 2; L. 2014, ch. 56, § 10; July 1.
History: L. 1986, ch. 229, § 25; Repealed, L. 1987, ch. 176, § 12; July 1.
History: L. 1976, ch. 231, § 5; Repealed, L. 1989, ch. 143, § 10; July 1.
After consultation with the board of governors the director of investments may invest and reinvest moneys in the fund in accordance with investment policies established by the pooled money investment board under K.S.A. 75-4232, and amendments thereto, in the following:
(a) Direct obligations of, or obligations that are insured as to principal and interest by, the United States of America or any agency thereof and obligations and securities of the United States sponsored enterprises which under federal law may be accepted as security for public funds, including investments in mortgage-backed securities;
(b) repurchase agreements with a Kansas bank or primary government securities dealer which reports to the market reports division of the federal reserve bank of New York for direct obligations of, or obligations that are insured as to principal and interest by, the United States government or any agency thereof and obligations and securities of United States government sponsored enterprises which under federal law may be accepted as security for public funds;
(c) commercial paper that does not exceed 270 days to maturity and which has received one of the two highest commercial paper credit ratings by a nationally recognized investment rating firm;
(d) interest-bearing time deposits in any commercial bank located in Kansas;
(e) the municipal investment pool fund, under K.S.A. 12-1677a, and amendments thereto; or
(f) corporate bonds that are rated in one of the two highest credit rating categories by a nationally recognized investment rating firm.
History: L. 1976, ch. 231, § 6; L. 1987, ch. 295, § 4; L. 1989, ch. 48, § 85; L. 1996, ch. 254, § 9; L. 2005, ch. 205, § 2; July 1.
(a) Except for investment purposes, all payments from the fund shall be upon warrants of the state of Kansas issued pursuant to vouchers approved by the executive director or the executive director's designee, and, with respect to claim payments, accompanied by: (1) A file stamped copy of a final judgment against a healthcare provider or inactive healthcare provider for which the fund is liable; or (2) a file stamped copy of a court approved settlement against a healthcare provider or inactive healthcare provider for which the fund is liable.
(b) For investment purposes amounts shall be paid from the fund upon vouchers approved by the chairperson of the pooled money investment board.
(c) Payments from the fund for attorney fees, expert witness fees, and other costs related to claims, including invoices, statements and other documentation thereof, shall not be subject to K.S.A. 45-218, and amendments thereto.
History: L. 1976, ch. 231, § 7; L. 1994, ch. 155, § 5; L. 2014, ch. 56, § 11; L. 2019, ch. 62, § 8; May 30.
(a) Expenditures may be made from the health care stabilization fund for attorney fees, expenses and other costs incurred in defending the fund against claims and for judgments and settlements for which the fund is liable pursuant to subsection (c) of K.S.A. 40-3403, and amendments thereto, regardless of when such attorney fees, expenses or other costs were incurred or when any such judgment or settlement was made.
(b) This section shall be part of and supplemental to the health care provider insurance availability act.
History: L. 2005, ch. 205, § 1; July 1.
(a) For a claim for personal injury or death arising out of the rendering of or the failure to render professional services by a healthcare provider, the insurer of a healthcare provider covered by the fund or self-insurer shall be liable only for the amount of basic coverage in effect on the date of the incident giving rise to the claim, subject to an annual aggregate amount of not less than three times the primary amount for all such claims against the healthcare provider. If any liability insurance in excess of such amounts is applicable to any claim or would be applicable in the absence of this act, any payments from the fund shall be excess over such amounts paid, payable or that would have been payable in the absence of this act.
(b) If any inactive healthcare provider has liability insurance in effect that is applicable to any claim or would be applicable in the absence of this act, any payments from the fund shall be excess over such amounts paid, payable or that would have been payable in the absence of this act.
(c) Notwithstanding anything in article 34 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, to the contrary, an insurer that provides coverage to a healthcare provider may exclude from coverage any liability incurred by such provider:
(1) From the rendering of or the failure to render professional services by any other healthcare provider who is required by K.S.A. 40-3402, and amendments thereto, to maintain professional liability insurance in effect as a condition to rendering professional services as a healthcare provider in this state; or
(2) based upon or relating to the healthcare provider's sexual acts or activity, but in such cases the insurer may provide reasonable and necessary expenses for attorney fees incurred in defending against such claim. The insurer may recover all or a portion of such expenses for attorney fees if an adverse judgment is returned against the healthcare provider for damages resulting from the healthcare provider's sexual acts or activity.
(d) The fund shall not be liable for payment of any claim excluded by an insurer pursuant to this section or any claim otherwise excluded from coverage under a healthcare provider's professional liability insurance.
(e) Notwithstanding any provision of article 34 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, to the contrary, an insurer that provides coverage to a healthcare provider may exclude from coverage:
(1) Any liability incurred by such healthcare provider as a result of professional services rendered as a charitable healthcare provider; or
(2) any liability incurred by such healthcare provider that is covered under the federal tort claims act pursuant to chapter 171 of title 28 of the United States code.
History: L. 1976, ch. 231, § 8; L. 1984, ch. 238, § 5; L. 1986, ch. 229, § 30; L. 1990, ch. 174, § 3; L. 1997, ch. 134, § 4; L. 2014, ch. 56, § 12; L. 2017, ch. 35, § 3; L. 2021, ch. 108, § 15; July 1.
(a) (1) In any action filed in this state for personal injury or death arising out of the rendering of or the failure to render professional services by any healthcare provider covered by the fund or any inactive healthcare provider covered by the fund, the plaintiff shall serve a copy of the petition upon the board of governors by registered mail, certified mail, priority mail, commercial delivery service or first class mail within 30 calendar days from filing the same, and if such service is not made the fund shall not be liable for any amount due from a judgment or a settlement nor, in such case, shall the healthcare provider or the provider's insurer or the inactive healthcare provider or the provider's insurer be liable for such amount that, if such service had been made, would have been paid by the fund; (2) in any action filed outside of this state for personal injury or death arising out of the rendering of or the failure to render professional services by any healthcare provider or any inactive healthcare provider covered by the fund, the inactive healthcare provider, the self-insurer or the insurer of a healthcare provider or an inactive healthcare provider shall notify the board of governors, as soon as it is reasonably practicable, that such summons or petition has been filed. If the petition names as a defendant in the action a healthcare provider who is licensed, registered or certified by the state board of healing arts, the board of governors shall forward a copy of the petition to the state board of healing arts.
(b) Such action shall be defended by the insurer or the self-insurer, but if the board of governors believes it to be in the best interests of the fund, the board of governors may employ independent counsel to represent the interests of the fund. The cost of employing such counsel shall be paid from the fund. The board of governors is authorized to employ independent counsel in any such action against an inactive healthcare provider covered by the fund.
(c) The attorneys of record and the board of governors shall submit to the state board of healing arts expert witness reports which have been made available to the opposing parties in the case and, upon the request of the state board of healing arts, any depositions, interrogatories, admissions or other relevant information concerning the case which has been made available to the opposing parties in the case shall also be submitted. The board of governors shall not be required to furnish information not in the possession of the board of governors. Any report or other information made available to the state board of healing arts in accordance with this subsection shall be subject to K.S.A. 65-2898a and amendments thereto. Reasonable expenses incurred in reproducing such reports or other information shall be paid by the state board of healing arts.
History: L. 1976, ch. 231, § 9; L. 1983, ch. 213, § 3; L. 1985, ch. 167, § 1; L. 1994, ch. 155, § 6; L. 2021, ch. 108, § 16; July 1.
When the insurer of a health care provider or inactive health care provider covered by the fund has agreed to settle its liability on a claim against its insured or when the self-insurer has agreed to settle liability on a claim and the claimant's demand is in an amount in excess of such settlement, or where a claim is against an inactive health care provider covered by the fund who does not have liability insurance in effect which is applicable to the claim, or where it would otherwise be in the best interest of the fund, the claimant and the board of governors may negotiate on an amount to be paid from the fund. The board of governors may employ independent counsel to represent the interest of the fund in any such negotiations. In the event the claimant and the board of governors agree upon an amount the following procedure shall be followed:
(a) A petition shall be filed by the claimant with the court in which the action is pending against the health care provider or the inactive health care provider, or if none is pending, in a court of appropriate jurisdiction, for approval of the agreement between the claimant and the board of governors.
(b) The court shall set such petition for hearing as soon as the court's calendar permits, and notice of the time, date and place of hearing shall be given to the claimant, the health care provider or inactive health care provider, and to the board of governors.
(c) At such hearing the court shall approve the proposed settlement if the court finds it to be valid, just and equitable.
(d) In the event the settlement is not approved, the procedure set forth in K.S.A. 40-3411 and amendments thereto shall be followed.
History: L. 1976, ch. 231, § 10; L. 1994, ch. 155, § 7; January 1, 1995.
(a) In any claim in which the insurer of a health care provider or inactive health care provider covered by the fund has agreed to settle its liability on a claim against its insured or when the self-insurer has agreed to settle liability on a claim and the claimant's demand is in an amount in excess of such settlement, to which the board of governors does not agree, or where the claim is against an inactive health care provider covered by the fund who does not have liability insurance in effect which is applicable to the claim and the claimant and board of governors cannot agree upon a settlement, an action must be commenced by the claimant against the health care provider or inactive health care provider in a court of appropriate jurisdiction for such damages as are reasonable in the premises. If an action is already pending against the health care provider or inactive health care provider, the pending action shall be conducted in all respects as if the insurer or self-insurer had not agreed to settle.
(b) Any such action against a health care provider covered by the fund or inactive health care provider covered by the fund who has liability insurance in effect which is applicable to the claim shall be defended by the insurer or self-insurer in all respects as if the insurer or self-insurer had not agreed to settle its liability. Notwithstanding any other provision of law, the insurer or self-insurer shall be reimbursed from the fund for the costs of such defense incurred after the settlement agreement was reached, including a reasonable attorney's fee not to exceed the maximum hourly rate established by the board of governors. The board of governors is authorized to employ independent counsel in any such action against a health care provider or an inactive health care provider covered by the fund. If the primary carrier or self-insurer determines that the policy limits or the self-insured amount of basic coverage should be tendered to the fund in order to relieve itself of further costs of defense, it may do so in the manner specified by the board of governors. In the event of such a tender, the fund shall become responsible for the conduct of the defense. The board of governors may employ the attorney retained by the primary carrier or self-insurer or appoint other counsel to represent such health care provider. In any event, the board of governors shall pay attorneys' fees at a rate not to exceed the maximum hourly rate established by the board of governors. Under such circumstances, the fund shall have no liability for attorneys' fees to any attorney not so appointed.
(c) In any such action the health care provider or the inactive health care provider against whom claim is made shall be obligated to attend hearings and trials, as necessary, and to give evidence.
History: L. 1976, ch. 231, § 11; L. 1983, ch. 160, § 3; L. 1994, ch. 181, § 4; L. 1994, ch. 328, § 2; L. 2014, ch. 56, § 13; July 1.
(a) Any action for personal injury or death arising out of the rendering of or the failure to render professional services by any health care provider or inactive health care provider shall be maintained against such health care provider or inactive health care provider. No claimant shall have any right of action directly against the fund. No claimant shall have any right of action under this act directly against an insurer.
(b) Evidence that a portion of any verdict would be payable from insurance or the fund shall be inadmissible in any such action.
(c) Nothing in this act shall be construed to impose any liability in the fund in excess of that specifically provided for in this act for negligent failure to settle a claim or for failure to settle a claim in good faith.
(d) The fund shall have no obligations whatsoever for payment for punitive damages.
(e) The fund shall not be liable to pay amounts due from a judgment against an inactive health care provider arising from the rendering of professional services as a health care provider contrary to the provisions of this act.
(f) Any action for damages or for approval of a settlement as set forth in K.S.A. 40-3409, 40-3410 or 40-3411, and amendments thereto, shall be brought in a court of appropriate jurisdiction and venue.
History: L. 1976, ch. 231, § 12; L. 2014, ch. 56, § 14; July 1.
(a) Every insurer and every rating organization shall cooperate in preparing a plan or plans for the equitable apportionment among such insurers of applicants for professional liability insurance and such other liability insurance as may be included in or added to the plan, who, in good faith, are entitled to such insurance but are unable to procure through ordinary methods. Such plan or plans shall be prepared and filed with the commissioner and the board of governors within a reasonable time but not exceeding 60 calendar days. Such plan or plans shall provide:
(1) Reasonable rules governing the equitable distribution of risks by direct insurance, reinsurance or otherwise including the authority to make assessments against the insurers participating in the plan or plans;
(2) rates and rate modifications applicable to such risks that shall be reasonable, adequate and not unfairly discriminatory;
(3) a method whereby periodically the plan shall compare the premiums earned to the losses and expenses sustained by the plan. If there is any surplus of premiums over losses and expenses received for that year such surplus shall be transferred to the fund. If there is any excess of losses and expenses over premiums earned such losses shall be transferred from the fund, except that such transfers shall not occur more often than once each three months;
(4) the limits of liability that the plan shall be required to provide, except that such limits shall not be less than those limits provided for in K.S.A. 40-3402, and amendments thereto; and
(5) a method by which applicants for insurance, insureds and insurers may have a hearing on grievances and the right of appeal to the commissioner.
(b) (1) For every such plan or plans, there shall be a governing board that shall meet at least annually to review and prescribe operating rules. Prior to December 31, 2025, such board of directors shall consist of nine members to be appointed, for terms of four years, by the commissioner as follows:
(A) Two members who shall be representatives of foreign insurers;
(B) two members who shall be representatives of domestic insurers;
(C) two members who shall be healthcare providers;
(D) one member who shall be a licensed insurance agent actively engaged in the solicitation of casualty insurance;
(E) one member who shall be the chairperson of the board of governors or the chairperson's designee; and
(F) one member who shall be a representative of the general public.
(2) The members of the governing board appointed on or before July 1, 2025, shall serve their current terms that shall expire on December 31, 2025. On and after January 1, 2026, the governing board shall consist of five members who shall be appointed for a term of four years except that such members shall be removable by the commissioner for inefficiency, neglect of duty or malfeasance as follows:
(A) One member who shall be a representative of foreign insurers;
(B) one member who shall be a representative of domestic insurers;
(C) one member * shall be a healthcare provider;
(D) one member who shall be a licensed insurance agent engaged in the solicitation of casualty insurance; and
(E) one member who shall be chairperson of the board or the chairperson's designee.
(c) The commissioner and governing board shall review the plan as soon as reasonably possible after filing in order to determine whether if such plan meets the requirements set forth in subsection (a). As soon as reasonably possible after the plan has been filed, the commissioner, consistent with the recommendations of the governing board, shall approve or disapprove the plan in writing. Any plan shall be deemed approved unless disapproved within 30 days. Subsequent to the waiting period the commissioner may disapprove any plan on the grounds that such plan does not meet the requirements set forth in subsection (a), but only after a hearing held upon not less than 10 days' written notice to every insurer and rating organization affected specifying in what respect the commissioner finds that such plan fails to meet such requirements and stating when, within a reasonable period thereafter, such plan shall be deemed no longer effective. Such order shall not affect any assignment made or policy issued or made prior to the expiration of the period set forth in the order. Amendments to such plan or plans shall be prepared, filed and reviewed in the same manner as provided in this section with respect to the original plan or plans.
(d) If no plan meeting the standards set forth in subsection (a) is submitted to the commissioner and board of directors within 60 calendar days from July 1, 1982, or within the period stated in any order disapproving an existing plan, the commissioner with the assistance of the board of directors shall after a hearing, if necessary to carry out the purpose of this act, prepare and promulgate a plan meeting such requirements.
(e) If, after a hearing conducted in accordance with the provisions of the Kansas administrative procedure act, the commissioner and board of directors find that any activity or practice of any insurer or rating organization in connection with the operation of such plan or plans is unfair or unreasonable or otherwise inconsistent with the provisions of this act, the commissioner and board of directors may issue a written order specifying in what respects such activity or practice is unfair or unreasonable or otherwise inconsistent with the provisions of this act and requiring discontinuance of such activity or practice.
(f) An insurer participating in the plan approved by the commissioner may pay a commission with respect to insurance written under the plan to an insurance agent licensed for any other insurer participating in the plan or to any insurer participating in the plan. Such commission shall be reasonably equivalent to the usual customary commission paid on similar types of policies issued in the voluntary market.
History: L. 1976, ch. 231, § 13; L. 1977, ch. 166, § 1; L. 1980, ch. 144, § 1; L. 1982, ch. 208, § 1; L. 1984, ch. 178, § 2; L. 1987, ch. 179, § 1; L. 1988, ch. 356, § 124; L. 1989, ch. 144, § 1; L. 1992, ch. 23, § 2; L. 1995, ch. 145, § 5; L. 2014, ch. 56, § 15; L. 2025, ch. 87, § 21; July 1.
(a) (1) Any healthcare provider or any healthcare system organized and existing under the laws of this state which owns and operates more than one medical care facility or more than one healthcare facility, as defined in K.S.A. 40-3401, and amendments thereto, licensed by the state of Kansas, whose aggregate annual insurance premium is or would be $150,000 or more for basic coverage calculated in accordance with rating procedures approved by the commissioner pursuant to K.S.A. 40-3413, and amendments thereto, may qualify as a self-insurer by obtaining a certificate of self-insurance from the board of governors. Upon application of any such healthcare provider or healthcare system, on a form prescribed by the board of governors, the board of governors may issue a certificate of self-insurance if the board of governors is satisfied that the applicant possesses and will continue to possess the ability to pay any judgment for which liability exists equal to the amount of basic coverage required of a healthcare provider obtained against such applicant arising from the applicant's rendering of professional services as a healthcare provider.
(2) In making such determination the board of governors shall consider:
(A) The financial condition of the applicant;
(B) the procedures adopted and followed by the applicant to process and handle claims and potential claims;
(C) the amount and liquidity of assets reserved for the settlement of claims or potential claims; and
(D) any other factors the board deems relevant.
(3) Any applicant for self-insurance that owns and operates more than one medical care facility or more than one healthcare facility shall be deemed qualified by the board of governors if such applicant is insured by a captive insurance company, as defined in K.S.A. 40-4301, and amendments thereto, or under the laws of the state of domicile of any such captive insurance company.
(4) The certificate of self-insurance may contain reasonable conditions prescribed by the board of governors. Upon notice and a hearing in accordance with the provisions of the Kansas administrative procedure act, the board of governors may cancel a certificate of self-insurance upon reasonable grounds therefor. Failure to pay any judgment for which the self-insurer is liable arising from the self-insurer's rendering of professional services as a healthcare provider, the failure to comply with any provision of this act or the failure to comply with any conditions contained in the certificate of self-insurance shall be reasonable grounds for the cancellation of such certificate of self-insurance. The provisions of this subsection shall not apply to the Kansas soldiers' home, the Kansas veterans' home or to any individual who is a self-insurer pursuant to subsection (d) or (e).
(b) Any such healthcare provider or healthcare system that holds a certificate of self-insurance shall pay the applicable surcharge set forth in K.S.A. 40-3402(c), and amendments thereto.
(c) The Kansas soldiers' home and the Kansas veterans' home shall be self-insurers and shall pay the applicable surcharge set forth in K.S.A. 40-3402(c), and amendments thereto.
(d) Individuals engaged in residency training as provided in K.S.A. 40-3401(r)(1) and (2), and amendments thereto, shall be self-insured by the state of Kansas for occurrences arising during such training, and such individual shall be deemed a self-insurer for the purposes of the healthcare provider insurance availability act. Such self-insurance shall be applicable to an individual engaged in residency training only when such individual is engaged in medical activities which do not include extracurricular, extra-institutional medical service for which such individual receives extra compensation and which have not been approved as provided in K.S.A. 40-3401(r)(1) and (2), and amendments thereto.
(e) (1) An individual engaged in a postgraduate training program approved by the state board of healing arts at a medical care facility or mental health center in this state may be self-insured by such medical care facility or mental health center in accordance with this subsection and in accordance with such terms and conditions of eligibility therefor as may be specified by the medical care facility or mental health center and approved by the board of governors. An individual self-insured under this subsection by a medical care facility or mental health center shall be deemed a self-insurer for purposes of the healthcare provider insurance availability act. Upon application by a medical care facility or mental health center, on a form prescribed by the board of governors, the board of governors may authorize such medical care facility or mental health center to self-insure individuals engaged in postgraduate training programs approved by the state board of healing arts at such medical care facility or mental health center if the board of governors is satisfied that the medical care facility or mental health center is possessed and will continue to be possessed of ability to pay any judgment for which liability exists equal to the amount of basic coverage required of a healthcare provider obtained against an individual engaged in such a postgraduate training program and arising from such individual's rendering of or failure to render professional services as a healthcare provider.
(2) In making such determination the board of governors shall consider:
(A) The financial condition of the medical care facility or mental health center;
(B) the procedures adopted by the medical care facility or mental health center to process and handle claims and potential claims;
(C) the amount and liquidity of assets reserved for the settlement of claims or potential claims by the medical care facility or mental health center; and
(D) any other factors the board of governors deems relevant.
The board of governors may specify such conditions for the approval of an application as the board of governors deems necessary. Upon approval of an application, the board of governors shall issue a certificate of self-insurance to each individual engaged in such postgraduate training program at the medical care facility or mental health center who is self-insured by such medical care facility or mental health center.
(3) Upon notice and a hearing in accordance with the provisions of the Kansas administrative procedure act, the board of governors may cancel, upon reasonable grounds therefor, a certificate of self-insurance issued pursuant to this subsection or the authority of a medical care facility or mental health center to self-insure individuals engaged in such postgraduate training programs at the medical care facility or mental health center. Failure of an individual engaged in such postgraduate training program to comply with the terms and conditions of eligibility to be self-insured by the medical care facility or mental health center, the failure of a medical care facility or mental health center to pay any judgment for which such medical care facility or mental health center is liable as self-insurer of such individual, the failure to comply with any provisions of the healthcare provider insurance availability act or the failure to comply with any conditions for approval of the application or any conditions contained in the certificate of self-insurance shall be reasonable grounds for cancellation of such certificate of self-insurance or the authority of a medical care facility or mental health center to self-insure such individuals.
(4) A medical care facility or mental health center authorized to self-insure individuals engaged in such postgraduate training programs shall pay the applicable surcharge set forth in K.S.A. 40-3402(c), and amendments thereto, on behalf of such individuals.
(5) As used in this subsection, "medical care facility" does not include the university of Kansas medical center or those community hospitals or medical care facilities described in K.S.A. 40-3401(r)(2), and amendments thereto.
(f) For the purposes of subsection (a), "healthcare provider" may include each health care provider in any group of healthcare providers who practice as a group to provide physician services only for a health maintenance organization, any professional corporations, partnerships or not-for-profit corporations formed by such group and the health maintenance organization itself. The premiums for each such provider, health maintenance organization and group corporation or partnership may be aggregated for the purpose of being eligible for and subject to the statutory requirements for self-insurance as set forth in this section.
(g) The provisions of subsections (a) and (f), relating to healthcare systems, shall not affect the responsibility of individual healthcare providers as defined in K.S.A. 40-3401(f), and amendments thereto, or organizations whose premiums are aggregated for purposes of being eligible for self-insurance from individually meeting the requirements imposed by K.S.A. 40-3402, and amendments thereto, with respect to the ability to respond to injury or damages to the extent specified therein and K.S.A. 40-3404, and amendments thereto, with respect to the payment of the healthcare stabilization fund surcharge.
(h) Each private practice corporation or foundation and their full-time physician faculty employed by the university of Kansas medical center and each nonprofit corporation organized to administer the graduate medical education programs of community hospitals or medical care facilities affiliated with the university of Kansas school of medicine shall be deemed a self-insurer for the purposes of the healthcare provider insurance availability act. The private practice corporation or foundation of which the full-time physician faculty is a member and each nonprofit corporation organized to administer the graduate medical education programs of community hospitals or medical care facilities affiliated with the university of Kansas school of medicine shall pay the applicable surcharge set forth in K.S.A. 40-3404(a), and amendments thereto, on behalf of the private practice corporation or foundation and their full-time physician faculty employed by the university of Kansas medical center or on behalf of a nonprofit corporation organized to administer the graduate medical education programs of community hospitals or medical care facilities affiliated with the university of Kansas school of medicine.
(i) (1) Subject to the provisions of paragraph (4), for the purposes of the healthcare provider insurance availability act, each nonprofit corporation organized to administer the graduate medical education programs of community hospitals or medical care facilities affiliated with the university of Kansas school of medicine shall be deemed to have been a healthcare provider as defined in K.S.A. 40-3401, and amendments thereto, from and after July 1, 1997.
(2) Subject to the provisions of paragraph (4), for the purposes of the healthcare provider insurance availability act, each nonprofit corporation organized to administer the graduate medical education programs of community hospitals or medical care facilities affiliated with the university of Kansas school of medicine shall be deemed to have been a self-insurer within the meaning of subsection (h), and amendments thereto, from and after July 1, 1997.
(3) Subject to the provisions of paragraph (4), for the purposes of the healthcare provider insurance availability act, the election of fund coverage limits for each nonprofit corporation organized to administer the graduate medical education programs of community hospitals or medical care facilities affiliated with the university of Kansas school of medicine shall be deemed to have been effective at the highest option, as provided in K.S.A. 40-3403(l), and amendments thereto, from and after July 1, 1997.
(4) No nonprofit corporation organized to administer the graduate medical education programs of community hospitals or medical care facilities affiliated with the university of Kansas school of medicine shall be required to pay to the fund any annual premium surcharge for any period prior to the effective date of this act. Any annual premium surcharge for the period commencing on the effective date of this act and ending on June 30, 2001, shall be prorated.
History: L. 1976, ch. 231, § 14; L. 1981, ch. 199, § 2; L. 1982, ch. 209, § 1; L. 1984, ch. 177, § 2; L. 1985, ch. 166, § 4; L. 1986, ch. 184, § 5; L. 1988, ch. 155, § 9; L. 1988, ch. 356, § 125; L. 1989, ch. 143, § 4; L. 1990, ch. 175, § 5; L. 1995, ch. 145, § 6; L. 1997, ch. 118, § 10; L. 2001, ch. 204, § 3; L. 2014, ch. 56, § 16; L. 2015, ch. 45, § 8; L. 2021, ch. 108, § 17; July 1.
The board of governors, the commissioner, the attorney general, the health care stabilization fund oversight committee and the officers and employees of the state agencies which license, register, certify or otherwise regulate health care providers are authorized and directed to consult with and assist each other in maintaining compliance with the provisions of this act.
History: L. 1976, ch. 231, § 15; L. 1984, ch. 238, § 6; L. 1989, ch. 143, § 5; July 1.
When the board of governors is informed or reasonably suspects that a health care provider licensed to render professional services is in violation of K.S.A. 40-3402, and amendments thereto, such board shall report the suspected violation to the state agency which licenses, registers or certifies such health care provider. Upon receipt of such report or other evidence of a violation of K.S.A. 40-3402, and amendments thereto, the state agency shall make such investigation as it deems necessary and take such other official action as deemed appropriate. If a violation is found to exist, the state agency shall promptly notify the attorney general of this state. Upon such notice the attorney general or county attorney of the proper county shall, in the name of the state, institute and maintain an action to enjoin the health care provider from rendering professional services in this state in the district court of the district in which such health care provider is rendering professional services.
History: L. 1976, ch. 231, § 16; L. 1995, ch. 145, § 7; L. 2014, ch. 56, § 17; July 1.
(a) Except as otherwise provided by subsection (b), the commissioner may adopt such rules and regulations as may be deemed necessary to carry out the purposes of this act.
(b) The board of governors may adopt such rules and regulations as may be deemed necessary for the administration of the fund and the powers, duties and functions of the board of governors under the health care provider insurance availability act.
History: L. 1976, ch. 231, § 17; L. 1994, ch. 155, § 9; January 1, 1995.
If any clause, paragraph, subsection or section of this act shall be held invalid or unconstitutional, it shall be conclusively presumed that the legislature would have enacted the remainder of this act without such invalid or unconstitutional clause, paragraph, subsection or section.
History: L. 1976, ch. 231, § 18; July 1.
If any provisions of this act or the application thereof to any person or circumstances is held invalid, the invalidity shall not affect other provisions or applications of the act which can be given effect without the invalid provisions or application and, to this end, the provisions of this act are severable.
History: L. 1989, ch. 143, § 9; July 1.
K.S.A. 40-3401 et seq., and amendments thereto, shall be known and may be cited as the health care provider insurance availability act.
History: L. 1976, ch. 231, § 19; L. 2014, ch. 56, § 18; July 1.
(a) Any professional corporation organized under the professional corporation law of Kansas that reorganizes as a Kansas not-for-profit corporation and seeks to comply with the provisions of the health care provider insurance availability act shall be considered to be a continuing concern for the purposes of obtaining basic coverage pursuant to the health care provider insurance availability act and shall not be considered to be an inactive health care provider. Any insurer issuing basic coverage to such corporation shall provide coverage for all claims made during the term of the policy issued which arose while the not-for-profit corporation was operating in this state as a professional corporation under the professional corporation law of Kansas.
(b) This section shall be part of and supplemental to the health care provider insurance availability act.
History: L. 1982, ch. 207, § 2; April 29.
(a) Any insurer providing professional liability insurance coverage to a health care provider, as defined by K.S.A. 40-3401, and amendments thereto, who is licensed in Kansas shall report to the appropriate state health care provider regulatory agency and the board of governors on forms prescribed by the board of governors any written or oral claim or action for damages for medical malpractice. The report shall be filed no later than 30 days following the insurer's receipt of notice of the claim or action and shall contain:
(1) The name, address, area of practice or specialty, policy coverage and policy number of the insured; and
(2) the date of the occurrence giving rise to the claim, the date the occurrence was reported to the insurer, and the date legal action, if any, was initiated.
(b) Upon request of an agency to which a report is made under subsection (a), the insurer making the report shall provide to the agency no later than 30 days following receipt of the request or receipt of the information, whichever is later:
(1) The names of all defendants involved in the claim; and
(2) a summary of the occurrence, including the name of the institution at which the incident occurred, the final diagnosis for which treatment was sought or rendered, the patient's actual condition, the incident, treatment or diagnosis giving rise to the claim and a description of the principal injury giving rise to the claim.
(c) Reports required to be filed pursuant to this section shall be confidential and shall not be admissible in any civil or criminal action or in any administrative proceeding other than a disciplinary proceeding of a health care provider involved in the reported occurrence.
(d) Any insurer which fails to report any information as required by this section shall be subject, after proper notice and an opportunity to be heard, to a civil fine assessed by the board of governors in an amount not exceeding $1,000 for each day after the thirty-day period for reporting that the information is not reported. In the event that a civil fine is assessed pursuant to this subsection, the reason for and the amount of such fine shall be reported to the commissioner. The board of governors shall remit any moneys collected from fines assessed pursuant to this subsection to the state treasurer in accordance with the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount in the state treasury to the credit of the state general fund.
(e) Any insurer which, in good faith, reports or provides any information pursuant to this act shall not be liable in a civil action for damages or other relief arising from the reporting or providing of such information.
(f) As used in this section, "insurer" means insurer or self-insurer, as defined by K.S.A. 40-3401, and amendments thereto, or joint underwriting association operating pursuant to K.S.A. 40-3413, and amendments thereto.
(g) The requirements of this section shall not be applicable with respect to any occurrence on or after July 1, 1991, giving rise to any claim or action against any optometrist or pharmacist.
(h) The requirements of this section shall not be applicable with respect to any occurrence on or after July 1, 1995, giving rise to any claim or action against any physical therapist.
History: L. 1986, ch. 229, § 19; L. 1991, ch. 139, § 6; L. 1995, ch. 145, § 8; L. 2001, ch. 5, § 125; L. 2014, ch. 56, § 19; July 1.
In any medical malpractice liability action, as defined by K.S.A. 60-3401, and amendments thereto, the proceedings shall be stayed on appeal by the filing of a supersedeas bond in the amount of the judgment for which the fund is liable. Such supersedeas bond shall be signed by the chairperson of the board of governors, or the chairperson's designee, as administrator of the health care stabilization fund without surety or other security.
History: L. 1986, ch. 229, § 31; L. 1994, ch. 155, § 10; L. 2014, ch. 56, § 20; July 1.
The health care stabilization fund may own or assign any annuity purchased by the fund pursuant to K.S.A. 60-3407, 60-3409 or 60-3411 or pursuant to K.S.A. 40-3410 and amendments thereto in settlements of the liability of the fund.
History: L. 1986, ch. 229, § 32; July 1.
(a) For all claims made on and after July 1, 2014, the amount of fund liability for a judgment or settlement against a resident or nonresident inactive healthcare provider shall be equal to the minimum professional liability insurance policy limits required pursuant to K.S.A. 40-3402, and amendments thereto, and in effect on the date of the incident giving rise to a claim, plus the level of coverage selected by the healthcare provider pursuant to K.S.A. 40-3403(l), and amendments thereto, at the time of the incident giving rise to a claim.
(b) The aggregate fund liability for all judgments and settlements arising from all claims made in any fiscal year against a resident or nonresident inactive healthcare provider shall not exceed $3,000,000 in any fiscal year.
For all claims made for incidents occurring on or after January 1, 2022, the aggregate fund liability for all judgments and settlements made in any fiscal year against a resident or nonresident inactive healthcare provider shall not exceed three times the coverage amount in subsection (a).
History: L. 2014, ch. 56, § 1; L. 2017, ch. 35, § 4; L. 2021, ch. 108, § 18; July 1.
(a) Notwithstanding any provision of article 34 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, to the contrary, the fund shall in no event be liable for any claim against a healthcare provider if:
(1) The healthcare provider's liability for the incident giving rise to the claim is the result of professional services rendered as a charitable healthcare provider; or
(2) the healthcare provider's liability for the incident giving rise to the claim is covered under the federal tort claims act pursuant to chapter 171 of title 28 of the United States code.
(b) This section shall be part of and supplemental to the healthcare provider insurance availability act.
History: L. 2017, ch. 35, § 1; July 1.
This act may be cited as the "mortgage guaranty insurance act."
History: L. 1977, ch. 154, § 1; January 1, 1978.
As used in this act the following terms shall have the meanings respectively ascribed to them herein:
(a) "Mortgage guaranty insurance company" means any corporation, company, association, reciprocal exchange, persons or partnerships writing contracts of mortgage guaranty insurance and shall be governed by the provisions of this act and the other provisions of chapter 40 of the Kansas Statutes Annotated applicable to companies organized or operating under the provisions of K.S.A. 40-1101 et seq., and amendments thereto, to the extent such other provisions are not inconsistent with the requirements of this act.
(b) "Mortgage guaranty insurance" means and includes: (1) Insurance against financial loss by reason of nonpayment of principal, interest or other sums agreed to be paid under the terms of any note or bond or other evidence of indebtedness secured by a mortgage, deed of trust, or other instrument constituting a lien or charge on real estate, when the improvement on such real estate is a residential building or a condominium or townhouse unit or buildings designed for occupancy by not more than four families;
(2) insurance against financial loss by reason of nonpayment of principal, interest or other sums agreed to be paid under the terms of any note or bond or other evidence of indebtedness secured by a mortgage, deed of trust or other instrument constituting a lien or charge on real estate, when the improvement on such real estate is a building or buildings designed for occupancy by five or more families or designed to be occupied for industrial or commercial purposes; or
(3) insurance against financial loss by reason of nonpayment of rent or other sums agreed to be paid under the terms of a written lease for the possession, use or occupancy of real estate, when the improvement on such real estate is a building or buildings designed to be occupied for industrial or commercial purposes.
(c) "Authorized real estate security" means an amortized note, bond or other evidence of indebtedness, not exceeding 105% of the fair market value of the real estate, secured by a mortgage, deed of trust, or other instrument which constitutes, or is equivalent to, a first lien or charge on real estate, when: (1) The real estate loan secured in such manner is one of a type which a bank, savings and loan association, or an insurance company, which is supervised and regulated by a department of this state or an agency of the federal government, is authorized to make, or would be authorized to make, disregarding any requirement applicable to such an institution that the amount of the loan not exceed a certain percentage of the value of the real estate;
(2) the improvement on such real estate is a building or buildings designed for occupancy as specified by paragraphs (1) or (2) of subsection (b); and
(3) the lien on such real estate may be subject to and subordinate to the following:
(i) The lien of any public bond, assessment or tax, when no installment, call or payment of or under such bond, assessment or tax is delinquent; and
(ii) outstanding mineral, oil, water or timber rights, rights-of-way, easements or rights-of-way of support, sewer rights, building restrictions or other restrictions or covenants, conditions or regulations of use, or outstanding leases upon such real property under which rents or profits are reserved to the owner thereof.
(d) "Contingency reserve" means an additional premium reserve established to protect policyholders against the effect of adverse economic cycles.
(e) "Single risk" means the insurance provided with respect to each separate loan or lease covered by an individual policy of mortgage guaranty insurance or an individual certificate issued pursuant to K.S.A. 40-3511, and amendments thereto.
History: L. 1977, ch. 154, § 2; L. 1994, ch. 87, § 3; L. 2000, ch. 170, § 31; L. 2002, ch. 40, § 1; July 1.
A mortgage guaranty insurance company shall not transact the business of mortgage guaranty insurance unless, if said company is a stock insurance company, it has paid-in capital of at least one million dollars ($1,000,000) and surplus of at least one million dollars ($1,000,000), or if said company is a mutual insurance company, it has a minimum surplus of two million dollars ($2,000,000).
History: L. 1977, ch. 154, § 3; January 1, 1978.
No mortgage guaranty insurance company may issue policies until it has obtained from the commissioner of insurance a certificate of authority and has complied with the other applicable provisions of chapter 40 of the Kansas Statutes Annotated.
History: L. 1977, ch. 154, § 4; January 1, 1978.
(a) A mortgage guaranty insurance company shall not insure loans secured by a single risk in excess of ten percent (10%) of its aggregate capital, surplus and contingency reserve.
(b) No mortgage guaranty insurance company shall have more than twenty percent (20%) of its total insurance in force in any one standard metropolitan statistical area ("SMSA"), as defined by the United States department of commerce. The provisions of this subsection shall not apply to a mortgage guaranty insurance company until it has possessed a certificate of authority in this state for three (3) years.
History: L. 1977, ch. 154, § 5; January 1, 1978.
No mortgage guaranty insurance company or any agent or representative of a mortgage guaranty insurance company shall prepare or distribute or assist in preparing or distributing any brochure, pamphlet, report or any form of advertising to the effect that the real estate investments of any financial institution are "insured investments," unless the brochure, pamphlet, report or advertising clearly states that the loans are insured by mortgage guaranty insurance companies possessing a certificate of authority to transact mortgage guaranty insurance in this state or are insured by an agency of the federal government, as the case may be.
History: L. 1977, ch. 154, § 6; January 1, 1978.
A mortgage guaranty insurance company shall not invest in notes or other evidences of indebtedness secured by mortgage or other lien upon real property. This section shall not apply to obligations secured by real property, which obligations or contracts of sale are acquired in the course of the good faith settlement of claims under policies of insurance issued by the mortgage guaranty insurance company, or in the good faith disposition of real property so acquired.
History: L. 1977, ch. 154, § 7; January 1, 1978.
History: L. 1977, ch. 154, § 8; Repealed, L. 2012, ch. 55, § 1; July 1.
(a) A mortgage guaranty insurance company which anywhere transacts any class of insurance other than mortgage guaranty insurance is not eligible for the issuance of a certificate of authority to transact mortgage guaranty insurance in this state nor for the renewal thereof.
(b) A mortgage guaranty insurance company which anywhere transacts the classes of insurance defined in K.S.A. 40-3502(b)(2) or (3) is not eligible for a certificate of authority to transact in this state the class of mortgage guaranty insurance defined in K.S.A. 40-3502(b)(1) except a mortgage guaranty insurance company which transacts a class of insurance defined in K.S.A. 40-3502(b)(1) may write up to five percent (5%) of its insurance in force on residential property designed for occupancy by five (5) or more families.
(c) Any insurance company that is authorized to write mortgage guaranty insurance as defined in this act on January 1, 1977, shall have until May 1, 1983, to comply with the provisions of this section.
History: L. 1977, ch. 154, § 9; January 1, 1978.
(a) No mortgage guaranty insurance company may discriminate in the issuance or extension of mortgage guaranty insurance on the basis of the applicant's sex, marital status, race, color, creed or national origin.
(b) Nothing in this act shall be construed as limiting the right of any mortgage guaranty insurance company to impose reasonable requirements upon the lender with regard to the terms of any note or bond or other evidence of indebtedness secured by a mortgage or deed of trust, such as requiring a stipulated down payment by the borrower.
(c) No policy of mortgage guaranty insurance excluding policies of reinsurance, shall be written unless and until the insurer or the lender, in compliance with underwriting directives from the insurer and subject to periodic underwriting audits by the insurer shall have conducted a reasonable and thorough examination of: (1) The evidence supporting credit worthiness of the borrower; and (2) the appraisal report reflecting market evaluation of the property and shall have determined that prudent underwriting standards have been met.
History: L. 1977, ch. 154, § 10; L. 1995, ch. 55, § 1; July 1.
Policies of mortgage guaranty insurance may be issued to lending institutions, with such lending institutions as the named insured. Coverage under such policies may be extended to individual loans by certificates of insurance. Such policies shall be considered as group policies for the purpose of complying with K.S.A. 40-214 and such policies and certificates of insurance shall be filed with the commissioner of insurance in the manner prescribed by K.S.A. 40-216. With respect to owner-occupied, single-family dwellings, the mortgage guaranty insurance policy shall provide that the borrower shall not be liable to the insurance company for any deficiency arising from a foreclosure sale.
History: L. 1977, ch. 154, § 11; January 1, 1978.
Unless a waiver is granted by the insurance commissioner, a mortgage guaranty insurance company shall not at any time have outstanding a total liability, net of reinsurance, under its aggregate mortgage guaranty insurance policies exceeding 25 times its capital, surplus and contingency reserve. Subject to a waiver which may be granted by the commissioner, in the event that any mortgage guaranty insurance company has outstanding total liability exceeding 25 times its capital, surplus and contingency reserve, it shall cease transacting new mortgage guaranty business until such time as its total liability no longer exceeds 25 times its capital, surplus and contingency reserve. Total outstanding liability shall also be calculated on a consolidated basis for all mortgage guaranty insurance companies which are part of a holding company system as defined in K.S.A. 40-3302, and amendments thereto. Upon the request of a mortgage guaranty insurance company, the commissioner may waive the requirements in this section for such time and under such conditions as the commissioner may order, except that no such waiver shall exceed two years.
History: L. 1977, ch. 154, § 12; L. 2010, ch. 108, § 1; July 1.
(a) A mortgage guaranty insurance company shall not pay or cause to be paid either directly or indirectly, to any owner, purchaser, lessor, lessee, mortgagee or prospective mortgagee of the real property which secures the authorized real estate security or which is the fee of an insured lease, or any interest therein, or any person who is acting as an agent, representative, attorney or employee of such owner, purchaser or mortgagee, any commission, or any part of its premium charges or any other consideration as an inducement for or as compensation on any mortgage guaranty insurance business.
(b) In connection with the placement of any mortgage guaranty insurance, a mortgage guaranty insurance company shall not cause or permit any commission, fee, remuneration, or other compensation to be paid to, or received by any insured lender or lessor; any subsidiary or affiliate of any insured; any officer, director or employee of any insured or any member of their immediate family; any corporation, partnership, trust, trade association in which any insured is a member, or other entity in which any insured or any such officer, director, or employee or any member of their immediate family has a financial interest; or any designee, trustee, nominee, or other agent or representative of any of the foregoing.
(c) Any mortgage guaranty insurance company which pays any commission or makes any unlawful rebate in violation of the provisions of this article shall be subject to the penalties prescribed in K.S.A. 40-2407 and 40-2411.
History: L. 1977, ch. 154, § 13; January 1, 1978.
(a) Except for commercial checking accounts and normal deposits in support of an active bank line of credit, a mortgage guaranty insurance company, the holding company or any affiliate thereof is prohibited from maintaining funds on deposit with the lender for which the mortgage guaranty insurance company has insured loans.
(b) Any deposit account bearing interest at rates less than what is currently being paid other depositors on similar deposits or any deposit in excess of amounts insured by an agency of the federal government shall be presumed to be an account in violation of this section. Furthermore, a mortgage guaranty insurance company shall not use compensating balances, special deposit accounts or engage in any practice which unduly delays its receipt of moneys due or which involves the use of its financial resources for the benefit of any owner, mortgagee of the real property or any interest therein or any person who is acting as agent, representative, attorney or employee of such owner, purchaser or mortgagee as a means of circumventing any part of this section.
History: L. 1977, ch. 154, § 14; January 1, 1978.
(a) If it is a member of a holding company system as defined in K.S.A. 40-3302, a mortgage guaranty insurance company licensed to transact business in this state shall not, as a condition of its certificate of authority, knowingly underwrite mortgage guaranty insurance on mortgages originated by the holding company system or an affiliate or on mortgages originated by any mortgage lender to which credit is extended, directly or indirectly, by the holding company system or any affiliate.
(b) A mortgage guaranty insurance company, the holding company system of which it is a part or any affiliate shall not as a condition of the mortgage guaranty insurance company's certificate of authority, pay any commissions, remuneration, rebates or engage in activities proscribed in K.S.A. 40-3513 and 40-3514.
History: L. 1977, ch. 154, § 15; January 1, 1978.
A mortgage guaranty insurance company shall compute and maintain an unearned premium reserve as set forth by regulation adopted by the commissioner of insurance.
History: L. 1977, ch. 154, § 16; January 1, 1978.
A mortgage guaranty insurance company shall compute and maintain adequate case basis and other loss reserves which accurately reflect loss frequency and loss severity and shall include components for claims reported and unpaid, and for claims incurred but not reported, including estimated losses on:
(a) Insured loans which have resulted in the conveyance of property which remains unsold;
(b) Insured loans in the process of foreclosure;
(c) Insured loans in default for four (4) months or for any lesser period which is defined as default for such purposes in the policy provisions; and
(d) Insured leases in default for four (4) months or for any lesser period which is defined as default for such purposes in policy provisions.
History: L. 1977, ch. 154, § 17; January 1, 1978.
Each mortgage guaranty insurance company shall establish a contingency reserve out of net premiums remaining (gross premiums less premiums returned to policyholders net of reinsurance) after establishment of the unearned premium reserve. The mortgage guaranty insurance company shall contribute to the contingency reserve an amount equal to fifty percent (50%) of such remaining earned premiums. Contributions to the contingency reserve made during each calendar year shall be maintained for a period of one hundred twenty (120) months, except that withdrawals may be made by the company in any year in which the actual incurred losses exceed thirty-five percent (35%) of the corresponding earned premiums, and no such releases shall be made without prior approval by the commissioner of the mortgage guaranty insurance company's state of domicile.
History: L. 1977, ch. 154, § 18; January 1, 1978.
Whenever a mortgage guaranty insurance company obtains reinsurance from an insurance company which is properly licensed to provide reinsurance or from an appropriate governmental agency, the mortgage guaranty insurer and the reinsurer shall establish and maintain the reserves required in this act in appropriate proportions in relation to the risk retained by the original insurer and ceded to the assuming reinsurer so that the total reserves established shall not be less than the reserves required by this act.
History: L. 1977, ch. 154, § 19; January 1, 1978.
(a) Whenever the laws of any other jurisdiction in which a mortgage guaranty insurance company subject to the requirement of this act is also licensed to transact mortgage guaranty insurance require a larger unearned premium reserve or contingency reserve in the aggregate than that set forth herein, the establishment of such larger unearned premium reserve or contingency reserve in the aggregate shall be deemed to be in compliance with this act.
(b) Unearned premium reserves and contingency reserves shall be computed and maintained on risks insured after the effective date of this act as required by K.S.A. 40-3516 and 40-3518. Unearned premium reserves and contingency reserves on risks insured before the effective date of this act may be computed and maintained as required previously.
History: L. 1977, ch. 154, § 20; January 1, 1978.
The commissioner shall prescribe such rules and regulations as may be deemed necessary to carry out the purposes of this act.
History: L. 1977, ch. 154, § 21; January 1, 1978.
History: L. 1977, ch. 157, § 1; Repealed, L. 1991, ch. 125, § 56; July 1.
(a) Subject to the limitations specified in K.S.A. 40-2906 and amendments thereto, an insurance agent shall have the right to offset unearned premiums for their insureds on payment of the agent's account to an insolvent insurer as defined in K.S.A. 40-2903 and amendments thereto.
(b) The provisions of any contract between an insurance agent and an insolvent insurer shall apply for the duration of all policies in effect and until all accounts are settled with the insolvent insurer.
History: L. 1986, ch. 167, § 1; April 24.
(a) This act may be cited as the insurers supervision, rehabilitation and liquidation act.
(b) This act shall not be interpreted to limit the powers granted the commissioner by other provisions of law.
(c) This act shall be liberally construed.
History: L. 1991, ch. 125, § 1; July 1.
This act shall apply to all insurance companies, fraternal benefit societies, health maintenance organizations, reciprocal insurance exchanges, mutual nonprofit hospital and medical service corporations, captive insurance companies, group funded pools except municipal group funded pools governed by K.S.A. 12-2616 through 12-2629 and amendments thereto, prepaid service plans operating under article 19a of chapter 40 of the Kansas Statutes Annotated, regardless of whether such entities are authorized to do business in this state, and such entities which are in the process of organization.
History: L. 1991, ch. 125, § 2; L. 1997, ch. 8, § 12; L. 2000, ch. 147, § 41; July 1.
For the purposes of this act:
(a) "Ancillary state" means any state other than a domiciliary state.
(b) "Commissioner" means the commissioner of insurance.
(c) "Creditor" means a person having any claim, whether matured or unmatured, liquidated or unliquidated, secured or unsecured, absolute, fixed or contingent.
(d) "Delinquency proceeding" means any proceeding instituted against an insurer for the purpose of liquidating, rehabilitating, reorganizing or conserving such insurer, and any summary proceeding under K.S.A. 40-3613 or 40-3614, and amendments thereto.
(e) "Doing business" includes, but is not necessarily limited to, any of the following acts, whether effected by mail or otherwise:
(1) The issuance or delivery of contracts of insurance to persons resident in this state;
(2) the solicitation of applications for such contracts, or other negotiations preliminary to the execution of such contracts;
(3) the quoting of premiums, membership fees, assessments or other consideration for such contracts;
(4) the transaction of matters subsequent to execution of such contracts and arising out of them; or
(5) operating under a license or certificate of authority, as an insurer, issued by the insurance department.
(f) "Domiciliary state" means the state in which an insurer is incorporated or organized; or, in the case of an alien insurer, its state of entry.
(g) "Fair consideration" is given for property or obligation:
(1) When in exchange for such property or obligation, as a fair equivalent therefor, and in good faith, property is conveyed or services are rendered or an obligation is incurred or an antecedent debt is satisfied; or
(2) when such property or obligation is received in good faith to secure a present advance or antecedent debt in amount not disproportionately small as compared to the value of the property or obligation obtained.
(h) "Foreign country" means any other jurisdiction not in any state.
(i) "General assets" means all property, real, personal or otherwise, not specifically mortgaged, pledged, deposited or otherwise encumbered for the security or benefit of specified persons or classes of persons. As to specifically encumbered property, "general assets" includes all such property or its proceeds in excess of the amount necessary to discharge the sum or sums secured hereby. Assets held in trust and on deposit for the security or benefit of all policyholders or all policyholders and creditors, in more than a single state, shall be treated as general assets.
(j) "Guaranty association" means the Kansas insurance guaranty association created by K.S.A. 40-2901, and amendments thereto, the Kansas life and health insurance guaranty association created by K.S.A. 40-3001, and amendments thereto, and any other similar entity now or hereafter created by the legislature of this state for the payment of claims of insolvent insurers. "Foreign guaranty association" means any similar entities now in existence in or hereafter created by the legislature of any other state.
(k) "Insolvency" or "insolvent" means:
(1) For an insurer issuing only assessable fire insurance policies:
(A) The inability to pay any obligation within 30 days after it becomes payable; or
(B) if an assessment is made, within 30 days after such date. The inability to pay such obligation 30 days following the date specified in the first assessment notice issued after the date of loss.
(2) For any other insurer, that it is unable to pay its obligations when they are due, or when its admitted assets do not exceed its liabilities plus the greater of:
(A) Any capital and surplus required by law for its organization; or
(B) the total par of stated value of its authorized and issued capital stock.
(3) For purposes of this subsection, "liabilities" shall include, but not be limited to, reserves required by statute or by insurance department general regulations or specific requirements imposed by the commissioner upon a subject company at the time of admission or subsequent thereto.
(l) "Insurer" means any person who has done, purports to do, is doing or is licensed to do an insurance business, and is or has been subject to the authority of, or to liquidation, rehabilitation, reorganization, supervision or conservation by, any insurance commissioner. For purposes of this act, any other persons included under K.S.A. 40-3606, and amendments thereto, shall be deemed to be insurers.
(m) "Person" means any individual, aggregation of individuals, trust, association, partnership, corporation or any affiliate thereof.
(n) "Preferred claim" means any claim with respect to which the terms of this act accord priority of payment from the general assets of the insurer.
(o) "Receiver" means receiver, liquidator, rehabilitator or conservator as the context requires.
(p) "Reciprocal state" means any state other than this state in which in substance and effect subsection (a) of K.S.A. 40-3622 and K.S.A. 40-3650, 40-3651 and 40-3653 through 40-3655, and amendments thereto, are in force, and in which provisions are in force requiring that the commissioner or equivalent official be the receiver of a delinquent insurer, and in which some provision exists for the avoidance of fraudulent conveyances and preferential transfers.
(q) "Secured claim" means any claim secured by mortgage, trust deed, pledge, deposit as security, escrow or otherwise, but not including, special deposit claims or claims against general assets. The term also includes claims which have become liens upon specific assets by reason of judicial process.
(r) "Special deposit claim" means any claim secured by a deposit made pursuant to statute for the security or benefit of a limited class or classes of persons, but not including any claim secured by general assets.
(s) "State" means any state, district, or territory of the United States and the Panama Canal Zone.
(t) "Transfer" shall include the sale and every other and different mode, direct or indirect, of disposing of or of parting with property or within an interest therein, or with the possession thereof or of fixing a lien upon property or upon an interest therein, absolutely or conditionally, voluntarily, by or without judicial proceedings. The retention of a security title to property delivered to a debtor shall be deemed a transfer suffered by the debtor.
(u) "Commodity contract" means any of the following:
(1) A contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a:
(A) Board of trade or contract market under the commodity exchange act, 7 U.S.C. § 1 et seq.; or
(B) board of trade outside the United States.
(2) An agreement that is subject to regulation under section 23 of the commodity exchange act, 7 U.S.C. § 1 et seq., and that is commonly known to the commodities trade as a margin account, margin contract, leverage account or leverage contract.
(3) An agreement or transaction that is subject to regulation under section 6c(b) of the commodity exchange act, 7 U.S.C. § 1 et seq., and that is commonly known to the commodities trade as a commodity option.
(4) Any combination of the agreements or transactions referred to in this paragraph.
(5) Any option to enter into an agreement or transaction referred to in this paragraph.
(v) "Formal delinquency proceeding" means a delinquency proceeding, except that such term shall not include a supervision under K.S.A. 40-3613, and amendments thereto.
(w) "Forward contract" shall have the meaning ascribed to such term in the federal deposit insurance act, 12 U.S.C. § 1821(e)(8)(D).
(x) "Netting agreement" means:
(1) A contract or agreement, including the terms and conditions incorporated by reference therein, including a master agreement, (which master agreement, together with all schedules, confirmations, definitions and addenda thereto and transactions under any thereof, shall be treated as one netting agreement) that documents one or more transactions between the parties to the agreement:
(A) For or involving one or more qualified financial contracts; and
(B) that provides for the netting, liquidation, setoff, termination, acceleration or close out under or in connection with one or more qualified financial contracts or present or future payment or delivery obligations or payment or delivery entitlements thereunder (including liquidation or close out values relating to such obligations or entitlements) among the parties to the netting agreement;
(2) any master agreement or bridge agreement for one or more master agreements described in paragraph (1) of this subsection; or
(3) any security agreement or arrangement or other credit enhancement or guarantee or reimbursement obligation related to any contract or agreement described in either paragraph (1) or (2) of this subsection.
Provided that any contract or agreement described in either paragraph (1) or (2) of this subsection relating to agreements or transactions that are not qualified financial contracts shall be deemed to be a netting agreement only with respect to those agreements or transactions that are qualified financial contracts.
(y) "Qualified financial contract" means any commodity contract, forward contract, repurchase agreement, securities contract, swap agreement and any similar agreement that the commissioner determines by regulation, rule or order to be a qualified financial contract for the purposes of this act.
(z) "Repurchase agreement" shall have the meaning ascribed to such term in the federal deposit insurance act, 12 U.S.C. § 1821(e)(8)(D). The term repurchase agreement also applies to a reverse repurchase agreement.
(aa) "Securities contract" shall have the meaning set forth in the federal deposit insurance act, 12 U.S.C. § 1821(e)(8)(D).
(bb) "Swap agreement" shall have the meaning set forth in the federal deposit insurance act, 12 U.S.C. § 1821(e)(8)(D).
History: L. 1991, ch. 125, § 3; L. 2013, ch. 46, § 2; April 18.
(a) No delinquency proceeding shall be commenced under this section by anyone other than the commissioner and no court shall have jurisdiction to entertain, hear or determine any such proceeding commenced by any other person.
(b) No court shall have jurisdiction to entertain, hear or determine any complaint praying for the dissolution, liquidation, rehabilitation, sequestration, conservation or receivership of any insurer; or praying for an injunction or restraining order or other relief preliminary to, incidental to or relating to such proceedings other than in accordance with this act.
(c) In addition to other grounds for jurisdiction provided by law, a court having jurisdiction of the subject matter has jurisdiction over a person served pursuant to K.S.A. 60-101 et seq. and amendments thereto, Kansas rules of civil procedure, or other applicable provisions of law in an action brought by the receiver of a domestic insurer or an alien insurer domiciled in this state:
(1) If the person served is an agent, broker or other person who has at any time written policies of insurance for or has acted in any manner whatsoever on behalf of an insurer against which a delinquency proceeding has been instituted, in any action resulting from or incident to such a relationship with the insurer;
(2) if the person served is a reinsurer who has at any time entered into a contract of reinsurance with an insurer against which a delinquency proceeding has been instituted, or is an agent or broker of or for the reinsurer, in any action on or incident to the reinsurance contract;
(3) if the person served is or has been an officer, director, manager, trustee, organizer, promoter or other person in a position of comparable authority or influence over an insurer against which a delinquency proceeding has been instituted, in any action resulting from or incident to such a relationship with the insurer;
(4) if the person served is or was at the time of the institution of the delinquency proceeding against the insurer holding assets in which the receiver claims an interest on behalf of the insurer, in any action concerning the assets; or
(5) if the person served is obligated to the insurer in any way whatsoever, in any action on or incident to the obligation.
(d) If the court on motion of any party finds that any action should as a matter of substantial justice be tried in a forum outside this state, the court may enter an appropriate order to stay further proceedings on the action in this state.
(e) All actions herein authorized shall be brought in the district court of Shawnee county, Kansas.
History: L. 1991, ch. 125, § 4; July 1.
(a) Except as provided in subsection (c), any receiver appointed in a proceeding under this act may at any time apply for, and the district court of Shawnee county may grant, such restraining orders, preliminary and permanent injunctions and other orders as may be deemed necessary and proper to prevent:
(1) The transaction of further business;
(2) the transfer of property;
(3) interference with the receiver or with a proceeding under this act;
(4) waste of the insurer's assets;
(5) dissipation and transfer of bank accounts;
(6) the institution or further prosecution of any actions or proceedings;
(7) the obtaining of preferences, judgments, attachments, garnishments or liens against the insurer, its assets or its policyholders;
(8) the levying of execution against the insurer, its assets or its policyholders;
(9) the making of any sale or deed for nonpayment of taxes or assessments that would lessen the value of the assets of the insurer;
(10) the withholding from the receiver of books, accounts, documents or other records relating to the business of the insurer; or
(11) any other threatened or contemplated action that might lessen the value of the insurer's assets or prejudice the rights of policyholders, creditors or shareholders, or the administration of any proceeding under this act.
(b) Except as provided in subsection (c), the receiver may apply to any court outside the state for the relief described in subsection (a).
(c) No federal home loan bank shall be stayed, enjoined, or prohibited from exercising or enforcing any right or cause of action regarding collateral pledged under:
(1) Any federal home loan bank security agreement; or
(2) any pledge, security, collateral or guarantee agreement or other similar arrangement or credit enhancement relating to such security agreement.
History: L. 1991, ch. 125, § 5; L. 2014, ch. 3, § 1; July 1.
(a) Any officer, manager, director, trustee, owner, employee or agent of any insurer, or any other persons with authority over or in charge of any segment of the insurer's affairs, shall cooperate with the commissioner in any proceeding under this act or any investigation preliminary to the proceeding. The term "person" as used in this section, shall include any person who exercises control directly or indirectly over activities of the insurer through any holding company or other affiliate of the insurer. "To cooperate" shall include, but shall not be limited to, the following:
(1) To reply promptly in writing to any inquiry from the commissioner requesting such a reply; and
(2) to make available to the commissioner any books, accounts, documents or other records or information or property of or pertaining to the insurer and in the insurer's possession, custody or control.
(b) No person shall obstruct or interfere with the commissioner in the conduct of any delinquency proceeding or any investigation preliminary or incidental thereto.
(c) This section shall not be construed to abridge otherwise existing legal rights, including the right to resist a petition for liquidation or other delinquency proceedings, or other orders.
(d) Any person included within subsection (a) who fails to cooperate with the commissioner, or any person who obstructs or interferes with the commissioner in the conduct of any delinquency proceeding or any investigation preliminary or incidental thereto, or who violates any order the commissioner issued validly under this act may:
(1) Be sentenced to pay a fine not exceeding $10,000 or to imprisonment for a term of not more than one year, or both; or
(2) after a hearing held in accordance with the Kansas administrative procedure act, be subject to the imposition by the commissioner of a civil penalty not to exceed $10,000 and shall be subject further to the revocation or suspension of any insurance licenses issued by the commissioner.
History: L. 1991, ch. 125, § 6; July 1.
Every proceeding heretofore commenced under the laws in effect before the enactment of this act shall be deemed to have commenced under this act for the purpose of conducting the proceeding henceforth, except that in the discretion of the commissioner the proceeding may be continued, in whole or in part, as it would have been continued had this act not been enacted.
History: L. 1991, ch. 125, § 7; July 1.
No insurer that is subject to any delinquency proceedings, whether formal or informal shall:
(a) Be released from such proceeding, unless such proceeding is converted into a judicial rehabilitation or liquidation proceeding;
(b) be permitted to solicit or accept new business or request or accept the restoration of any suspended or revoked license or certificate of authority;
(c) be returned to the control of its shareholders or private management; or
(d) have any of its assets returned to the control of the shareholders or private management; until all payments of or on account of the insurer's contractual obligations by all guaranty associations, along with all expenses thereof and interest on all such payments and expenses, shall have been repaid to the guaranty associations or a plan of repayment by the insurer shall have been approved by the guaranty association.
History: L. 1991, ch. 125, § 8; July 1.
(a) Whenever the commissioner has reasonable cause to believe, and has determined after a hearing held under subsection (f), that any domestic insurer has committed or engaged in, or is about to commit or engage in, any act, practice or transaction that would subject it to delinquency proceedings under this act, the commissioner may make and serve upon the insurer and any other persons involved, such orders as are reasonably necessary to correct, eliminate or remedy such conduct, condition or ground. Such orders may be made confidential by the commissioner and may not be subject to release under the Kansas open records act.
(b) If upon examination or at any other time the commissioner has reasonable cause to believe that any domestic insurer is in such condition as to render the continuance of such domestic insurer's business hazardous to the public or to holders of its policies or certificates of insurance, or if such domestic insurer gives its consent, then the commissioner shall upon such determination:
(1) Notify the insurer of such determination; and
(2) furnish to the insurer a written list of the commissioner's requirements to abate the determination.
(c) If the commissioner makes a determination to supervise an insurer subject to an order under subsections (a) or (b), the commissioner shall notify the insurer that such insurer is under the supervision of the commissioner. During the period of supervision, the commissioner may appoint a supervisor to supervise such insurer. The order appointing a supervisor shall direct the supervisor to enforce orders issued under subsections (a) and (b) and may also require that the insurer may not do any of the following things during the period of supervision, without the prior approval of the commissioner or the supervisor:
(1) Dispose of, convey or encumber any of its assets or its business in force;
(2) withdraw from any of its bank accounts;
(3) lend any of its funds;
(4) invest any of its funds;
(5) transfer any of its property;
(6) incur any debt, obligation or liability;
(7) merge or consolidate with another company; or
(8) enter into any new reinsurance contract or treaty.
(d) No provision of subsection (c) shall restrict the commissioner's authority to issue an order under K.S.A. 40-222 or 40-222b and amendments thereto.
(e) Any insurer subject to an order under this section shall comply with the lawful requirements of the commissioner and, if placed under supervision, shall have 60 days from the date the supervision order is served within which to comply with the requirements of the commissioner. In the event of such insurer's failure to comply with in such time, the commissioner may institute proceedings under K.S.A. 40-3615 or 40-3620 to have a rehabilitator or liquidator appointed, or extend the period of supervision.
(f) The notice of hearing under subsection (a) and any order issued pursuant to such subsection shall be served upon the insurer pursuant to the Kansas administrative procedure act.
(g) During the period of supervision the insurer may request the commissioner to review an action taken or proposed to be taken by the supervisor, specifying wherein the action complained of is believed not to be in the best interest of the insurer.
(h) Any person who has violated any supervision order issued under this section, which as to such person was still in effect, shall be liable to pay a civil penalty imposed by the district court of Shawnee county not to exceed $10,000.
(i) The commissioner may apply for, and any court of general jurisdiction may grant, such restraining orders, preliminary and permanent injunctions, and other orders as may be necessary and proper to enforce a supervision order.
(j) In the event that any person, subject to the provisions of this act, including those persons described in K.S.A. 40-3610(a), shall knowingly violate any valid order of the commissioner issued under the provisions of this section and, as a result of such violation, the net worth of the insurer shall be reduced or the insurer shall suffer loss it would not otherwise have suffered, such person shall become personally liable to the insurer for the amount of any such reduction or loss. The commissioner or supervisor is authorized to bring an action on behalf of the insurer in the district court of Shawnee county to recover the amount of the reduction or loss together with any costs.
History: L. 1991, ch. 125, § 9; July 1.
(a) The commissioner may file in the district court of Shawnee county a petition alleging, with respect to a domestic insurer:
(1) That there exists any grounds that would justify a court order for a formal delinquency proceeding against an insurer under this act;
(2) that the interests of policyholders, creditors or the public will be endangered by delay; and
(3) the contents of an order deemed necessary by the commissioner.
(b) Upon a filing under subsection (a), the court may issue forthwith, ex parte and without a hearing, the requested order which shall direct the commissioner to take possession and control of all or a part of the property, books, accounts, documents, other records of an insurer and of the premises occupied by it for transaction of its business; and until further order of the court enjoin the insurer and its officers, managers, agents and employees from disposition of its property and from the transaction of the insurer's business except with the written consent of the commissioner.
(c) The court shall specify in the order what the order's duration shall be, which shall be such time as the court deems necessary for the commissioner to ascertain the condition of the insurer. On motion of either party or on the court's own motion, the court may from time to time hold such hearings as it deems desirable after such notice as it deems appropriate, and may extend, shorten, or modify the terms of the seizure order. The court shall vacate the seizure order if the commissioner fails to commence a formal proceeding under this act after having had a reasonable opportunity to do so. An order of the court pursuant to a formal proceeding under this act shall ipso facto vacate the seizure order.
(d) Entry of a seizure order under this section shall not constitute an anticipatory breach of any contract of the insurer.
(e) An insurer subject to an ex parte order under this section may petition the court at any time after the issuance of such order for a hearing and review of the order. The court shall hold such a hearing and review not more than 15 days after the request. A hearing under this subsection may be held privately in chambers and it shall be so held, if the insurer proceeded against so requests.
(f) If, at any time after the issuance of such an order, it appears to the court that any person whose interest is, or will be, substantially affected by the order did not appear at the hearing and has not been served, the court may order that notice be given. An order that notice be given shall not stay the effect of any order previously issued by the court.
History: L. 1991, ch. 125, § 10; July 1.
In all proceedings and judicial reviews thereof under K.S.A. 40-3613 and 40-3614, all records of the insurer, other documents, and all insurance department files and court records and papers, so far as they pertain to or are a part of the record of the proceedings, shall be and remain confidential except as is necessary to obtain compliance therewith, unless and until the district court of Shawnee county, after hearing arguments from the parties in chambers, shall order otherwise; or unless the insurer requests that the matter be made public. Until such court order, all papers filed with the clerk of the district court of Shawnee county shall be held by such clerk in a confidential file.
History: L. 1991, ch. 125, § 11; July 1.
The commissioner may apply by petition to the district court of Shawnee county for an order authorizing the commissioner to rehabilitate a domestic insurer on any one or more of the following grounds:
(a) The insurer is in such condition that the further transaction of business would be hazardous financially to its policyholders, creditors or the public;
(b) there is reasonable cause to believe that there has been embezzlement from the insurer, wrongful sequestration or diversion of the insurer's assets, forgery or fraud affecting the insurer, or other illegal conduct in, by, or with respect to the insurer that if established would endanger assets in an amount threatening the solvency of the insurer;
(c) after demand by the commissioner under K.S.A. 40-222 and amendments thereto or under this act, the insurer has failed to promptly make available for examination any of such insurer's own property, books, accounts, documents, or other records, or those of any subsidiary or related company within the control of the insurer, or those of any person having executive authority in the insurer so far as they pertain to the insurer;
(d) control of the insurer, whether by stock ownership or otherwise, and whether direct or indirect, is in a person or persons found after notice and hearing to be untrustworthy;
(e) any person who in fact has executive authority in the insurer, whether an officer, manager, general agent, director or trustee, employee or other person, has refused to be examined under oath by the commissioner concerning its affairs, whether in this state or elsewhere; and after reasonable notice of the fact, the insurer has failed promptly and effectively to terminate the employment and status of the person and all such person's influence on management;
(f) without first obtaining the written consent of the commissioner, the insurer has transferred or attempted to transfer, in a manner contrary to K.S.A. 40-3301, 40-221a or 40-309 and amendments thereto, substantially its entire property or business, or has entered into any transaction the effect of which is to merge, consolidate, or reinsure substantially its entire property or business in or with the property or business of any other person;
(g) the insurer or its property has been or is the subject of an application for the appointment of a receiver, trustee, custodian, conservator or sequestrator or similar fiduciary of the insurer or its property otherwise than as authorized under the insurance laws of this state, and such appointment has been made or is imminent, and such appointment might oust the courts of this state of jurisdiction or might prejudice orderly delinquency proceedings under this act;
(h) the insurer has failed to pay within 60 days after due date any obligation to any state or any subdivision thereof or any judgment entered in any state, if the court in which such judgment was entered had jurisdiction over such subject matter except that such nonpayment shall not be a ground until 60 days after any good faith effort by the insurer to contest the obligation has been terminated, whether it is before the commissioner or in the courts, or the insurer has systematically attempted to compromise or renegotiate previously agreed settlements with its creditors on the ground that it is financially unable to pay its obligations in full; or
(i) the board of directors of the insurer requests or consents to rehabilitation under this act.
History: L. 1991, ch. 125, § 12; July 1.
(a) An order to rehabilitate the business of a domestic insurer or an alien insurer domiciled in this state shall appoint the commissioner and such commissioner's successors as the rehabilitator, and shall direct the rehabilitator forthwith to take possession of the assets of the insurer, and to administer such assets under the general supervision of the court. The filing or recording of the order with the clerk of the district court of Shawnee county or register of deeds of the county in which the principal business of the company is conducted, or the county in which its principal office or place of business is located, shall impart the same notice as a deed, bill of sale or other evidence of title duly filed or recorded with that recorder of deeds would have imparted. The order to rehabilitate the insurer shall by operation of law vest title to all assets of the insurer in the rehabilitator.
(b) Any order issued under this section shall require accounting to the court by the rehabilitator. Accountings shall be at such intervals as the court specifies in this order.
(c) Entry of an order of rehabilitation shall not constitute an anticipatory breach of any contracts of the insurer nor shall it be grounds for retroactive revocation or retroactive cancellation of any contracts of the insurer, unless such revocation or cancellation is done by the rehabilitator pursuant to K.S.A. 40-3618.
History: L. 1991, ch. 125, § 13; July 1.
(a) The commissioner as rehabilitator may appoint one or more special deputies, who shall have all the powers and responsibilities of the rehabilitator granted under this section, and the commissioner may employ such counsel, clerks and assistants as deemed necessary. The compensation of the special deputy, counsel, clerks and assistants and all expenses of taking possession of the insurer and of conducting the proceedings shall be fixed by the commissioner, with the approval of the court and shall be paid out of the funds or assets of the insurer. The persons appointed under this section shall serve at the pleasure of the commissioner.
(b) The commissioner, as rehabilitator, may appoint an advisory committee of policyholders or other creditors including guaranty associations should such a committee be deemed necessary. Such committees shall serve at the pleasure of the commissioner and shall serve without compensation other than reimbursement for reasonable travel and per diem living expenses. No other committee of any nature shall be appointed by the commissioner or the court in rehabilitation proceedings conducted under this act.
(c) The rehabilitator may take such action as necessary or appropriate to reform and revitalize the insurer. The rehabilitator shall have all the powers of the directors, officers and managers, whose authority shall be suspended, except as they are redelegated by the rehabilitator. The rehabilitator shall have full power to direct and manage, to hire and discharge employees subject to any contract rights they may have, and to deal with the property and business of the insurer.
(d) If it appears to the rehabilitator that there has been criminal or tortious conduct, or breach of any contractual or fiduciary obligation detrimental to the insurer by any officer, manager, agent, broker, employee or other person, the rehabilitator may pursue all appropriate legal remedies on behalf of the insurer.
(e) If the rehabilitator determines that reorganization, consolidation, conversion, reinsurance, merger or other transformation of the insurer is appropriate, the rehabilitator shall prepare a plan to effect such changes. Upon application of the rehabilitator for approval of the plan, and after such notice and hearings as the court may prescribe, the court may either approve or disapprove the plan proposed, or may modify the plan and approve it as modified. Any plan approved under this section shall be, in the judgment of the court, fair and equitable to all parties concerned. If the plan is approved, the rehabilitator shall carry out the plan. In the case of a life insurer, the plan proposed may include the imposition of liens upon the policies of the company, if all rights of shareholders are first relinquished. A plan for a life insurer may also propose imposition of a moratorium upon loan and cash surrender rights under policies, for such period and to such an extent as may be necessary.
(f) The rehabilitator shall have the power under K.S.A. 40-3629 and 40-3630 to avoid fraudulent transfers.
History: L. 1991, ch. 125, § 14; July 1.
(a) Except as provided in subsection (d), any court in this state before which any action or proceeding in which the insurer is a party, or is obligated to defend a party, is pending when a rehabilitation order against the insurer is entered shall stay the action or proceeding for 90 days and such additional time as is necessary for the rehabilitator to obtain proper representation and prepare for further proceedings. The rehabilitator shall take such action respecting the pending litigation as necessary in the interests of justice and for the protection of creditors, policyholders and the public. The rehabilitator shall immediately consider all litigation pending outside this state and shall petition the courts having jurisdiction over such litigation for stays whenever necessary to protect the estate of the insurer.
(b) Except as provided in subsection (d), no statute of limitation or defense of laches shall run with respect to any action by or against an insurer between the filing of a petition for appointment of a rehabilitator for that insurer and the order granting and denying that petition. Any action against the insurer that might have been commenced when the petition was filed may be commenced for at least 60 days after the order or rehabilitation is entered or the petition is denied. The rehabilitator, upon an order for rehabilitation, within one year or such other longer time as applicable law may permit, may institute an action or proceeding on behalf of the insurer upon any cause of action against which the period of limitation fixed by applicable law has not expired at the time of the filing of the petition upon which such order is entered.
(c) Any guaranty association or foreign guaranty association covering life or health insurance or annuities shall have standing to appear in any court proceeding concerning the rehabilitation of a life or health insurer if such association is or may become liable to act as a result of the rehabilitation.
(d) No federal home loan bank shall be stayed, enjoined, or prohibited from exercising or enforcing any right or cause of action regarding collateral pledged under:
(1) Any federal home loan bank security agreement; or
(2) any pledge, security, collateral or guarantee agreement or other similar arrangement or credit enhancement relating to such security agreement.
History: L. 1991, ch. 125, § 15; L. 2014, ch. 3, § 2; July 1.
(a) Whenever the commissioner believes further attempts to rehabilitate an insurer would substantially increase the risk of loss to creditors, policyholders or the public, or would be futile, the commissioner may petition the district court of Shawnee county for an order of liquidation. A petition under this subsection shall have the same effect as a petition under K.S.A. 40-3621. The court shall permit the directors of the insurer to take such actions as are reasonably necessary to defend against the petition and may order payment from the estate of the insurer of such costs and other expenses of defense as justice may require.
(b) The rehabilitator may at any time petition the court for an order terminating rehabilitation of an insurer. The court shall also permit the directors of the insurer to petition the court for an order terminating rehabilitation of the insurer and may order payment from the estate of the insurer of such costs and other expenses of such petition as justice may require. If the court finds that rehabilitation has been accomplished and that grounds for rehabilitation under K.S.A. 40-3616 no longer exist, the court shall order that the insurer be restored to possession of such insurer's property and the control of the business. The court may also make that finding and issue that order at any time upon such court's own motion.
History: L. 1991, ch. 125, § 16; July 1.
The commissioner may petition the district court of Shawnee county for an order directing the commissioner to liquidate a domestic insurer on the basis:
(a) Of any grounds for an order of rehabilitation as specified in K.S.A. 40-3616, whether or not there has been a prior order directing the rehabilitation of the insurer;
(b) that the insurer is insolvent; or
(c) that the insurer is in such condition that the further transaction of business would be hazardous, financially or otherwise, to its policyholders, its creditors or the public.
History: L. 1991, ch. 125, § 17; July 1.
(a) An order to liquidate the business of a domestic insurer shall appoint the commissioner and successors as liquidator and shall direct the liquidator forthwith to take possession of the assets of the insurer and to administer such assets under the general supervision of the court. The liquidator shall be vested by operation of law with the title to all of the property, contracts and rights of action, and all of the books and records of the insurer ordered liquidated, wherever located, as of the entry of the final order of liquidation. The filing or recording of the order with the clerk of the district court of Shawnee county and the register of deeds of the county in which its principal office or place of business is located; or, in the case of real estate, with the register of deeds of the county where the property is located, shall impart the same notice as a deed, bill of sale or other evidence of title duly filed or recorded with that register of deeds would have imparted.
(b) Upon issuance of the order, the rights and liabilities of any such insurer and of its creditors, policyholders, shareholders, members and all other persons interested in such insurer's estate shall become fixed as of the date of entry of the order of liquidation, except as provided in K.S.A. 40-3623 and 40-3638.
(c) At the time of petitioning for an order of liquidation, or at any time thereafter, the commissioner, after making appropriate findings of an insurer's insolvency, may petition the court for a judicial declaration of such insolvency. After providing such notice and hearing as it deems proper, the court may make the declaration.
(d) Any order issued under this section shall require accounting to the court by the liquidator. Accounts shall be at such intervals as the court specifies in its order.
(e) (1) If an order of liquidation is appealed, the commissioner may request the court to approve an appeal pendency plan for the continued performance of the defendant company's policy claims obligations including, but not limited to, the duty to defend insured's under liability policies, during the pendency of an appeal. No action shall be against the commissioner or any of the commissioner's deputies, agents, clerks, assistants or attorneys by any party based on preference in an appeal pendency plan approved by the court.
(2) The appeal pendency plan shall not supersede nor affect the obligations of any insurance guaranty decision.
(3) Any such plans shall provide for equitable adjustments to be made by the liquidator to any distributions of assets to guaranty associations, in the event that the liquidator pays claims from assets of the estate, which would otherwise be the obligations of any particular guaranty association but for the appeal of the order of liquidation, such that all guaranty associations equally benefit on a pro rata basis from the assets of the estate. Further, in the event an order of liquidation is set aside upon any appeal, the company shall not be released from delinquency proceedings unless and until all funds advanced by any guaranty association, including reasonable administrative expenses in connection therewith relating to obligations of the company, shall be repaid in full, together with interest at the judgment rate of interest or unless an arrangement for repayment thereof has been made with the consent of all applicable guaranty associations.
History: L. 1991, ch. 125, § 18; July 1.
(a) All policies, other than life or health insurance or annuities, in effect at the time of issuance of an order of liquidation shall continue in force only for the lesser of:
(1) A period of 30 days from the date of entry of the liquidation orders;
(2) the expiration of the policy coverage;
(3) the date when the insured has replaced the insurance coverage with equivalent insurance in another insurer or otherwise terminated the policy; or
(4) the liquidator has effected a transfer of the policy obligation pursuant to K.S.A. 40-3625(a)(9).
(b) An order or liquidation under K.S.A. 40-3622 shall terminate coverages at the time specified in subsection (a) for purposes of any other statute.
(c) Policies of life or health insurance or annuities shall continue in force for such period and under such terms as is provided for by any applicable guaranty association or foreign guaranty association.
(d) Policies of life or health insurance or annuities or any period or coverage of such policies not covered by a guaranty association or foreign guaranty association shall terminate under subsections (a) and (b).
History: L. 1991, ch. 125, § 19; July 1.
The commissioner may petition for an order: (a) Dissolving the corporate existence of a domestic insurer, or the United States branch of an alien insurer domiciled in this state at the time the commissioner applies for a liquidation order. The court may order dissolution of the corporation upon petition by the commissioner upon or after the granting of a liquidation order. If the dissolution has not previously been ordered, it shall be effected by operation of law upon the discharge of the liquidator if the insurer is insolvent but may be ordered by the court upon the discharge of the liquidator if the insurer is under a liquidation order for some other reason; or
(b) permitting the sale of the corporate existence of a domestic insurer, together with any of its licenses to do business, despite the entry of an order of liquidation. The court may permit the sale of such corporate existence upon or after the granting of a liquidation order. The proceeds from the sale of the corporation shall become a part of the general assets of the estate in liquidation. The corporation and its licenses shall thereafter be free and clear from the claims or interests of all claimants, creditors, policyholders and stockholders of the corporation under liquidation. If permission to sell the corporation is not granted, the court shall order dissolution of the corporation as provided in subsection (a).
History: L. 1991, ch. 125, § 20; L. 1993, ch. 6, § 1; July 1.
(a) The liquidator shall have the power:
(1) To appoint a special deputy or deputies to act for the liquidator under this act, and to determine reasonable compensation for such deputies. The special deputy shall have all powers of the liquidator granted by this section. The special deputy shall serve at the pleasure of the liquidator;
(2) to employ employees and agents, legal counsel, actuaries, accountants, appraisers, consultants and other personnel necessary to assist in the liquidation;
(3) to appoint an advisory committee of policyholders, claimants or other creditors including guaranty associations should such a committee be deemed necessary. Such committee shall serve at the pleasure of the commissioner and shall serve without compensation other than reimbursement for personal travel and per diem living expenses. No other committee of any nature shall be appointed by the commissioner or the court in liquidation proceedings conducted under this act;
(4) to fix the reasonable compensation of employees and agents, legal counsel, actuaries, accountants, appraisers and consultants with the approval of the court;
(5) to pay reasonable compensation to persons appointed and to defray from the funds or assets of the insurer all expenses of taking possession of, conserving, conducting, liquidating, disposing of, or otherwise dealing with the business and property of the insurer;
(6) to hold hearings, to subpoena witnesses to compel their attendance, to administer oaths, to examine any person under oath, and to compel any person to subscribe to testimony of the person after the testimony has been correctly reduced to writing; and in connection therewith to require the production of any books, papers, records or other documents which are relevant to the inquiry. Such hearings shall be held in accordance with the Kansas administrative procedure act;
(7) to audit the books and records of all agents of the insurer insofar as those records relate to the business activities of the insurer;
(8) to collect all debts and moneys due and claims belonging to the insurer, wherever located, and for this purpose:
(A) To institute timely action in other jurisdictions, in order to forestall garnishment and attachment proceedings against such debts;
(B) to do such other acts as are necessary or expedient to collect, conserve or protect such insurer's assets or property, including the power to sell, compound, compromise or assign debts for purposes of collection upon reasonable terms and conditions; and
(C) to pursue any creditor's remedies available to enforce claims;
(9) to conduct public and private sales of the property of the insurer;
(10) to use assets of the estate of an insurer under a liquidation order to transfer policy obligations to a solvent assuming insurer, if the transfer can be arranged without prejudice to applicable priorities under K.S.A. 40-3641, and amendments thereto;
(11) to acquire, hypothecate, encumber, lease, improve, sell, transfer, abandon or otherwise dispose of or deal with, any property of the insurer at its market value or upon such terms and conditions as are fair and reasonable. The liquidator shall also have power to execute, acknowledge and deliver any and all deeds, assignments, releases and other instruments necessary or proper to effectuate any sale of property or other transaction in connection with the liquidation;
(12) to borrow money on the security of the insurer's assets or without security and to execute and deliver all documents necessary to that transaction for the purpose of facilitating the liquidation. Any such funds borrowed may be repaid as an administrative expense and have priority over any other claims in class 1 under the priority of distribution;
(13) to enter into such contracts as are necessary to carry out the order to liquidate, and to affirm or disavow any contracts to which the insurer is a party, except that no liquidator shall have the power to disavow, reject or repudiate:
(A) Any federal home loan bank security agreement; or
(B) any pledge, security, collateral or guarantee agreement or any other similar arrangement or credit enhancement relating to such security agreement;
(14) to continue to prosecute and to institute in the name of the insurer or in the liquidator's name any and all suits and other legal proceedings, in this state or outside this state, and to abandon the prosecution of unprofitable claims. If the insurer is dissolved under K.S.A. 40-3624, and amendments thereto, the liquidator shall have the power to apply to any court in this state or elsewhere for leave to substitute such liquidator for the insurer as plaintiff;
(15) to prosecute any action which may exist on behalf of the creditors, members, policyholders or shareholders of the insurer against any officer of the insurer, or any other person;
(16) to remove any or all records and property of the insurer to the offices of the commissioner or to such other place as may be convenient for the purposes of efficient and orderly execution of the liquidation. Guaranty associations and foreign guaranty associations shall have such reasonable access to the records of the insurer as is necessary for them to carry out their statutory obligations;
(17) to deposit in one or more banks in this state such sums as are required for meeting current administration expenses and dividend distributions;
(18) to invest all sums not currently needed, unless the court orders otherwise;
(19) to file any necessary documents for record in the office of any register of deeds or record office in this state or elsewhere where property of the insurer is located;
(20) to assert all defenses available to the insurer as against third persons, including statutes of limitation, statutes of frauds and the defense of usury. A waiver of any defense by the insurer after a petition in liquidation has been filed shall not bind the liquidator. Whenever a guaranty association or foreign guaranty association has an obligation to defend any suit, the liquidator shall give precedence to such obligation and may defend only in the absence of a defense by such guaranty associations;
(21) to exercise and enforce all the rights, remedies and powers of any creditor, shareholder, policyholder or member; including any power to avoid any transfer or lien that may be given by the general law and that is not included with K.S.A. 40-3629 through 40-3631, and amendments thereto;
(22) to intervene in any proceeding wherever instituted that might lead to the appointment of a receiver or trustee, and to act as the receiver or trustee whenever the appointment is offered;
(23) to enter into agreements with any receiver or commissioner of any other state relating to the rehabilitation, liquidation, conservation or dissolution of an insurer doing business in both states; and
(24) to exercise all powers now held or hereafter conferred upon receivers by the laws of this state not inconsistent with the provisions of this act.
(b) The enumeration, in this section, of the powers and authority of the liquidator shall not be construed as limitation upon the liquidator, nor shall it exclude in any manner the right to do such other acts not specifically enumerated or otherwise provided for, as may be necessary or appropriate for the accomplishment of or in aid of the purpose of liquidation.
(c) Notwithstanding the powers of the liquidator as stated in subsections (a) and (b), the liquidator shall have no obligation to defend claims or to continue to defend claims subsequent to the entry of a liquidation order.
History: L. 1991, ch. 125, § 21; L. 2014, ch. 3, § 3; July 1.
(a) Unless the court otherwise directs, the liquidator shall give or cause to be given notice of the liquidation order as soon as possible:
(1) To the insurance commissioner of each jurisdiction in which the insurer is doing business;
(2) to any guaranty association or foreign guaranty association which is or may become obligated as a result of the liquidation;
(3) to all insurance agents of the insurer;
(4) to all persons known or reasonably expected to have claims against the insurer including all policyholders, at their last known address as indicated by the records of the insurer; and
(5) by publication in a newspaper of general circulation in the county in which the insurer has its principal place of business and in such other locations as the liquidator deems appropriate.
(b) Except as otherwise established by the liquidator with approval of the court, notice to potential claimants under subsection (a) shall require claimants to file with the liquidator their claims together with proper proofs thereof under K.S.A. 40-3637, on or before a date the liquidator shall specify in the notice. The liquidator need not require persons claiming cash surrender values or other investment values in life insurance and annuities to file a claim. All claimants shall have a duty to keep the liquidator informed of any changes of address.
(c) If notice is given in accordance with this section, the distribution of assets of the insurer under this act shall be conclusive with respect to all claimants, whether or not they receive notice.
History: L. 1991, ch. 125, § 22; July 1.
(a) Upon issuance of an order appointing a liquidator of a domestic insurer or of an alien insurer domiciled in this state, no action at law or equity or in arbitration shall be brought against the insurer or liquidator, whether in this state or outside this state, nor shall any such existing actions be maintained or further presented after issuance of such order. The courts of this state shall give full faith and credit to injunctions against the liquidator or the company or the continuation of existing actions against the liquidator or the company, when such injunctions are included in an order to liquidate an insurer issued pursuant to corresponding provisions in other states. Whenever, in the liquidator's judgment, protection of the estate of the insurer necessitates intervention in an action against the insurer that is pending outside this state, such liquidator may intervene in the action. The liquidator may defend any action in which the liquidator intervenes under this section at the expense of the estate of the insurer.
(b) The liquidator, upon or after an order for liquidation, within two years or such other longer time as applicable law may permit, may institute an action or proceeding on behalf of the estate of the insurer upon any cause of action against which the period of limitation fixed by applicable law has not expired at the time of the filing of the petition upon which such order is entered. Where, by any agreement, a period of limitation is fixed for instituting a suit or proceeding upon any claim, or for filing any claim, proof of claim, proof of loss, demand, notice, or the like, or where in any proceeding, judicial or otherwise, a period of limitation is fixed, either in the proceeding or by applicable law, for taking any action, filing any claim or pleading, or doing any act, and where in any such case the period had not expired at the date of the filing of the petition, the liquidator, for the benefit of the estate, may take any such action or do any such act, required of or permitted to the insurer, within a period of 180 days subsequent to the entry of an order for liquidation, or within such further period as is shown to the satisfaction of the court not to be unfairly prejudicial to the other party.
(c) No statute of limitation or defense of laches shall run with respect to any action against an insurer between the filing of a petition for liquidation against an insurer and the denial of the petition. Any action against the insurer that might have been commenced when the petition was filed may be commenced for at least 60 days after the petition is denied.
(d) Any guaranty association or foreign guaranty association shall have standing to appear in any court proceeding concerning the liquidation of an insurer if such association is or may become liable to act as a result of the liquidation.
History: L. 1991, ch. 125, § 23; July 1.
(a) As soon as practicable after the liquidation order but not later than 120 days thereafter, the liquidator shall prepare in duplicate a list of the insurer's assets. The list shall be amended or supplemented from time to time as the liquidator may determine. One copy shall be filed in the district court of Shawnee county and one copy shall be retained for the liquidator's files. All amendments and supplements shall be similarly filed.
(b) A submission to the court for disbursement of assets in accordance with K.S.A. 40-3637 fulfills the requirements of subsection (a).
History: L. 1991, ch. 125, § 24; July 1.
(a) Except as provided in subsection (e), every transfer made or suffered and every obligation incurred by an insurer within one year prior to the filing of a successful petition for rehabilitation or liquidation under this act is fraudulent as to then existing and future creditors if made or incurred without fair consideration, or with actual intent to hinder, delay or defraud either existing or future creditors. A transfer made or an obligation incurred by an insurer ordered to be rehabilitated or liquidated under this act, which is fraudulent under this section, may be avoided by the receiver, except as to a person who in good faith is a purchaser, lienor or obligee for a present fair equivalent value, and except that any purchaser, lienor or obligee, who in good faith has given a consideration less than fair for such transfer, lien or obligation, may retain the property, lien or obligation as security for repayment. The court, on due notice, may order any such transfer or obligation to be preserved for the benefit of the estate, and in that event, the receiver shall succeed to and may enforce the rights of the purchaser, lienor, or obligee.
(b) (1) A transfer of property other than real property shall be deemed to be made or suffered when it becomes so far perfected that no subsequent lien obtainable by legal or equitable proceedings on a simple contract could become superior to the rights of the transferee.
(2) A transfer of real property shall be deemed to be made or suffered when it becomes so far perfected that no subsequent bona fide purchaser from the insurer could obtain rights superior to the rights of the transferee.
(3) A transfer which creates an equitable lien shall not be deemed to be perfected if there are available means by which a legal lien could be created.
(4) Any transfer not perfected prior to the filing of a petition for liquidation shall be deemed to be made immediately before the filing of the successful petition.
(5) The provisions of this subsection apply whether or not there are or were creditors who might have obtained any liens or persons who might have become bona fide purchasers.
(c) Any transaction of the insurer with a reinsurer shall be deemed fraudulent and may be avoided by the receiver under subsection (a) if:
(1) The transaction consists of the termination, adjustment or settlement of a reinsurance contract in which the reinsurer is released from any part of its duty to pay the originally specified share of losses that had occurred prior to the time of the transactions, unless the reinsurer gives a present fair equivalent value for the release; and
(2) any part of the transaction took place within one year prior to the date of filing of the petition through which the receivership was commenced.
(d) Every person receiving any property from the insurer or any benefit thereof which is a fraudulent transfer under subsection (a) shall be personally liable therefor and shall be bound to account to the liquidator.
(e) (1) Except as provided in paragraph (2), no receiver shall be entitled to avoid any transfer of, or any obligation to transfer, money or any other property arising under or in connection with:
(A) Any federal home loan bank security agreement; or
(B) any pledge, security, collateral or guarantee agreement or any other similar arrangement or credit enhancement relating to such federal home loan bank security agreement.
(2) A transfer may be avoided under this section if such transfer was made with actual intent to hinder, delay or defraud either existing or future creditors.
History: L. 1991, ch. 125, § 25; L. 2014, ch. 3, § 4; July 1.
(a) Except as provided in subsection (e), after a petition for rehabilitation or liquidation has been filed, a transfer of any of the real property of the insurer made to a person acting in good faith shall be valid against the receiver if made for a present fair equivalent value, or, if not made for a present fair equivalent value, then to the extent of the present consideration actually paid therefor, for which amount the transferee shall have a lien on the property so transferred. The commencement of a proceeding in rehabilitation or liquidation shall be constructive notice upon the recording of a copy of the petition for or order of rehabilitation or liquidation with the register of deeds in the county where any real property in question is located. The exercise by a court of the United States or any state or jurisdiction to authorize or effect a judicial sale of real property of the insurer within any county in any state shall not be impaired by the pendency of such a proceeding unless the copy is recorded in the county prior to the consummation of the judicial sale.
(b) After a petition for rehabilitation or liquidation has been filed and before either the receiver takes possession of the property of the insurer or an order of rehabilitation or liquidation is granted:
(1) A transfer of any of the property of the insurer, other than real property, made to a person acting in good faith shall be valid against the receiver if made for a present fair equivalent value, or, if not made for a present fair equivalent value, then to the extent of the present consideration actually paid therefor, for which amount the transferee shall have a lien on the property so transferred.
(2) A person indebted to the insurer or holding property of the insurer, if acting in good faith, may pay the indebtedness or deliver the property, or any part thereof, to the insurer or upon the insurer's order, with the same effect as if the petition were not pending.
(3) A person having actual knowledge of the pending rehabilitation or liquidation shall be deemed not to act in good faith.
(4) A person asserting the validity of a transfer under this section shall have the burden of proof. Except as elsewhere provided in this section, no transfer by or on behalf of the insurer after the date of the petition for liquidation by any person other than the liquidator shall be valid against the liquidator.
(c) Every person receiving any property from the insurer or any benefit thereof which is a fraudulent transfer under subsection (a) shall be personally liable therefor and shall be bound to account to the liquidator.
(d) Nothing in this act shall impair the negotiability of currency or negotiable instruments.
(e) (1) Except as provided in paragraph (2), no receiver shall be entitled to avoid any transfer of, or any obligation to transfer, money or any other property arising under or in connection with:
(A) Any federal home loan bank security agreement; or
(B) any pledge, security, collateral or guarantee agreement or any other similar arrangement or credit enhancement relating to such federal home loan bank security agreement.
(2) A transfer may be avoided under this section if such transfer was made with actual intent to hinder, delay or defraud either existing or future creditors.
History: L. 1991, ch. 125, § 26; L. 2014, ch. 3, § 5; July 1.
(a) (1) A preference is a transfer of any of the property of an insurer to or for the benefit of a creditor, for or on account of an antecedent debt, made or suffered by the insurer within one year before the filing of a successful petition for liquidation under this act, the effect of which transfer may be to enable the creditor to obtain a greater percentage of this debt than another creditor of the same class would receive. If a liquidation order is entered while the insurer is already subject to a rehabilitation order, then such transfers shall be deemed preferences if made or suffered within one year before the filing of the successful petition for rehabilitation, or within two years before the filing of the successful petition for liquidation, whichever time is shorter.
(2) Except as provided in paragraph (4), any preference may be avoided by the liquidator if:
(A) The insurer was insolvent at the time of the transfer;
(B) the transfer was made within four months before the filing of the petition;
(C) the creditor receiving the preference or to be benefited thereby or the creditor's agent acting with reference thereto had, at the time when the transfer was made, reasonable cause to believe that the insurer was insolvent or was about to become insolvent; or
(D) the creditor receiving the preference was an officer, or any employee or attorney or other person who was in fact in a position of comparable influence with the insurer to an officer whether or not such creditor held such position, or any shareholder holding directly or indirectly more than 5% of any class of any equity security issued by the insurer, or any other person, firm, corporation, association, or aggregation of persons with whom the insurer did not deal at arm's length.
(3) Where the preference is voidable, the liquidator may recover the property or, if it has been converted, its value from any person who has received or converted the property, except where a bona fide purchaser or lienor has given less than fair equivalent value, such person shall have a lien upon the property to the extent of the consideration actually given. Where a preference by way of lien or security title is voidable, the court may on due notice order the lien or title to be preserved for the benefit of the estate, in which event the lien or title shall pass to the liquidator.
(4) No liquidator or receiver shall be entitled to avoid any preference arising under or in connection with:
(A) Any federal home loan bank security agreement; or
(B) any pledge, security, collateral or guarantee agreement or any other similar arrangement or credit enhancement relating to such security agreement.
(b) (1) A transfer of property other than real property shall be deemed to be made or suffered when such transfer becomes so far perfected that no subsequent lien obtainable by legal or equitable proceedings on a simple contract could become superior to the rights of the transferee.
(2) A transfer of real property shall be deemed to be made or suffered when such transfer becomes so far perfected that no subsequent bona fide purchaser from the insurer could obtain rights superior to the rights of the transferee.
(3) A transfer which creates an equitable lien shall not be deemed to be perfected if there are available means by which a legal lien could be created.
(4) A transfer not perfected prior to the filing of a petition for liquidation shall be deemed to be made immediately before the filing of the successful petition.
(5) The provisions of this subsection apply whether or not there are, or were, creditors who might have obtained liens or persons who might have become bona fide purchasers.
(c) (1) A lien obtainable by legal or equitable proceedings upon a simple contract is one arising in the ordinary course of such proceedings upon the entry or docketing of a judgment or decree, or upon attachment, garnishment, execution or like process, whether before, upon, or after judgment or decree and whether before or upon levy. It does not include liens which under applicable law are given a special priority over other liens which are prior in time.
(2) A lien obtainable by legal or equitable proceedings could become superior to the rights of a transferee, or a purchaser could obtain rights superior to the rights of a transferee within the meaning of subsection (b), if such consequences would follow only from the lien or purchase itself, or from the lien or purchase followed by any step wholly within the control of the respective lienholder or purchaser, with or without the aid of ministerial action by public officials. Such a lien could not, however, become superior and such a purchase could not create superior rights for the purpose of subsection (b) through any actions subsequent to the obtaining of such a lien or subsequent to such a purchase which requires the agreement or concurrence of any third party or which require any further judicial action or ruling.
(d) A transfer of property for or on account of a new and contemporaneous consideration which is deemed under subsection (b) to be made or suffered after the transfer because of delay in perfecting such transfer does not thereby become a transfer for or on account of an antecedent debt if any acts required by the applicable law to be performed in order to perfect the transfer as against liens or bona fide purchasers' rights are performed within 21 days or any period expressly allowed by law, whichever is less. A transfer to secure a future loan, if such a loan is actually made, or a transfer which becomes security for a future loan, shall have the same effect as a transfer for or on account of a new and contemporaneous consideration.
(e) If any lien deemed voidable under subsection (a)(2) has been dissolved by the furnishing of a bond or other obligation, the surety on which has been indemnified directly or indirectly by the transfer of or the creation of a lien upon any property of an insurer before the filing of a petition under this act which results in a liquidation order, the indemnifying transfer or lien shall also be deemed voidable.
(f) The property affected by any lien deemed voidable under subsections (a) and (e) shall be discharged from such lien, and that property and any of the indemnifying property transferred to or for the benefit of a surety shall pass to the liquidator, except that the court may on due notice order any such lien to be preserved for the benefit of the estate and the court may direct that such conveyance be executed as may be proper or adequate to evidence the title of the liquidator.
(g) The district court of Shawnee county shall have summary jurisdiction of any proceeding by the liquidator to hear and determine the rights of any parties under this section. Reasonable notice of any hearing in the proceeding shall be given to all parties in interest, including the obligee of a releasing bond or other like obligation. Where an order is entered for the recovery of indemnifying property in-kind or for the avoidance of an indemnifying lien, the court, upon application of any party in interest, shall in the same proceeding ascertain the value of the property or lien, and if the value is less than the amount for which the property is indemnity or than the amount of the lien, the transferee or lienholder may elect to retain the property or lien upon payment of its value, as ascertained by the court, to the liquidator, within such reasonable times as the court shall fix.
(h) The liability of the surety under a releasing bond or other like obligation shall be discharged to the extent of the value of the indemnifying property recovered or the indemnifying lien nullified and avoided by the liquidator, or where the property is retained under subsection (g) to the extent of the amount paid to the liquidator.
(i) If a creditor has been preferred, and afterward in good faith gives the insurer further credit without security of any kind, for property which becomes a part of the insurer's estate, the amount of the new credit remaining unpaid at the time of the petition may be setoff against the preference which would otherwise be recoverable.
(j) If an insurer shall, directly or indirectly, within four months before the filing of a successful petition for liquidation under this act, or at any time in contemplation of a proceeding to liquidate such insurer, pay money or transfer property to an attorney-at-law for services rendered or to be rendered, the transactions may be examined by the court on its own motion or shall be examined by the court on petition of the liquidator and shall be held valid only to the extent of a reasonable amount to be determined by the court, and the excess may be recovered by the liquidator for the benefits of the estate provided that where the attorney is in a position of influence with the insurer or an affiliate thereof payment of any money or the transfer of any property to the attorney-at-law for services rendered or to be rendered shall be governed by the provision of subsection (a)(2)(D).
(k) (1) Every officer, manager, employee, shareholder, member, subscriber, attorney or any other person acting on behalf of the insurer who knowingly participates in giving any preference when such person has reasonable cause to believe the insurer is or is about to become insolvent at the time of the preference shall be personally liable to the liquidator for the amount of the preference. It is permissible to infer that there is a reasonable cause to so believe if the transfer was made within four months before the date of filing of this successful petition for liquidation.
(2) Every person receiving any property from the insurer or the benefit thereof as a preference voidable under subsection (a) shall be personally liable therefor and shall be bound to account to the liquidator.
(3) Nothing in this subsection shall prejudice any other claim by the liquidator against any person.
History: L. 1991, ch. 125, § 27; L. 2014, ch. 3, § 6; July 1.
(a) No claims of a creditor who has received or acquired a preference, lien, conveyance, transfer, assignment or encumbrance voidable under this act, shall be allowed unless the creditor surrenders the preference, lien, conveyance, transfer, assignment or encumbrance. If the avoidance is effected by a proceeding in which a final judgment has been entered, the claim shall not be allowed unless the money is paid or the property is delivered to the liquidator within 30 days from the date of the entering of final judgment, except that the court having jurisdiction over the liquidation may allow further time if there is an appeal or other continuation of the proceeding.
(b) A claim allowable under subsection (a) by reason of the avoidance, whether voluntary or involuntary, or a preference, lien, conveyance, transfer, assignment or encumbrance, may be filed as an excused last filing under K.S.A. 40-3640 if filed within 30 days from the date of the avoidance, or within the further time allowed by the court under subsection (a).
History: L. 1991, ch. 125, § 28; July 1.
(a) Mutual debts or mutual credits whether arising out of one or more contracts between the insurer and another person in connection with any action or proceeding under this act, shall be setoff and the balance only shall be allowed or paid, except as provided in subsections (b) and (c) of this section.
(b) No setoff, except as provided in K.S.A. 40-3602, and amendments thereto, shall be allowed in favor of any person where:
(1) The obligation of the insurer to the person would not at the date of the filing of a petition for liquidation entitle the person to share as a claimant in the assets of the insurer;
(2) the obligation of the insurer to the person was purchased by or transferred to the person with a view to its being used as a setoff;
(3) the obligation of the insurer is owed to an affiliate of such person, or any other entity or association other than the person;
(4) the obligation of the person is owed to an affiliate of the insurer, or any other entity or association other than the insurer;
(5) the obligations of the person is to pay an assessment levied against the members or subscribers of the insurer, or is to pay a balance upon a subscription to the capital stock of the insurer, or is in any other way in the nature of a capital contribution; or
(6) the obligations between the person and the insurer arise out of transactions where either the person or the insurer has assumed risks and obligations from the other party and then has ceded back to that party substantially the same risks and obligations.
(c) The receiver shall provide persons with accounting statements identifying debts which are currently due and payable. Accounts currently due and payable as identified by such accounting statements shall be promptly paid to the receiver. However, persons making such payments may setoff against such payments mutual credits currently due and payable by the insurer and may assert setoff of mutual credits which become due and payable from the insurer in the future. Notwithstanding K.S.A. 40-3641, the receiver shall promptly and fully refund to the extent of the person's prior payments any mutual credits so asserted that may become due and payable to the person by the insurer.
(d) This section shall apply to all contracts entered into, renewed, extended or amended on or after the effective date of this act.
History: L. 1991, ch. 125, § 29; July 1.
Except as provided in K.S.A. 40-3602 and amendments thereto, in the event of the insolvency of the ceding insurer, the reinsurance shall be payable under a contract reinsured by the assuming insurer on the basis of the liability of the ceding company under the contract or contracts reinsured, as approved by the liquidation court, without diminution because of the insolvency of the ceding insurer. Such payments shall be made directly to the ceding insurer or to its domiciliary liquidator except: (a) Where the reinsurance contract or policy reinsured specifically provides another payee of such reinsurance in the event of the insolvency of the ceding insurer; or (b) where the assuming insurer, with the consent of the direct insured, has assumed such policy obligations of the ceding insurer as direct obligations of the assuming insurer to the payees under such policies and in substitution for the obligations of the ceding insurer to such payees.
History: L. 1991, ch. 125, § 30; L. 1999, ch. 66, § 2; July 1.
(a) Within 120 days of a final determination of insolvency of an insurer by a court of competent jurisdiction of this state, the liquidator shall make application to the court for approval of a proposal to disburse assets out of marshaled assets, from time to time as such assets become available, to a guaranty association or foreign guaranty association having obligations because of such insolvency. If the liquidator determines that there are insufficient assets to disburse, the application required by this section shall be considered satisfied by a filing by the liquidator stating the reasons for this determination.
(b) Such proposal shall at least include provisions for:
(1) Reserving amounts for the payment of expenses of administration and the payment of claims of secured creditors, to the extent of the value of the security held, and claims falling within the priorities established in K.S.A. 40-3641, Class 1 and Class 2;
(2) disbursement of the assets marshaled to date and subsequent disbursement of assets as they become available;
(3) equitable allocation of disbursements to each of the guaranty associations and foreign guaranty associations entitled thereto;
(4) the securing by the liquidator from each of the associations entitled to disbursements pursuant to this section of an agreement to return to the liquidator such assets, together with income earned on assets previously disbursed, as may be required to pay claims of secured creditors and claims falling within the priorities established in K.S.A. 40-3641 in accordance with such priorities. No bond shall be required of any such association; and
(5) a full report to be made by each association to the liquidator accounting for all assets so disbursed to the association, all disbursements made therefrom, any interest earned by the association on such assets and any other matter as the court may direct.
(c) The liquidator's proposal shall provide for disbursements to the associations in amounts estimated at least equal to the claim payments made, or to be made thereby, for which such associations could assert a claim against the liquidator, and shall further provide that if the assets available for disbursement from time to time do not equal or exceed the amount of such claim payments made or to be made by the association then disbursements shall be in the amount of available assets.
(d) The liquidator's proposal shall, with respect to an insolvent insurer writing life or health insurance or annuities, provide for disbursements of assets to any guaranty association or any foreign guaranty association covering life or health insurance or annuities or to any other entity or organization reinsuring, assuming or guaranteeing policies or contracts of insurance under the acts creating such associations.
(e) Notice of such application shall be given to the association in each state and to the commissioners of insurance of each of the states. Any such notice shall be deemed to have been given when deposited in the United States certified mails, first-class postage prepaid, at least 15 days prior to submission of such application to the court. Action on the application may be taken by the court provided the above required notice has been given and provided further, that the liquidator's proposal complies with subsection (b)(1) and (2).
History: L. 1991, ch. 125, § 31; July 1.
(a) Proof of all claims shall be filed with the liquidator in the form required by K.S.A. 40-3637 on or before the last day for filing specified by the court, except that proof of claims for cash surrender values or other investment values in life insurance and annuities need not be filed unless the liquidator expressly so requires.
(b) The liquidator may permit a claimant making a late filing to share in distributions, whether past or future, as if the claimant were not late, to the extent that any such payment will not prejudice the orderly administration of the liquidation, under the following circumstances:
(1) The existence of the claim was not known to the claimant and that the claim was filed as promptly as reasonably possible after learning of such claim;
(2) a transfer to a creditor was avoided under K.S.A. 40-3629 through 40-3631, or was voluntarily surrendered under K.S.A. 40-3632, and that the filing satisfies the conditions of K.S.A. 40-3632; or
(3) the valuation under K.S.A. 40-3640, of security held by a secured creditor shows a deficiency, which is filed, within 30 days after the valuation.
(c) The liquidator shall permit late filing claims to share in distributions, whether past or future, as if they were not late, if such claims are claims of a guaranty association or foreign guaranty association for reimbursement of covered claims paid or expenses incurred, or both, subsequent to the last day for filing where such payments were made and expenses incurred as provided by law.
(d) The liquidator may consider any claim filed late which is not covered by subsection (b), and permit it to receive distributions which are subsequently declared on any claims of the same or lower priority if the payment does not prejudice the orderly administration of the liquidation. The late-filing claimant shall receive, at each distribution, the same percentage of the amount allowed on such claim as is then being paid to claimants of any lower priority. This shall continue until the claim has been paid in full.
History: L. 1991, ch. 125, § 32; July 1.
(a) Proof of claim shall consist of a statement signed by the claimant that includes all of the following that are applicable:
(1) The particulars of the claim including the consideration given for it;
(2) the identity and amount of the security on the claim;
(3) the payments made on the debt, if any;
(4) that the sum claimed is justly owing and that there is no setoff, counterclaim or defense to the claim;
(5) any right of priority of payment or other specific right asserted by the claimants;
(6) a copy of the written instrument which is the foundation of the claim; and
(7) the names and addresses of the claimant and the attorney who represents the claimant, if any.
(b) No claim need be considered or allowed if it does not contain all the information in subsection (a) which may be applicable. The liquidator may require that a prescribed form be used, and may require that other information and documents be included.
(c) At any time, the liquidator may request the claimant to present information or evidence supplementary to that required under subsection (a) and may take testimony under oath, require production of affidavits or depositions, or otherwise obtain additional information or evidence.
(d) No judgment or order against an insured or the insurer entered after the date of filing of a successful petition for liquidation, and no judgment or order against an insured or the insurer entered at any time by default or by collusion need be considered as evidence of liability or of quantum of damages. No judgment or order against an insured or the insurer entered within four months before the filing of the petition need be considered as evidence of liability or of the quantum of damages.
(e) All claims of a guaranty association or foreign guaranty association shall be in such form and contain such substantiation as may be agreed to by the association and the liquidator.
History: L. 1991, ch. 125, § 33; July 1.
(a) The claim of a third party which is contingent only on first obtaining a judgment against the insured shall be considered and allowed as if there were no such contingency.
(b) A claim may be allowed even if contingent, if it is filed in accordance with K.S.A. 40-3636. It may be allowed and may participate in all distributions declared after it is filed to the extent that it does not prejudice the orderly administration of the liquidation.
(c) Claims that are due except for the passage of time shall be treated as absolute claims are treated, except such claims may be discounted at the legal rate of interest.
(d) Claims made under employment contracts by directors, principal officers, or persons in fact performing similar functions or having similar powers are limited to payment for services rendered prior to the issuance of any order of rehabilitation or liquidation under K.S.A. 40-3617 or 40-3622.
History: L. 1991, ch. 125, § 34; July 1.
(a) When a claim is denied in whole or in part by the liquidator, written notice of the determination shall be given to the claimant or the claimant's attorney by first-class mail at the address shown in the proof of claim. Within 60 days from the mailing of the notice, the claimant may file objections with the liquidator. If no such filing is made, the claimant may not further object to the determination.
(b) Whenever objections are filed with the liquidator and the liquidator does not alter denial of the claim as a result of the objections, the liquidator shall ask the court for a hearing as soon as practicable and give notice as set by the court of the hearing to the claimant or the claimant's attorney and to any other persons directly affected. The matter may be heard by the court or by a court-appointed referee who shall submit findings of fact along with recommendation.
(c) Whenever a creditor whose claim against an insurer is secured, in whole or in part, by the undertaking of another person, fails to prove and file that claim the other person may do so in the creditor's name, and shall be subrogated to the rights of the creditor, whether the claim has been filed by the creditor or by the person in the creditor's name, to the extent that the person discharges the undertaking. In the absence of an agreement with the creditor to the contrary, the other person shall not be entitled to any distribution; however, until the amount paid to the credit on the undertaking plus the distributions paid on the claim from the insurer's estate to the creditor equals the amount of the entire claim of the creditor. Any excess received by the creditor shall be held by such creditor in trust for such other person, the term "other person," as used in this section is not intended to apply to a guaranty association or foreign guaranty association.
History: L. 1991, ch. 125, § 35; July 1.
(a) The value of any security held by a secured creditor shall be determined in one of the following ways, as the court may direct:
(1) By converting the same into money according to the terms of the agreement pursuant to which the security was delivered to such creditors; or
(2) by agreement, arbitration, compromise or litigation between the creditor and the liquidator.
(b) The determination shall be under the supervision and control of the court with due regard for the recommendation of the liquidator. The amount so determined shall be credited upon the secured claim, and any deficiency shall be treated as an unsecured claim. If the claimant surrenders the security to the liquidator, the entire claim shall be allowed as if unsecured.
History: L. 1991, ch. 125, § 36; July 1.
The priority of distribution of claims from the insurer's estate shall be in accordance with the order in which each class of claims is herein set forth. Every claim in each class shall be paid in full or adequate funds retained for such payment before the members of the next class receive any payment. No subclasses shall be established within any class. The order of distribution of claims shall be:
(a) Class 1. The costs and expenses of administration during rehabilitation and liquidation including, but not limited to, the following:
(1) The actual and necessary costs of preserving or recovering the assets of the insurer;
(2) compensation for all authorized services rendered in the rehabilitation and liquidation;
(3) any necessary filing fees;
(4) the fees and mileage payable to witnesses;
(5) authorized reasonable attorney fees and other professional services rendered in the rehabilitation and liquidation;
(6) the reasonable expenses of a guaranty association or foreign guaranty association in handling claims.
(b) Class 2. All claims under policies including claims for unearned premium or other premium refunds and such claims of the federal or any state or local government for losses incurred, ("loss claims") including third-party claims and all claims of a guaranty association or foreign guaranty association other than those claims included in Class 1. All claims under life insurance policies, funding agreements, guaranteed investment contracts, synthetic guaranteed investment contracts and annuity policies, whether for death proceeds, annuity proceeds or investment values shall be treated as loss claims. That portion of any loss, indemnification for which is provided by other benefits or advantages recovered by the claimant, shall not be included in this class, other than benefits or advantages recovered or recoverable in discharge of familial obligation of support or by way of succession at death or as proceeds of life insurance, or as gratuities. No payment by an employer to an employee shall be treated as a gratuity.
(c) Class 3. Claims of the federal government not included in Class 2.
(d) Class 4. Reasonable compensation to employees for services performed to the extent they do not exceed two months of monetary compensation and represent payment for services performed within one year before the filing of the petition for liquidation or, if rehabilitation preceded liquidation, within one year before the filing of the petition for rehabilitation. Principal officers and directors shall not be entitled to the benefits of this priority except as otherwise approved by the liquidator and the court. Such priority shall be in lieu of any other similar priority which may be authorized by law as to wages or compensation of employees. Where there are no claims and no potential claims of the federal government in the estate, claims in this class will have priority over claims in Class 2 and below.
(e) Class 5. Claims of general creditors including claims of ceding and assuming companies in their capacity as such.
(f) Class 6. Claims of any state or local government except those under Class 2. Claims, including those of any governmental body for a penalty or forfeiture, shall be allowed in this class only to the extent of the pecuniary loss sustained from the act, transaction or proceeding out of which the penalty or forfeiture arose, with reasonable and actual costs occasioned thereby. The remainder of such claims shall be postponed to be equal to the class of claims under subsection (i).
(g) Class 7. Claims filed late or any other claims other than claims under subsections (h) and (i).
(h) Class 8. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Payments to members of domestic mutual insurance companies shall be limited in accordance with law.
(i) Class 9. The claims of shareholders or other owners in their capacity as shareholders.
The provisions of this section, as amended, shall apply to all claims which have not been paid prior to the effective date of this act.
History: L. 1991, ch. 125, § 37; L. 2005, ch. 92, § 5; L. 2005, ch. 186, § 11; July 1.
(a) The liquidator shall review all claims duly filed in the liquidation and shall make such further investigation as necessary. The liquidator may compound, compromise or in any other manner negotiate the amount for which claims will be recommended to the court except where the liquidator is required by law to accept claims as settled by any person or organization, including any guaranty association or foreign guaranty association. Unresolved disputes shall be determined under K.S.A. 40-3639. As soon as practicable, the liquidator shall present to the court a report of the claims against the insurer with recommendations thereon. The report shall include the name and address of each claimant and the amount of the claim finally recommended, if any. If the insurer has issued annuities or life insurance policies, the liquidator shall report the persons to whom, according to the records of the insurer, amounts are owed as cash surrender values or other investment value and the amounts owed.
(b) The court may approve, disapprove or modify the report on claims by the liquidator. Such reports as are not modified by the court within a period of 60 days following submission by the liquidator shall be treated by the liquidator as allowed claims, subject thereafter to later modification or to rulings made by the court pursuant to K.S.A. 40-3639. No claim under a policy of insurance shall be allowed for an amount in excess of the applicable policy limits.
History: L. 1991, ch. 125, § 38; July 1.
All unclaimed funds subject to distribution remaining in the liquidator's hands when the liquidator is ready to apply to the court for discharge, including the amount distributable to any creditor, shareholder, member or other person who is unknown or cannot be found, shall be deposited with the state treasurer in accordance with the unclaimed property act.
History: L. 1991, ch. 125, § 39; July 1.
When all assets justifying the expense of collection and distribution have been collected and distributed under this act, the liquidator shall apply to the court for discharge. The court may grant the discharge and make any other orders, including an order to transfer any remaining funds that are uneconomic to distribute, as deemed appropriate.
History: L. 1991, ch. 125, § 40; July 1.
After the liquidation proceeding has been terminated and the liquidator discharged, the commissioner may at any time petition the district court of Shawnee county to reopen the proceedings for good cause, including the discovery of additional assets. If the court is satisfied that there is justification for reopening, such court shall so order.
History: L. 1991, ch. 125, § 41; July 1.
Whenever it shall appear to the commissioner that the records of any insurer in process of liquidation or completely liquidated are no longer useful, the commissioner may recommend to the court and the court shall direct which records should be retained for future reference and which should be destroyed.
History: L. 1991, ch. 125, § 42; July 1.
The court, as it deems desirable, may cause audits to be made of the books of the commissioner relating to any receivership established under this act, and a report of each audit shall be filed with the commissioner and with the court. The books, records and other documents of the receivership shall be made available to the auditor at any time without notice. The expense of each audit shall be considered a cost of administration of the receivership.
History: L. 1991, ch. 125, § 43; July 1.
(a) If a domiciliary liquidator has not been appointed, the commissioner may apply to the district court of Shawnee county by verified petition for an order directing the commissioner to act as conservator to conserve the property of a foreign insurer on any one or more of the following grounds:
(1) Any of the grounds in K.S.A. 40-3616;
(2) that any of its property has been sequestered by official action in its domiciliary state, or in any other state;
(3) that enough of its property has been sequestered in a foreign country to give reasonable cause to fear that the insurer is or may become insolvent;
(4) (A) that its certificate of authority to do business in this state has been revoked; and
(B) that there are residents of this state with outstanding claims or outstanding policies.
(b) When an order is sought under subsection (a), the court shall cause the insurer to be given such notice and time to respond thereto as is reasonable under the circumstances.
(c) The court may issue the order in whatever terms it shall deem appropriate. The filing or recording of the order with the clerk of the court or the register of deeds of the county in which the principal business of the company is located, shall impart the same notice as a deed, bill of sale or other evidence of title duly filed or recorded with the register of deeds would have imparted.
(d) The conservator may at any time petition for, and the court may grant an order, under K.S.A. 40-3654 to liquidate assets of a foreign or alien insurer under conservation, or, if appropriate, for an order under K.S.A. 40-3656, to be appointed ancillary receiver.
(e) The conservator may at any time petition the court for an order terminating conservation of an insurer. If the court finds that the conservation is no longer necessary, such court shall order that the insurer be restored to possession of its property and the control of the insurer's business. The court may also make such finding and issue such order at any time upon motion of any interested party, but if such motion is denied all costs shall be assessed against such party.
History: L. 1991, ch. 125, § 44; July 1.
(a) If no domiciliary receiver has been appointed, the commissioner may apply to the district court of Shawnee county by verified petition for an order directing such receiver to liquidate the assets found in this state of a foreign insurer or an alien insurer not domiciled in this state, on any of the following grounds:
(1) Any of the grounds in K.S.A. 40-3616 or 40-3621; or
(2) any of the grounds specified in K.S.A. 40-3648(a)(2) through (4), inclusive.
(b) When an order is sought under subsection (a), the court shall cause the insurer to be given such notice and time to respond thereto as is reasonable under the circumstances.
(c) If it appears to the court that the best interests of creditors, policyholders and the public require, the court may issue an order to liquidate in whatever terms it shall deem appropriate. The filing or recording of the order with the clerk of the court or the register of deeds of the county in which the principal business of the company is located or the county in which its principal office or place of business is located, shall impart the same notice as a deed, bill of sale or other evidence of title duly filed or recorded with the register of deeds would have imparted.
(d) If a domiciliary liquidator is appointed in a reciprocal state while a liquidation is proceeding under this section, the liquidator under this section shall thereafter act as ancillary receiver under K.S.A. 40-3652. If a domiciliary liquidator is appointed in a nonreciprocal state while a liquidation is proceeding under this section, the liquidator under this section may petition the court for permission to act as ancillary receiver under K.S.A. 40-3651.
(e) On the same grounds as are specified in subsection (a), the commissioner may petition any appropriate federal district court to be appointed receiver to liquidate that portion of the insurer's assets and business over which the court will exercise jurisdiction, or any lesser part thereof the commissioner deems desirable for the protection of the policyholders and creditors in this state.
(f) The court may order the commissioner, when the assets of a foreign or alien insurer have been liquidated under this section, to pay claims of residents of this state against the insurer under such rules as to the liquidation of insurers under this act as are otherwise compatible with the provisions of this section.
History: L. 1991, ch. 125, § 45; July 1.
(a) The domiciliary liquidator of an insurer domiciled in a reciprocal state shall, except as to special deposits and security on secured claims under subsection (c) of K.S.A. 40-3651, be vested by operation of law with the title to all of the assets, property, contracts and rights of action, agents' balances, and all of the books, accounts and the other records of the insurer located in this state. The date of vesting shall be the date of the filing of the petition, if that date is specified by the domiciliary law for the vesting of property in the domiciliary state. Otherwise, the date of vesting shall be the date of entry of the order directing possession to be taken. The domiciliary liquidator shall have the immediate right to recover balances due from agents and to obtain possession of the books, accounts and other records of the insurer located in this state, and also shall have the right to recover all other assets of the insurer located in this state, subject to K.S.A. 40-3651.
(b) If a domiciliary liquidator is appointed for an insurer not domiciled in a reciprocal state, the commissioner shall be vested by operation of law with the title to all of the property, contracts and right of action, and all of the books, accounts and other records of the insurer located in this state, at the same time that the domiciliary liquidator is vested with title in the domicile. The commissioner may petition for a conservation or liquidation order under K.S.A. 40-3648 or 40-3649, for an ancillary receivership under K.S.A. 40-3651, or after approval by the court, may transfer title to the domiciliary liquidator, as the interests of justice and the equitable distribution of the assets require.
(c) Claimants residing in this state may file claims with the liquidator or ancillary receiver, if any, in this state or with the domiciliary liquidator, if the domiciliary law permits. The claims must be filed on or before the last date fixed for the filing of claims in the domiciliary liquidation proceedings.
History: L. 1991, ch. 125, § 46; July 1.
(a) If a domiciliary liquidator has been appointed for an insurer not domiciled in this state, the commissioner may file a petition with the district court of Shawnee county requesting appointment as ancillary receiver in this state:
(1) If such liquidator finds there are sufficient assets of the insurer located in this state to justify the appointment of an ancillary receiver;
(2) if the protection of creditors or policyholders in this state so requires.
(b) The court may issue an order appointing an ancillary receiver in whatever terms the court deems appropriate. The filing or recording of the order with the register of deeds in this state imparts the same notice as a deed, bill of sale or other evidence of title duly filed or recorded with the register of deeds.
(c) When a domiciliary liquidator has been appointed in a reciprocal state, then the ancillary receiver appointed in this state, whenever necessary, may aid and assist the domiciliary liquidator in recovering assets of the insurer located in this state. The ancillary receiver, as soon as practicable, shall liquidate from its securities those special deposit claims and secured claims which are proved and allowed in the ancillary proceedings in this state, and shall pay the necessary expenses of the proceedings. Such liquidator shall promptly transfer all remaining assets, books, accounts and records to the domiciliary liquidator. Subject to this section, the ancillary receiver and deputies shall have the same powers and be subject to the same duties with respect to the administration of assets as a liquidator of an insurer domiciled in this state.
(d) When a domiciliary liquidator has been appointed in this state, ancillary receivers appointed in reciprocal states shall have, as to assets and books, accounts, and other records in their respective states, corresponding rights, duties and powers to those provided in subsection (c) for ancillary receivers appointed in this state.
History: L. 1991, ch. 125, § 47; July 1.
The commissioner in the commissioner's sole discretion may institute proceedings under K.S.A. 40-3613 through 40-3615 at the request of the commissioner or other appropriate insurance officials of the domiciliary state of any foreign or alien insurer having property located in this state.
History: L. 1991, ch. 125, § 48; July 1.
(a) In a liquidation proceeding begun in this state against an insurer domiciled in this state, claimants residing in foreign countries or in states that are not reciprocal states must file claims in this state, and claimants residing in reciprocal states may file claims either with the ancillary receivers, if any, in such claimant's respective states, or with the domiciliary liquidator. Claims must be filed on or before the last date fixed for the filing of claims in the domiciliary liquidation proceeding.
(b) Claims belonging to claimants residing in reciprocal states may be proved either in the liquidation proceeding in this state as provided in this act, or in ancillary proceedings, if any, in the reciprocal states. If notice of the claims and opportunity to appear and be heard is afforded the domiciliary liquidator of this state as provided in K.S.A. 40-3654(b) with respect to ancillary proceedings, the final allowance of claims by the courts in ancillary proceedings in reciprocal states shall be conclusive as to amount and as to priority against special deposits or other security located in such ancillary states, but shall not be conclusive with respect to priorities against general assets under K.S.A. 40-3641.
History: L. 1991, ch. 125, § 49; July 1.
(a) In a liquidation proceeding in a reciprocal state against an insurer domiciled in that state, claimants against the insurer, who reside within this state, may file claims either with the ancillary receiver, if any, in this state, or with the domiciliary liquidator. Claims must be filed on or before the last dates fixed for the filing of claims in the domiciliary liquidation proceeding.
(b) Claims belonging to claimants residing in this state may be proved either in the domiciliary state under the law of the domiciliary state, or in ancillary proceedings, if any, in this state. If a claimant elects to prove such a claim in this state, the claimant shall file the claim with the liquidator in the manner provided in K.S.A. 40-3636 and 40-3637. The ancillary receiver shall make a recommendation to the court as under K.S.A. 40-3642, and also shall arrange a date for hearing if necessary under K.S.A. 40-3639 and shall give notice to the liquidator in the domiciliary state, either by certified mail or by personal service at least 40 days prior to the date set for hearing. If the domiciliary liquidator, within 30 days after the giving of such notice, gives notice in writing to the ancillary receiver and to the claimant, either by certified mail or by personal service, of such liquidator's intention to contest the claim, such liquidator shall be entitled to appear or be represented in any proceeding in this state involving the adjudication of the claim.
(c) The final allowance of the claim by the courts of this state shall be accepted as conclusive as to amount and as to priority against special deposits or other security located in this state.
History: L. 1991, ch. 125, § 50; July 1.
During the pendency in this or any other state of a liquidation proceeding, whether called by that name or not, no action or proceeding in the nature of an attachment, garnishment or levy of execution shall be commenced or maintained in this state against the delinquent insurer or its assets.
History: L. 1991, ch. 125, § 51; July 1.
(a) In a liquidation proceeding in this state involving one or more reciprocal states, the order of distribution of the domiciliary state shall control as to all claims of residents of this state and reciprocal states. All claims of residents of reciprocal states shall be given equal priority of payment from general assets regardless of where such assets are located.
(b) The owners of special deposit claims against an insurer for which a liquidator is appointed in this state or any other state shall be given priority against the special deposits in accordance with K.S.A. 40-222b and amendments thereto. If there is a deficiency in any deposit, so that claims secured by it are not fully discharged from it, the claimants may share in the general assets, but the sharing shall be deferred until general creditors, and also claimants against other special deposits who have received smaller percentages from their respective special deposits, have been paid percentages of their claims equal to the percentage paid from the special deposit.
(c) The owner of a secured claim against an insurer for which a liquidator has been appointed in this state or any other state may surrender security and file a claim as a general creditor, or the claim may be discharged by resort to the security in accordance with K.S.A. 40-3640, in which case the deficiency, if any, shall be treated as a claim against the general assets of the insurer on the same basis as claims of unsecured creditors.
History: L. 1991, ch. 125, § 52; July 1.
If an ancillary receiver in another state or foreign country, whether called by that name or not, fails to transfer to the domiciliary liquidator in this state any assets within such liquidator's control other than special deposits, diminished only by the expenses of the ancillary receivership, if any, the claims filed in the ancillary receivership, other than special deposit claims or secured claims, shall be placed in the class of claims under K.S.A. 40-3641(h).
History: L. 1991, ch. 125, § 53; July 1.
If any provision of this act or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of this act and the application of such provision to other persons or circumstances shall not be affected thereby.
History: L. 1991, ch. 125, § 54; July 1.
Qualified financial contracts.
(a) (1) No person shall be stayed, enjoined or prohibited from exercising any of the following:
(A) A contractual right to terminate, liquidate, accelerate or close out, or cause the termination, liquidation, acceleration or close out of obligations, under or in connection with any netting agreement or qualified financial contract with an insurer because of any of the following:
(i) The insolvency, financial condition or default of the insurer at any time, provided that the right is enforceable under applicable law other than this act; or
(ii) the commencement of a formal delinquency proceeding under this act;
(B) any right under a pledge, security, collateral, reimbursement or guarantee agreement or arrangement or any other similar security arrangement or other credit enhancement relating to one or more netting agreements or qualified financial contracts; or
(C) subject to the provisions of subsection (b) of K.S.A. 40-3633, and amendments thereto, any right to set off or net out any termination value, payment amount or other transfer obligation arising under or in connection with one or more netting agreements or qualified financial contracts where the counterparty or its guarantor is organized under the laws of the United States or a state or a foreign jurisdiction approved by the securities valuation office (SVO) of the national association of insurance commissioners as eligible for netting.
(2) If a counterparty to a master netting agreement or a qualified financial contract with an insurer subject to a formal delinquency proceeding under this act terminates, liquidates, closes out or accelerates the agreement or contract, damages shall be measured as of the date or dates of termination, liquidation, close out or acceleration. The amount of a claim for damages shall be actual direct compensatory damages calculated in accordance with subsection (f).
(b) Upon termination of a netting agreement or qualified financial contract, the net or settlement amount, if any, owed by a non-defaulting party to an insurer against which an application or petition has been filed under this act shall be transferred to or on the order of the receiver for the insurer even if the insurer is the defaulting party, notwithstanding any walkaway clause in the netting agreement or qualified financial contract. For the purposes of this subsection, the term "walkaway clause" means a provision in a netting agreement or a qualified financial contract that, after calculation of a value of a party's position or an amount due to or from one of the parties in accordance with its terms upon termination, liquidation or acceleration of the netting agreement or qualified financial contract, either does not create a payment obligation of a party or extinguishes a payment obligation of a party, in whole or in part, solely because of the party's status as a non-defaulting party. Any limited two-way payment or first method provision in a netting agreement or qualified financial contract with an insurer that has defaulted shall be deemed to be a full two-way payment or second method provision as against the defaulting insurer. Any such net or settlement amount shall, except to the extent it is subject to one or more secondary liens or encumbrances or rights of netting or setoff, be a general asset of the insurer.
(c) In making any transfer of a netting agreement or qualified financial contract of an insurer subject to a formal delinquency proceeding under this article, the receiver shall either:
(1) Transfer to one party, other than an insurer subject to a proceeding under this act, all netting agreements and qualified financial contracts between a counterparty or any affiliate of such counterparty and the insurer that is the subject of the formal delinquency proceeding, including all of the following:
(A) All rights and obligations of each party under each such netting agreement and qualified financial contract; and
(B) all property, including any guarantees or other credit enhancement, securing any claims of each party under each such netting agreement and qualified financial contract; or
(2) transfer none of the netting agreements, qualified financial contracts, rights, obligations or property referred to in paragraph (1) of this subsection with respect to the counterparty and any affiliate of such counterparty.
(d) (1) If a receiver for an insurer makes a transfer of one or more netting agreements or qualified financial contracts, then the receiver shall use its best efforts to notify any person who is a party to the netting agreements or qualified financial contracts of the transfer by 12 noon, the receiver's local time, on the business day following the transfer.
(2) For purposes of this subsection, "business day" means a day other than a Saturday, Sunday or any day on which either the New York stock exchange or the federal reserve bank of New York is closed.
(e) (1) Notwithstanding any other provision of this act to the contrary, except as provided in paragraph (2), a receiver shall not avoid a transfer of money or other property arising under or in connection with a netting agreement or qualified financial contract, or any pledge, security, collateral or guarantee agreement or any other similar security arrangement or credit support document relating to such netting agreement or qualified financial contract that is made before the commencement of a formal delinquency proceeding under this act.
(2) However, a transfer may be avoided under subsection (a) of K.S.A. 40-3629, and amendments thereto, if such transfer was made with actual intent to hinder, delay or defraud the insurer, a receiver appointed for the insurer or existing or future creditors.
(f) (1) In exercising the rights of disaffirmance or repudiation of a receiver with respect to any netting agreement or qualified financial contract to which an insurer is a party, the receiver for the insurer shall either:
(A) Disaffirm or repudiate all netting agreements and qualified financial contracts between a counterparty or any affiliate of the counterparty and the insurer that is the subject of the proceeding; or
(B) disaffirm or repudiate none of the netting agreements and qualified financial contracts referred to in subsection (f)(1)(A) with respect to the person or any affiliate of the person;
(2) notwithstanding any other provisions of this act, any claim of a counterparty against the estate arising from the receiver's disaffirmance or repudiation of a netting agreement or qualified financial contract that has not been previously affirmed in the liquidation or immediately preceding a conservation or rehabilitation case shall be determined and shall be allowed or disallowed:
(A) As if the claim had arisen before the date of the filing of the petition for liquidation; or
(B) if a conservation or rehabilitation proceeding is converted to a liquidation proceeding, as if the claim had arisen before the date of the filing of the petition for conservation or rehabilitation.
(3) The amount of the claim shall be the actual direct compensatory damages determined as of the date of the disaffirmance or repudiation of the netting agreement or qualified financial contract.
(4) (A) The term "actual direct compensatory damages" does not include punitive or exemplary damages, damages for lost profit or lost opportunity or damages for pain and suffering.
(B) The term "actual direct compensatory damages" does include normal and reasonable costs of cover or other reasonable measures of damages utilized in the derivatives, securities or other market for the contract and agreement claims.
(g) As used in this section, the term "contractual right" shall include:
(1) Any right set forth in a rule or bylaw or resolution of the governing board of a:
(A) Derivatives clearing organization, as defined in the commodity exchange act;
(B) multilateral clearing organization, as defined in the federal deposit insurance corporation improvement act of 1991;
(C) national securities exchange;
(D) national securities association;
(E) securities clearing agency;
(F) contract market designated under the commodity exchange act;
(G) derivatives transaction execution facility registered under the commodity exchange act; or
(H) board of trade, as defined in the commodity exchange act;
(2) any right, whether or not evidenced in writing, arising under statutory or common law, or under merchant law, or by reason of normal business practice.
(h) The provisions of this section shall not apply to any person who is an affiliate of the insurer that is the subject of the formal delinquency proceeding.
(i) All rights of any counterparties under this act shall apply to netting agreements and qualified financial contracts entered into on behalf of the general account or separate accounts if the assets of each separate account are available only to counterparties to netting agreements and qualified financial contracts entered into on behalf of that separate account.
(j) The provisions of this section shall apply only to a liquidation, rehabilitation or conservation proceeding that commences on or after the effective date of this act.
(k) This section shall be a part of and supplemental to the insurers supervision, rehabilitation and liquidation act.
History: L. 2013, ch. 46, § 1; April 18.
History: L. 1978, ch. 170, §§ 1 to 5; Repealed, L. 2001, ch. 91, § 19; July 1.
History: L. 1978, ch. 170, § 6; L. 1994, ch. 152, § 2; L. 1999, ch. 91, § 8; Repealed, L. 2001, ch. 91, § 19; July 1.
History: L. 1978, ch. 170, § 7; L. 1991, ch. 140, § 1; L. 1999, ch. 91, § 9; Repealed, L. 2001, ch. 91, § 19; July 1.
History: L. 1978, ch. 170, §§ 8 to 10; Repealed, L. 2001, ch. 91, § 19; July 1.
History: L. 1978, ch. 170, § 11; L. 1979, ch. 150, § 1; L. 1984, ch. 164, § 2; L. 1987, ch. 180, § 1; L. 1999, ch. 91, § 10; Repealed, L. 2001, ch. 91, § 19; July 1.
History: L. 1978, ch. 170, §§ 12, 14; Repealed, L. 2001, ch. 91, § 19; July 1.
History: L. 1988, ch. 148, § 2; Repealed, L. 2001, ch. 91, § 19; July 1.
This act may be cited as the business transacted with producer controlled insurer act.
History: L. 1992, ch. 14, § 1; L. 2005, ch. 163, § 2; July 1.
As used in this act:
(a) "Accredited state" means a state in which the insurance department or regulatory agency has qualified as meeting the minimum financial regulatory standards promulgated and established from time to time by the national association of insurance commissioners.
(b) "Captive insurer" means an insurance company owned by another organization whose exclusive purpose is to insure risks of the parent organization and affiliated companies or, in the case of groups and associations, an insurance organization owned by the insureds whose exclusive purpose is to insure risks to member organizations or group members, or both, and their affiliates.
(c) "Control" or "controlled" has the meaning ascribed in subsection (c) of K.S.A. 40-3302, and amendments thereto.
(d) "Controlled insurer" means a licensed insurer which is controlled, directly or indirectly by a producer.
(e) "Controlling producer" means a producer who, directly or indirectly, controls an insurer.
(f) "Licensed insurer" or "insurer" means any person, firm, association or corporation duly licensed to transact a property or casualty insurance business in this state. The following, inter alia, are not licensed insurers for the purposes of this act:
(1) All risk retention groups as defined in the superfund amendments reauthorization act of 1986, public law 99-499, 100 Stat. 1613 (1986); the risk retention act, 15 U.S.C. § 3901 et seq. (1982 & Supp. 1986); and K.S.A. 40-4101 et seq., and amendments thereto;
(2) all residual market pools and joint underwriting authorities or associations; and
(3) all captive insurers.
(g) "Producer" has the meaning ascribed to it in K.S.A. 40-4902, and amendments thereto. Producer includes any other person, firm, association or corporation, when, for any compensation, commission or other thing of value, such person, firm, association or corporation acts or aids in any manner in soliciting, negotiating or procuring the making of any insurance contract on behalf of an insured other than the person, firm, association or corporation.
History: L. 1992, ch. 14, § 2; L. 2005, ch. 163, § 3; July 1.
This act shall apply to licensed insurers as defined in K.S.A. 40-37a02, either domiciled in this state or domiciled in a state that is not an accredited state having in effect a substantially similar law. All provisions of the insurance holding company act, to the extent such provisions are not superseded by this act, shall continue to apply to all parties within holding company systems subject to this act.
History: L. 1992, ch. 14, § 3; L. 2005, ch. 163, § 4; July 1.
(a) (1) The provisions of K.S.A. 40-37a04 shall apply if, in any calendar year, the aggregate amount of gross written premium on business placed with a controlled insurer by a controlling producer is equal to or greater than five percent of the admitted assets of the controlled insurer, as reported in the controlled insurer's quarterly statement filed as of September 30 of the prior year.
(2) Notwithstanding paragraph (1) of this subsection, the provisions of this section shall not apply if:
(A) The controlling producer:
(i) Places insurance only with the controlled insurer, or only with the controlled insurer and a member or members of the controlled insurer's holding company system, or the controlled insurer's parent, affiliate or subsidiary and receives no compensation based upon the amount of premiums written in connection with such insurance; and
(ii) accepts insurance placements only from nonaffiliated subproducers, and not directly from insureds; and
(B) the controlled insurer, except for insurance business written through a residual market facility established pursuant to Kansas statutes or administrative regulations, accepts insurance business only from a controlling producer, a producer controlled by the controlled insurer, or a producer that is a subsidiary of the controlled insurer.
(b) A controlled insurer shall not accept business from a controlling producer and a controlling producer shall not place business with a controlled insurer unless there is a written contract between the controlling producer and the insurer specifying the responsibilities of each party, which contract has been approved by the board of directors of the insurer and contains the following minimum provisions:
(1) The controlled insurer may terminate the contract for cause, upon written notice to the controlling producer. The controlled insurer shall suspend the authority of the controlling producer to write business during the pendency of any dispute regarding the cause for the termination;
(2) the controlling producer shall render accounts to the controlled insurer detailing all material transactions, including information necessary to support all commissions, charges and other fees received by, or owing to, the controlling producer;
(3) the controlling producer shall remit all funds due under the terms of the contract to the controlled insurer on at least a monthly basis. The due date shall be fixed so that premiums or installments thereof collected shall be remitted no later than 90 days after the effective date of any policy placed with the controlled insurer under this contract;
(4) all funds collected for the controlled insurer's account shall be held by the controlling producer in a fiduciary capacity, in one or more appropriately identified bank accounts in banks that are members of the federal reserve system, in accordance with the provisions of the insurance law as applicable. Notwithstanding the foregoing, funds of a controlling producer not required to be licensed in this state shall be maintained in compliance with the requirements of the controlling producer's state of domicile;
(5) the controlling producer shall maintain separately identifiable records of business written for the controlled insurer;
(6) the contract shall not be assigned in whole or in part by the controlling producer;
(7) the controlled insurer shall provide the controlling producer with its underwriting standards, rules and procedures, manuals setting forth the rates to be charged, and the conditions for the acceptance or rejection of risks. The controlling producer shall adhere to the standards, rules, procedures, rates and conditions. The standards, rules, procedures, rates and conditions shall be the same as those applicable to comparable business placed with the controlled insurer by a producer other than the controlling producer;
(8) the rates and terms of the controlling producer's commissions, charges or other fees and the purposes for those charges or fees. The rates of the commissions, charges and other fees shall be no greater than those applicable to comparable business placed with the controlled insurer by producers other than controlling producers. For purposes of this paragraph and paragraph (7) of this subsection, examples of "comparable business" includes the same lines of insurance, same kinds of insurance, same kinds of risks, similar policy limits, and similar quality of business;
(9) if the contract provides that the controlling producer, on insurance business placed with the insurer, is to be compensated contingent upon the insurer's profits on that business, then such compensation shall not be determined and paid until at least five years after the premiums on liability insurance are earned and at least one year after the premiums are earned on any other insurance. In no event shall the commission be paid until the adequacy of the controlled insurer's reserves on remaining claims has been independently verified pursuant to paragraph (1) of subsection (d);
(10) a limit on the controlling producer's writings in relation to the controlled insurer's surplus and total writings. The insurer may establish a different limit for each line or subline of business. The controlled insurer shall notify the controlling producer when the applicable limit is approached and shall not accept business from the controlling producer if the limit is reached. The controlling producer shall not place business with the controlled insurer if it has been notified by the controlled insurer that the limit has been reached; and
(11) the controlling producer may negotiate but shall not bind reinsurance on behalf of the controlled insurer on business the controlling producer places with the controlled insurer, except that the controlling producer may bind faculative reinsurance contracts pursuant to obligatory faculative agreements if the contract with the controlled insurer contains underwriting guidelines including, for both reinsurance assumed and ceded, a list of reinsurers with which such automatic agreements are in effect, the coverages and amounts or percentages that may be reinsured and commission schedules.
(c) Every controlled insurer shall have an audit committee of the board of directors composed of independent directors. The audit committee shall annually meet the management, the insurer's independent certified public accountants, and an independent casualty actuary or other independent loss reserve specialist acceptable to the commissioner to review the adequacy of the insurer's loss reserves.
(d) (1) In addition to any other required loss reserve certification, the controlled insurer shall annually, on April 1 of each year, file with the commissioner an opinion of an independent casualty actuary or other independent loss reserve specialist acceptable to the commissioner, reporting loss ratios for each line of business written and attesting to the adequacy of loss reserves established for losses incurred and outstanding as of year-end, including incurred but not reported losses, on business placed by the producer; and
(2) the controlled insurer shall annually report to the commissioner the amount of commissions paid to the producer, the percentage such amount represents of the net premiums written and comparable amounts and percentage paid to noncontrolling producers for placements of the same kinds of insurance.
History: L. 1992, ch. 14, § 4; L. 2005, ch. 163, § 5; July 1.
The producer, prior to the effective date of the policy, shall deliver written notice to the prospective insured disclosing the relationship between the producer and the controlled insurer; except that, if the business is placed through a subproducer who is not a controlling producer, the controlling producer shall retain in such controlling producer's records a signed commitment from the subproducer that such subproducer is aware of the relationship between the insurer and the producer and that the subproducer has or will notify the insured.
History: L. 1992, ch. 14, § 5; L. 2005, ch. 163, § 6; July 1.
(a) (1) If the commissioner believes the controlling producer or any other person has not complied with this act, or any regulation or order promulgated hereunder, the commissioner may, after a hearing conducted under the provisions of the Kansas administrative procedures act, order the controlling producer to cease placing business with the controlled insurer; and
(2) if it was found that because of such noncompliance, the controlled insurer or any policyholder thereof has suffered any loss or damage, the commissioner may maintain a civil action or intervene in an action brought by or on behalf of the insurer or policyholder for recovery of compensatory damages for the benefit of the insurer or policyholder or other appropriate relief.
(b) If an order for liquidation or rehabilitation of the controlled insurer has been entered pursuant to K.S.A. 40-3605 et seq., and amendments thereto, and the receiver appointed under that order believes that the controlling producer or any other person has not materially complied with this act, or any regulation or order promulgated hereunder, and the insurer suffered any loss or damage therefrom, the receiver may maintain a civil action for recovery of damages or other appropriate sanctions for the benefit of the insurer.
(c) Nothing contained in this section shall affect the right of the commissioner to impose any other penalties provided for in chapter 40 of the Kansas Statutes Annotated.
(d) Nothing contained in this section is intended to or shall in any manner alter or affect the rights of policyholders, claimants, creditors or other third parties.
History: L. 1992, ch. 14, § 6; L. 2005, ch. 163, § 7; July 1.
As used in this act:
(a) "Administrator" or "third party administrator" or "TPA" means any person who directly or indirectly underwrites, collects charges or premiums from, or who adjusts or settles claims on, residents of this state in connection with life, annuity or health insurance coverage offered or provided by a payor, except any of the following:
(1) An employer, or a wholly owned direct or indirect subsidiary of an employer, on behalf of its employees or the employees of one or more subsidiaries or affiliated corporations of such employer.
(2) A union or association on behalf of its members.
(3) An insurance company that is either authorized to transact insurance in this state or acting as an insurer with respect to a policy lawfully issued and delivered by such company in and pursuant to the laws of a state in which the insurer was authorized to transact an insurance business, or a hospital, medical, dental or optometric service corporation or a health care service organization, including their sales representatives, possessing a valid certificate of authority in this state when engaged in the performance of their duties.
(4) An insurance producer licensed to sell life, annuities or health coverage in this state whose activities are limited exclusively to the sale, solicitation and negotiation of insurance.
(5) A creditor on behalf of its debtors with respect to insurance covering a debt between the creditor and its debtors.
(6) A trust, its trustees, agents and employees acting pursuant to such trust established in conformity with 29 U.S.C. § 186.
(7) A trust exempt from taxation under section 501(a) of the internal revenue code, its trustees, and employees acting pursuant to such trust or a custodian and the custodian's agents or employees acting pursuant to a custodian account which meets the requirements of section 401(f) of the internal revenue code.
(8) A credit union or a financial institution that is subject to supervision or examination by federal or state banking authorities, or a mortgage lender, to the extent they collect and remit premiums to licensed insurance producers or to limited lines producers or authorized insurers in connection with loan payments.
(9) A credit card issuing company that advances for and collects premiums or charges from its credit card holders who have authorized such collection.
(10) A person who adjusts or settles claims in the normal course of that person's practice or employment as an attorney at law and who does not collect charges or premiums in connection with life, annuity or health insurance coverage.
(11) A person licensed as a managing general agent in this state whose activities are limited to the scope of activities conveyed under such license.
(12) A person who is affiliated with an insurer and who acts solely as an administrator for the direct and assumed insurance business of an affiliated insurer. The insurer is responsible for the acts of the administrator and is responsible for providing all of the administrator's books and records to the commissioner upon a request from the commissioner. For purposes of this paragraph, "insurer" means a licensed insurance company, hospital or professional service corporation or a managed care organization.
(b) "Affiliate" or "affiliated" means an entity or person who, directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, a specified entity or person.
(c) "Business entity" means a corporation, association, partnership, limited liability company or other legal entity.
(d) "Collateral" means funds, letters of credit or any item with economic value owned by the payor but held by an insurer or TPA in case it needs to be used to fulfill premium or loss reimbursement obligations in accordance with a contract between the insurer or TPA and the payor. "Collateral" shall also include anticipated loss prepayments made prior to the payment of losses, pursuant to arrangements where reimbursement is not due until after losses have been paid.
(e) "Commissioner" means the commissioner of insurance of the state of Kansas.
(f) "Control," "controlling," "controlled by" and "under common control with" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing 10% or more of the voting securities of any other person. This presumption may be rebutted by a showing made in the manner provided in K.S.A. 40-3305, and amendments thereto, that control does not exist in fact. The commissioner may determine, after furnishing all persons in interest notice and an opportunity to be heard and making specific findings of fact to support the determination, that control exists in fact, notwithstanding the absence of a presumption to that effect.
(g) "GAAP" means United States generally accepted accounting principles consistently applied.
(h) "Home state" means the United States jurisdiction that has adopted this act or a substantially similar law governing TPAs and that has granted the TPA a home state TPA license.
(i) "Insurance producer" means a person required to be licensed under the laws of this state to sell, solicit or negotiate insurance, and also includes a business entity whose primary activities are the sales, solicitation and negotiation of insurance.
(j) "Insurer" means a person undertaking to provide life, annuity or health coverage or self-funded coverage who is subject to regulation under chapter 40 of the Kansas Statutes Annotated, and amendments thereto.
(k) "NAIC" means the national association of insurance commissioners.
(l) "Nonresident TPA" means a TPA with a home state other than Kansas.
(m) "Payor" means an insurer or an employer administering its employee benefit plan or the employee benefit plan of an affiliated employer under common management or control.
(n) "Person" means an individual or a business entity.
(o) "Stop-loss insurance" means insurance protecting an employer or other person responsible for an otherwise self-insured health or life benefit plan against obligations under the plan, but "stop-loss insurance" does not include reinsurance written for an insurance company.
(p) "Underwrites" or "underwriting" means, but is not limited to, the acceptance of employer or individual applications for coverage of individuals in accordance with the written rules of the insurer or self-funded plan, or the overall planning and coordinating of a benefits program.
(q) "Uniform application" means the current version of the NAIC uniform application for third party administrators.
History: L. 1978, ch. 174, § 1; L. 2017, ch. 2, § 7; March 9.
(a) No administrator shall act as such without a written agreement between the administrator and the insurer, and such written agreement shall be retained as part of the official records of both the insurer and the administrator for the duration of the agreement and five years thereafter. Such written agreement shall contain provisions which include the requirements of K.S.A. 40-3805 through 40-3809, and amendments thereto, except insofar as those requirements do not apply to the functions performed by the administrator.
(b) The written agreement shall include a statement of duties that the administrator is expected to perform on behalf of the insurer and the lines, classes or types of insurance for which the administrator is to be authorized to administer. The agreement shall make provision with respect to underwriting or other standards pertaining to the business underwritten by the insurer.
(c) The insurer or administrator may, with written notice to the other party and the commissioner, terminate the written agreement as provided in the agreement. The insurer may suspend the underwriting authority of the administrator during the pendency of any dispute regarding the termination of the written agreement. The insurer shall fulfill any lawful obligations with respect to policies affected by the written agreement regardless of any dispute between the insurer and the administrator.
History: L. 1978, ch. 174, § 2; L. 2017, ch. 2, § 8; March 9.
History: L. 1978, ch. 174, § 6; Repealed, L. 2017, ch. 2, § 16; March 9.
If an insurer utilizes the services of an administrator, the payment to the administrator of any premiums or charges for insurance by or on behalf of the insured shall be deemed to have been received by the insurer and the payment of return premiums or claims forwarded by the insurer to the administrator shall not be deemed payment to the insured or claimant until such payments are received by the insured or claimant. Nothing shall limit any right of the insurer against the administrator resulting from its failure to make payments to the insurer, insureds or claimants.
History: L. 1978, ch. 174, § 3; L. 2017, ch. 2, § 9; March 9.
(a) Every administrator shall maintain and make available to the payor complete books and records of all transactions performed on behalf of the payor. Such books and records shall be maintained in accordance with prudent standards of insurance record keeping and shall be maintained for a period of not less than five years from the date of their creation.
(b) The commissioner of insurance shall have access to such books and records for the purposes of examination, audit and inspection. Any documents, materials or other information in the possession or control of the commissioner that are furnished by a TPA, payor, insurance producer or an employee or agent thereof acting on behalf of the TPA, payor or insurance producer or obtained in an investigation, shall be confidential by law and privileged, shall not be subject to the open records act, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. The commissioner is authorized to use such documents, materials or other information in the furtherance of any regulatory or legal action brought as a part of the commissioner's official duties.
(c) Neither the commissioner nor any person who receives documents, materials or other information while acting under the authority of the commissioner shall be permitted or required to testify in any private civil action concerning confidential documents, materials or information subject to subsection (b).
(d) In order to assist in the performance of the commissioner's duties, the commissioner may:
(1) Share documents, materials or other information, including the confidential and privileged documents, materials or other information subject to this section, with other state, federal and international regulatory agencies, the NAIC, its affiliates or subsidiaries and with state, federal and international law enforcement authorities, provided the recipient agrees to maintain the confidentiality and privileged status of the document, material or other information; and
(2) may receive documents, materials or information, including otherwise confidential and privileged documents, materials or information, from the NAIC, its affiliates or subsidiaries and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information.
(e) No waiver of any applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the commissioner under this section.
(f) Nothing in this section shall prohibit the commissioner from releasing final, adjudicated actions, including for cause terminations that are open to public inspection pursuant to the open records act, to a database or other clearinghouse service maintained by the NAIC, its affiliates or subsidiaries.
(g) The payor shall own the records generated by the administrator pertaining to the payor, however, the administrator shall retain the right to continuing access to books and records to permit the administrator to fulfill all of its contractual obligations to insured parties, claimants and the payor, and its obligations to maintain records available to the commissioner.
(h) In the event the payor and the administrator cancel their agreement, notwithstanding the provisions of subsection (a), the administrator may, by written agreement with the payor, transfer all records to a new administrator rather than retain them for five years. In such cases, the new administrator shall acknowledge, in writing, that it is responsible for retaining the records of the prior administrator as required in subsection (a).
History: L. 1978, ch. 174, § 4; L. 2005, ch. 67, § 1; L. 2017, ch. 2, § 10; L. 2022, ch. 62, § 5; July 1.
An administrator may use only such advertising pertaining to the business underwritten by an insurer as has been approved by such insurer in advance of its use. An administrator that mentions any current or former client in its advertising must obtain the client's prior written consent.
History: L. 1978, ch. 174, § 5; L. 2017, ch. 2, § 11; March 9.
(a) All insurance charges, premiums, collateral and loss reimbursements collected by an administrator on behalf of or for a payor, and the return of premiums or collateral received from that payor, shall be held by the administrator in a fiduciary capacity. Such funds shall be immediately remitted to the person or persons entitled thereto, or shall be deposited promptly in a fiduciary account established and maintained by the administrator in a federally or state-insured financial institution. A separate fiduciary account shall be maintained by the administrator for each payor and shall not contain funds collected or held by the administrator on behalf of multiple payors. The written agreement between the administrator and the payor shall provide for the administrator to periodically render an accounting to the payor detailing all transactions performed by the administrator pertaining to the business of the payor, and the written agreement between the payor and the administrator shall include specifications of this reporting.
(b) The administrator shall keep copies of all records of any fiduciary account maintained or controlled by the administrator, and, upon request of a payor, shall furnish the payor with copies of such records pertaining to deposits and withdrawals on behalf of the payor. If charges or premiums so deposited have been collected on behalf of or for more than one payor, or for the payment of claims associated with more than one policy, the administrator shall keep records clearly recording the deposits in and withdrawals from the account on behalf of each payor and relating to each policyholder.
(c) The administrator shall not pay any claim by withdrawals from a fiduciary account in which premiums or charges are deposited. Withdrawals from a fiduciary account shall be made as provided in the written agreement between the administrator and the payor, and only for the following purposes: (1) Remittance to an insurer entitled thereto; (2) deposit in an account maintained in the name of the payor; (3) transfer to and deposit in a claims paying account, with claims to be paid as provided in subsection (d); (4) payment to a group policyholder for remittance to the payor entitled thereto; (5) payment to the administrator of its earned commissions, fees or charges; (6) remittance of return premiums to the person or persons entitled thereto; or (7) payment to other service providers as authorized by the payor.
(d) All claims paid by the administrator from funds collected on behalf of or for a payor shall be paid only as authorized by the payor. Payments from an account maintained or controlled by the administrator may be made for the following purposes including the payment of claims: (1) Payment of valid claims; (2) payment of expenses associated with the handling of claims to the administrator or to other service providers approved by the payor; (3) remittance to the payor, or transfer to a successor administrator as directed by the payor, for the purpose of paying claims and associated expenses; and (4) return of funds held as collateral or prepayment, to the person entitled to those funds, upon a determination by the payor that those funds are no longer necessary to secure or facilitate the payment of claims and associated expenses.
History: L. 1978, ch. 174, § 7; L. 2017, ch. 2, § 12; L. 2025, ch. 94, § 18; July 1.
(a) An administrator shall not enter into an agreement or understanding with a payor in which the effect is to make the amount of the administrator's commissions, fees or charges contingent upon savings effected by the adjustment, settlement and payment of losses covered by the payor's obligations. This provision shall not prohibit an administrator from receiving performance-based compensation for providing hospital or other auditing services, from providing managed care or related services, or from being compensated for subrogation expenses.
(b) This section shall not prevent the compensation of an administrator from being based on premiums or charges collected or the number of claims paid or processed.
History: L. 1978, ch. 174, § 8; L. 2017, ch. 2, § 13; March 9.
(a) Where the services of an administrator are utilized, the administrator shall provide a written notice, approved by the payor, to covered individuals advising them of the identity of and relationship among the administrator, the policyholder and the payor.
(b) When an administrator collects funds, the reason for collection of each item shall be identified to the insured party and each item shall be shown separately from any premium. Additional charges may not be made for services to the extent the services have already been paid for by the payor.
(c) The administrator shall disclose to the payor all charges, fees and commissions that the administrator receives arising from services it provides for the payor, including any fees or commissions paid by payors providing reinsurance or stop-loss insurance.
(d) An administrator shall disclose to the commissioner any bankruptcy petition filed by or on behalf of such administrator pursuant to chapter 9 or chapter 11 of the United States bankruptcy code at the time such filing is made.
History: L. 1978, ch. 174, § 9; L. 2017, ch. 2, § 14; L. 2025, ch. 94, § 19; July 1.
A person who is not required to be licensed as an administrator under this act and who directly or indirectly underwrites, collects charges or premiums from or adjusts or settles claims on residents of this state only in connection with life, annuity or health coverage provided by a self-funded plan other than a governmental or church plan, shall register with the commissioner annually, verifying its status as herein described. This section shall not apply to an insurer or to an individual performing these actions as an employee of an insurer. This section shall also not apply to a person performing these actions under contract to or as an employee of an administrator.
History: L. 1978, ch. 174, § 10; L. 1988, ch. 356, § 126; L. 2017, ch. 2, § 15; March 9.
History: L. 1978, ch. 174, § 11; L. 1988, ch. 356, § 127; Repealed, L. 1997, ch. 24, § 7; July 1.
(a) A person shall apply to be an administrator in its home state and shall receive a license from the regulatory authority of its home state prior to performing any function of an administrator in this state.
(b) A person applying to Kansas as its home state shall apply for licensure by submitting to the commissioner an application in the form prescribed by the commissioner that shall include or be accompanied by the following information and documents:
(1) All basic organizational documents of the applicant, including any articles of incorporation, articles of association, partnership agreement, trade name certificate, trust agreement, shareholder agreement, certificate of existence from the Kansas secretary of state and other applicable documents and all amendments to such documents;
(2) the bylaws, rules, regulations or similar documents regulating the internal affairs of the applicant;
(3) NAIC biographical affidavits for the individuals who are directly or indirectly responsible for the conduct of affairs of the applicant, including all members of the board of directors, board of trustees, executive committee or other governing board or committee, the principal officers in the case of a corporation or the partners or members in the case of a partnership, association or limited liability company, any shareholders or members holding directly or indirectly 10% or more of the voting stock, voting securities or voting interest of the applicant and any other person who directly or indirectly exercises control or influence over the affairs of the applicant;
(4) audited annual financial statements or reports for the two most recent fiscal years that demonstrate that the applicant has a positive net worth. If the applicant has been in existence for less than two fiscal years, the uniform application shall include financial statements or reports, certified by at least two officers, owners or directors of the applicant and prepared in accordance with GAAP, for any completed fiscal years and for any month during the current fiscal year for which such financial statements or reports have been completed. An audited annual financial report prepared on a consolidated basis shall include a columnar consolidating or combining worksheet that shall be filed with the report and include the following:
(A) Amounts shown on the consolidated audited financial report shown on the worksheet;
(B) amounts for each entity stated separately; and
(C) explanations of consolidating and eliminating entries included.
The applicant shall also include such other information as the commissioner may require in order to review the current financial condition of the applicant;
(5) in lieu of submitting audited financial statements, and upon written application by an applicant and good cause shown, the commissioner may grant a hardship exemption from filing audited financial statements and allow the submission of unaudited financial statements. Acceptable formats for unaudited financial statements, that shall include notes, are:
(A) Reports compiled or reviewed by a certified public accountant; or
(B) (i) internal financial reports prepared in accordance with GAAP, certified by at least two officers, owners or directors of the administrator.
(ii) If unaudited financial statements are submitted, the applicant shall also secure and maintain a surety bond in a form prescribed by the commissioner for the use and benefit of the commissioner to be held in trust for the benefit and protection of covered persons and any payor or self-funded plan against loss by reason of acts of fraud or dishonesty, for the greater of 10% of funds handled for the benefit of Kansas residents or $20,000. Administrators of self-funded plans in Kansas shall be subject to the mandatory surety bond requirement described in subsection (h), regardless of whether they file audited or unaudited financial reports;
(6) a statement describing the business plan, including information on staffing levels and activities, proposed in this state and nationwide. The plan shall provide details setting forth the applicant's capability for providing a sufficient number of experienced and qualified personnel in the areas of claims processing, record keeping and underwriting;
(7) a license application fee not to exceed $400; and
(8) such other pertinent information as may be required by the commissioner.
(c) An administrator licensed or applying for licensure under the provisions of this section shall make available for inspection by the commissioner, copies of all contracts with payors or other persons utilizing the services of the administrator.
(d) An administrator licensed or applying for licensure under the provisions of this section shall produce its accounts, records and files for examination, and makes its officers available to give information with respect to its affairs, as often as reasonably required by the commissioner.
(e) The commissioner may refuse to issue a license if the commissioner determines that the applicant or any individual responsible for the conduct of affairs of the applicant is not competent, trustworthy, financially responsible or of good personal and business reputation, or has had an insurance or an administrator certificate of authority or license denied or revoked for cause by any jurisdiction, or if the commissioner determines that any of the grounds set forth in K.S.A. 40-3810, and amendments thereto, exist with respect to the applicant.
(f) A license issued under this section shall remain valid, unless surrendered, suspended or revoked by the commissioner, for so long as the administrator continues in business in this state and remains in compliance with the provisions of this act and any applicable rules and regulations.
(g) An administrator licensed or applying for licensure under the provisions of this section shall immediately notify the commissioner of any material change in its ownership, control or other fact or circumstance affecting its qualification for a license in this state.
(h) An administrator licensed or applying for a home state license that administers or will administer governmental or church self-insured plans in this state or any other state shall maintain a surety bond for the use and benefit of the commissioner to be held in trust for the benefit and protection of covered persons and any payor or self-funded plan against loss by reason of acts of fraud or dishonesty. The bond shall be in the greater of the following amounts:
(1) $100,000; or
(2) an amount equal to 10% of the aggregate total amount of self-funded coverage under church plans or governmental plans handled in this state and all additional states in which the administrator is authorized to do business.
(i) Not later than December 1 of each year, the commissioner shall set and cause to be published in the Kansas register the fee required pursuant to this section for the next calendar year.
History: L. 2017, ch. 2, § 2; L. 2019, ch. 54, § 5; L. 2025, ch. 87, § 22; July 1.
(a) Unless an administrator has obtained a home state license in this state, any administrator who performs duties as an administrator in this state shall obtain a nonresident administrator license in accordance with the provisions of this section by filing with the commissioner the uniform application, accompanied by a letter of certification. In lieu of requiring an administrator to file a letter of certification with the uniform application, the commissioner may verify the nonresident administrator's home state certificate of authority or license status through an electronic database maintained by the NAIC, its affiliates or subsidiaries.
(b) An administrator shall not be eligible for a nonresident administrator license under the provisions of this section if such administrator does not hold a license in a home state that has adopted a substantially similar law governing administrators.
(c) Except as provided in subsections (b) and (h), the commissioner shall issue to the administrator a nonresident administrator license promptly upon receipt of a complete application.
(d) Each nonresident administrator shall file biennially, as a part of its application for renewal of its license, a statement that its home state administrator license remains in force and has not been revoked or suspended by its home state during the preceding years. Each nonresident administrator renewal application shall be accompanied by a renewal application fee not to exceed $200.
(e) At the time of filing the application for licensing required under the provisions of this section, the nonresident administrator shall pay a license application fee not to exceed $400.
(f) An administrator licensed or applying for licensure under the provisions of this section shall produce its accounts, records and files for examination, and make its officers available to give information with respect to its affairs, as often as reasonably required by the commissioner.
(g) A nonresident administrator is not required to hold a nonresident administrator license in this state if the administrator is licensed in its home state and the administrator's duties in this state are limited to:
(1) The administration of a group policy or plan and not more than a total of 20% of covered persons, for all plans the administrator services, reside in this state; and
(2) the total number of covered persons residing in this state is fewer than 100.
(h) The commissioner may refuse to issue a nonresident administrator license, or delay the issuance of a nonresident administrator license, if the commissioner determines that, due to events or information obtained subsequent to the home state's licensure of the administrator, the nonresident administrator cannot satisfy the requirements of this act or that grounds exist for the home state's revocation or suspension of the administrator's home state certificate of authority or license.
(i) Not later than December 1 of each year, the commissioner shall set and cause to be published in the Kansas register the fees required pursuant to this section for the next calendar year.
History: L. 2017, ch. 2, § 3; L. 2019, ch. 54, § 6; L. 2025, ch. 87, § 23; July 1.
(a) Each administrator licensed under the provisions of this act shall file an annual report for the preceding calendar year with the commissioner on or before July 1 of each year, or within such extension of time as the commissioner may grant for good cause, accompanied by an annual report fee not to exceed $100. Not later than December 1 of each year, the commissioner shall set and cause to be published in the Kansas register such fee for the next calendar year.
(b) The annual report shall include:
(1) The complete names and addresses of all payors, and for self-funded plans, all employers and trusts with which the administrator had agreements during the preceding fiscal year.
(2) the number of Kansas residents covered by each of the plans; and
(3) (A) an audited financial statement attested to by an independent certified public accountant. An audited annual financial report prepared on a consolidated basis shall include a columnar consolidating or combining worksheet filed with the report. Such worksheet shall include the following:
(i) Amounts shown on the consolidated audited financial report shown on the worksheet;
(ii) amounts for each entity stated separately; and
(iii) explanations of consolidating and eliminating entries included.
(B) In lieu of submitting an audited financial statement, and upon written application by an administrator and good cause shown, the commissioner may grant a hardship exemption from filing audited financial statements and allow the submission of unaudited financial statements. Acceptable formats for unaudited financial statements, which shall include notes, are:
(i) Reports compiled or reviewed by a certified public accountant; or
(ii) internal financial reports prepared in accordance with GAAP, certified by at least two officers, owners or directors of the administrator.
(C) If unaudited financial statements are submitted, the administrator shall secure and maintain a surety bond in a form prescribed by the commissioner for the use and benefit of the commissioner to be held in trust for the benefit and protection of covered persons and any payor or self-funded plan against loss by reason of acts of fraud or dishonesty, for the greater of 10% of funds handled for the benefit of Kansas residents or $20,000.
(c) The annual report shall be in the form and contain such matters as the commissioner prescribes and shall be verified by at least two officers, owners or directors of the administrator.
History: L. 2017, ch. 2, § 4; L. 2019, ch. 54, § 7; L. 2025, ch. 87, § 24; July 1.
(a) The license of an administrator shall be denied, suspended or revoked if the commissioner finds that the administrator:
(1) Is in an unsound financial condition;
(2) is using such methods or practices in the conduct of its business so as to render its further transaction of business in this state hazardous or injurious to insured persons or the public; or
(3) has failed to pay any judgment rendered against it in this state within 60 days after the judgment has become final.
(b) The commissioner may deny, suspend or revoke the license of an administrator if the director finds that the administrator:
(1) Has violated any lawful rule or regulation or order of the commissioner or any provision of chapter 40 of the Kansas Statutes Annotated, and amendments thereto;
(2) has refused to be examined or to produce its accounts, records and files for examination, or if any individual responsible for the conduct of affairs of the administrator, including members of the board of directors, board of trustees, executive committee or other governing board or committee, the principal officers in the case of a corporation or the partners or members in the case of a partnership, association or limited liability company, any shareholder or member holding directly or indirectly 10% or more of the voting stock, voting securities or voting interest of the administrator and any other person who exercises control or influence over the affairs of the administrator, has refused to give information with respect to its affairs or has refused to perform any other legal obligation as to an examination, when required by the commissioner;
(3) has, without just cause, refused to pay proper claims or perform services arising under its contracts or has, without just cause, caused covered individuals to accept less than the amount due them or caused covered individuals to employ attorneys or bring suit against the administrator to secure full payment or settlement of such claims;
(4) fails, at any time, to meet any qualification for which issuance of the license could have been refused had the failure then existed and been known to the commissioner;
(5) any of the individuals responsible for the conduct of its affairs, including members of the board of directors, board of trustees, executive committee or other governing board or committee, the principal officers in the case of a corporation or the partners or members in the case of a partnership, association or limited liability company, any shareholder or member holding directly or indirectly 10% or more of its voting stock, voting securities or voting interest and any other person who exercises control or influence over its affairs, has been convicted of, or has entered a plea of guilty or nolo contendere to any felony, or to a misdemeanor that evidences bad moral character, dishonesty, a lack of integrity and financial responsibility or an unfitness and inability to provide acceptable service to the consuming public without regard to whether adjudication was withheld; or
(6) is under suspension or revocation in another state.
(c) The commissioner may, in the commissioner's discretion and without advance notice or hearing, immediately suspend the license of an administrator, if the commissioner finds that one or more of the following circumstances exist:
(1) The administrator is insolvent or impaired;
(2) a proceeding for receivership, conservatorship, rehabilitation or other delinquency proceeding regarding the administrator has been commenced in any state;
(3) the financial condition or business practices of the administrator otherwise pose an imminent threat to the public health, safety or welfare of the residents of this state; or
(4) a final order suspending or revoking the administrator's license in its home state has been entered.
(d) If the commissioner finds that one or more grounds exist for the suspension or revocation of a license issued under the provisions of this act, the commissioner may, in lieu of or in addition to suspension or revocation, impose an administrative penalty upon the administrator pursuant to the Kansas administrative procedure act.
History: L. 2017, ch. 2, § 5; March 9.
Any policies, certificates, booklets, termination notices or other written communications delivered by the payor to the administrator for delivery to insured parties or covered individuals shall be delivered by the administrator promptly after receipt of instructions from the payor to deliver them.
History: L. 2017, ch. 2, § 6; March 9.
K.S.A. 40-3801, 40-3802, 40-3804 through 40-3810 and K.S.A. 40-3812 through 40-3817, and amendments thereto, shall be known and may be cited as the third party administrators act.
History: L. 2017, ch. 2, § 1; March 9.
(a) K.S.A. 40-3821 through 40-3828, and amendments thereto, and K.S.A. 2025 Supp. 40-3828a, and amendments thereto, shall be known and may be cited as the pharmacy benefits manager licensure act.
(b) On and after January 1, 2023, a person shall not perform, act or do business in this state as a pharmacy benefits manager unless such person has a valid license issued by the commissioner pursuant to this act.
(c) This act shall apply to any pharmacy benefits manager that provides claims processing services, other prescription drug or device services, or both, to covered persons who are residents of this state.
(d) This act shall not apply to any pharmacy benefits manager that holds a certificate of registration as an administrator pursuant to K.S.A. 40-3810, and amendments thereto.
(e) A license issued in accordance with the pharmacy benefits manager licensure act shall be nontransferrable.
History: L. 2006, ch. 154, § 1; L. 2022, ch. 44, § 2; July 1.
As used in this act:
(a) "Act" means the pharmacy benefits manager licensure act.
(b) "Commissioner" means the commissioner of insurance as defined by K.S.A. 40-102, and amendments thereto.
(c) (1) "Covered entity" means:
(A) A nonprofit hospital or medical service corporation, health insurer, health benefit plan or health maintenance organization;
(B) a health program administered by a department or the state in the capacity of provider of health coverage; or
(C) an employer, labor union or other group of persons organized in the state that provides health coverage to covered individuals who are employed or reside in the state.
(2) "Covered entity" does not include any:
(A) Self-funded plan that is exempt from state regulation pursuant to ERISA;
(B) plan issued for coverage for federal employees; or
(C) health plan that provides coverage only for accidental injury, specified disease, hospital indemnity, medicare supplement, disability income, long-term care or other limited benefit health insurance policies and contracts.
(d) "Covered person" means a member, policyholder, subscriber, enrollee, beneficiary, dependent or other individual participating in a health benefit plan.
(e) "Department" means the insurance department.
(f) "ERISA" means the federal employee retirement income security act of 1974.
(g) "Health benefit plan" means the same as defined in K.S.A. 40-4602, and amendments thereto.
(h) "Health insurer" means the same as defined in K.S.A. 40-4602, and amendments thereto.
(i) "Maximum allowable cost" or "MAC" means any term or methodology that a pharmacy benefits manager or a healthcare insurer may use to establish the maximum amount that a pharmacy benefits manager will reimburse a pharmacy or a pharmacist for generic drugs.
(j) "Pharmacy benefits management" means:
(1) Any of the following services provided with regard to the administration of the following pharmacy benefits:
(A) Mail service pharmacy;
(B) claims processing, retail network management and payment of claims to pharmacies for prescription drugs dispensed to covered individuals;
(C) clinical formulary development and management services;
(D) rebate contracting and administration;
(E) certain patient compliance, therapeutic intervention and generic substitution programs; or
(F) disease management programs involving prescription drug utilization; and
(2) (A) the procurement of prescription drugs by a prescription benefits manager at a negotiated rate for dispensation to covered individuals within this state; or
(B) the administration or management of prescription drug benefits provided by a covered insurance entity for the benefit of covered individuals.
(k) "Pharmacy benefits manager" means a person, business or other entity that performs pharmacy benefits management. "Pharmacy benefits manager" includes any person or entity acting in a contractual or employment relationship for a pharmacy benefits manager in the performance of pharmacy benefits management for a covered entity. "Pharmacy benefits manager" does not include a covered insurance entity.
(l) "Person" means an individual, partnership, corporation, organization or other business entity.
History: L. 2006, ch. 154, § 2; L. 2022, ch. 44, § 3; July 1.
(a) No person shall act or operate as a pharmacy benefits manager without first obtaining a valid license issued by the commissioner.
(b) Each person seeking a license to act as a pharmacy benefits manager shall file with the commissioner an application for a license upon a form to be furnished by the commissioner. At a minimum, the application form shall include the following information:
(1) The name, address and telephone number of the pharmacy benefits manager;
(2) the name, address, official position and professional qualifications of each individual who is responsible for the conduct of the affairs of the pharmacy benefits manager, including all members of the board of directors, board of trustees, executive committee, other governing board or committee, the principal officers in the case of a corporation, the partners or members in the case of a partnership or association;
(3) the name and address of the applicant's agent for service of process in the state;
(4) the name, address, phone number, email address and official position of the employee who will serve as the primary contact for the department;
(5) a copy of the pharmacy benefits manager's corporate charter, articles of incorporation or other charter document;
(6) a template contract including a dispute resolution process, that ultimately involves an independent fact finder between:
(A) The pharmacy benefits manager and the health insurer; or
(B) the pharmacy benefits manager and the pharmacy or a pharmacy's contracting agent; and
(7) a network adequacy report on a form prescribed by the department through rules and regulations.
(c) A nonrefundable application fee not to exceed $2,500. Not later than December 1 of each year, the commissioner shall set and cause to be published in the Kansas register such fee for the next calendar year.
(d) The licensee shall inform the commissioner, by any means acceptable to the commissioner, of any material change in the information required by this subsection within 90 days of such change. Failure to timely inform the commissioner of a material change may result in a penalty against the licensee in the amount of $500.
(e) Within 90 days after receipt of a completed application, the network adequacy report and the applicable license fee, the commissioner shall review the application and issue a license if the applicant is deemed qualified under this section. If the commissioner determines that the applicant is not qualified, the commissioner shall notify the applicant and shall specify the reason for the denial.
(f) (1) All documents, materials or other information and copies thereof in the possession or control of the department or any other governmental entity that are obtained by or disclosed to the commissioner or any other person in the course of an application, examination or investigation made pursuant to this act shall be confidential by law and privileged, shall not be subject to any open records, freedom of information, sunshine or other public record disclosure laws and shall not be subject to subpoena or discovery.
(2) The provisions of paragraph (1) shall only apply to the disclosure of the confidential documents described in paragraph (1) by the department or any other governmental entity and shall not be construed to create any privilege in favor of any other party.
(3) The provisions of this subsection shall expire on July 1, 2027, unless the legislature reviews and reenacts this provision pursuant to K.S.A. 45-229, and amendments thereto, prior to July 1, 2027.
History: L. 2006, ch. 154, § 3; L. 2022, ch. 44, § 4; L. 2025, ch. 87, § 25; July 1.
(a) Each pharmacy benefits manager license shall expire on March 31 of each year and may be renewed annually on the request of the licensee. The application for renewal shall be submitted on a form furnished by the commissioner and accompanied by a renewal fee not to exceed $2,500. The application for renewal shall be in such form and contain such matters as the commissioner prescribes.
(b) If a license renewal fee is not paid by the prescribed date, the amount of the fee, plus a penalty feenot to exceed $2,500 shall be paid. The pharmacy benefits manager's license may be revoked or suspended by the commissioner until the renewal fee and any penalty assessed has been paid.
(c) Any person who performs or is performing any pharmacy benefits management service shall be required to obtain a license as a pharmacy benefits manager from the commissioner not later than January 1, 2023, in order to continue to do business in Kansas.
(d) Not later than December 1 of each year, the commissioner shall set and cause to be published in the Kansas register the fees required pursuant to this section for the next calendar year.
History: L. 2006, ch. 154, § 4; L. 2022, ch. 44, § 5; L. 2025, ch. 87, § 26; July 1.
(a) In accordance with the provisions of the rules and regulations filing act, K.S.A. 77-415 et seq., and amendments thereto, the commissioner may adopt, amend and revoke rules and regulations governing the administration and enforcement of this act, limited to:
(1) The content of the application form;
(2) the content of any other form or report required to implement this act; and
(3) such other rules and regulations as the commissioner may deem necessary to carry out the provisions of this act.
(b) The commissioner shall adopt, amend and revoke all such necessary rules and regulations not later than July 1, 2023.
History: L. 2006, ch. 154, § 5; L. 2022, ch. 44, § 6; July 1.
(a) If the commissioner has reason to believe that a pharmacy benefits manager has been engaged in this state or is engaging in this state in activity that violates the pharmacy benefits manager licensure act, the commissioner shall issue and serve upon such pharmacy benefits manager a statement of the charges of any such violation and conduct a hearing thereon in accordance with the provisions of the Kansas administrative procedure act.
(b) If, after such a hearing, the commissioner determines that the pharmacy benefits manager charged has violated the act, the commissioner may, in the exercise of discretion, order any one or more of the following:
(1) (A) Payment of a monetary penalty of not more than $1,000 for each and every act or violation. The total of the monetary penalties for such violations shall not exceed $10,000;
(B) if the pharmacy benefits manager knew or reasonably should have known that such manager was in violation of this act, payment of a monetary penalty of not more than $5,000 for each and every act or violation. The total of the monetary penalties for such violations shall not exceed $50,000 in any six-month period;
(2) if such manager knew or reasonably should have known such person was in violation of this act, the suspension or revocation of the pharmacy benefits manager's license; or
(3) the assessment of any costs incurred as a result of conducting the administrative hearing authorized by the provisions of this section against the pharmacy benefits manager.
(c) As used in this section, "costs" includes witness fees, mileage allowances, any costs associated with reproduction of documents that become a part of the hearing record and expenses of making a record of the hearing.
(d) (1) If the deadline for filing a petition for review has expired and no such petition has been filed, the commissioner may reopen and modify or set aside any portion or the entirety of any administrative order issued under this section.
(2) The reopening of any such order may occur if, in the commissioner's opinion, the conditions of fact or law have changed to warrant such an action or if such an action is warranted in the public interest.
(e) Any person who acts as a pharmacy benefits manager without being licensed as required by this act shall be subject to a fine of $5,000 for the period in which the pharmacy benefits manager is found to be in violation.
History: L. 2006, ch. 154, § 6; L. 2022, ch. 44, § 7; July 1.
(a) There is hereby established in the state treasury the pharmacy benefits manager licensure fund. Such fund shall be administered by the commissioner for costs related to administering the pharmacy benefits manager licensing act. All expenditures from the pharmacy benefits manager licensure fund shall be made in accordance with appropriation acts upon warrants of the director of accounts and reports issued pursuant to vouchers approved by the commissioner or by the commissioner's designee.
(b) The commissioner shall remit all moneys received by or for the commissioner under the provisions of this act to the state treasurer in accordance with the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount thereof in the state treasury and such amount shall be credited to the pharmacy benefits manager licensure fund.
History: L. 2006, ch. 154, § 7; L. 2022, ch. 44, § 8; July 1.
If any provision of this act or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the act which can be given effect without the invalid provision or application, and to this end the provisions of this act are severable.
History: L. 2006, ch. 154, § 8; April 27.
(a) A pharmacy benefits manager's license may be revoked, suspended or limited, the licensee may be censured or placed under probationary conditions or an application for a license or for reinstatement of a license may be denied upon a finding that the:
(1) Applicant or licensee committed fraud or misrepresentation in applying for or securing an original, renewal or reinstated license;
(2) licensee has violated any lawful rule or regulation promulgated by the commissioner or violated any lawful order or directive of the commissioner previously entered by the commissioner;
(3) pharmacy benefits manager has engaged in fraudulent activity that constitutes a violation of state or federal law;
(4) licensee has failed to furnish any information legally requested by the commissioner to the commissioner or the commissioner's investigators or representatives;
(5) pharmacy benefits manager has been determined by the commissioner to be in violation of or noncompliance with state or federal law; or
(6) pharmacy benefits manager has failed to timely submit a renewal application and the information required under K.S.A. 40-3824, and amendments thereto. In lieu of a denial of a renewal application, the commissioner may permit the pharmacy benefits manager to submit to the commissioner a corrective action plan to correct or cure any deficiencies.
(b) This section shall be a part of and supplemental to the pharmacy benefits manager licensure act.
History: L. 2022, ch. 44, § 1; July 1.
As used in K.S.A. 40-3829 and 40-3830, and amendments thereto:
(a) "List" means the list of drugs for which maximum allowable costs have been established;
(b) "maximum allowable cost" or "MAC" means the same as defined in K.S.A. 40-3822, and amendments thereto;
(c) "network pharmacy" means a pharmacy that contracts with a pharmacy benefits manager;
(d) "pharmacy benefits manager" means the same as defined in K.S.A. 40-3822, and amendments thereto;
(e) "pharmacy benefits plan or pharmacy benefits program" means a plan or program that pays for, reimburses, covers the cost of or otherwise provides for pharmacist services to individuals who reside in or are employed in this state; and
(f) "wholesaler" means a person or entity that sells and distributes prescription pharmaceutical products, including, but not limited to, a full line of brand name, generic and over-the-counter pharmaceuticals and that offers regular and private delivery to a pharmacy.
History: L. 2016, ch. 13, § 1; L. 2022, ch. 44, § 9; July 1.
A pharmacy benefits manager, including the pharmacy benefits manager for the state healthcare benefits program, shall:
(a) Not place a drug on a MAC list unless there are at least two therapeutically equivalent multi-source generic drugs, or at least one generic drug available from at least one manufacturer, generally available for purchase by network pharmacies from national or regional wholesalers and the national drug code for the drug is not obsolete;
(b) provide to each network pharmacy at the beginning of the term of a contract and upon request thereafter, the sources utilized to determine the maximum allowable cost price;
(c) provide a process for each network pharmacy provider to readily access the maximum allowable price specific to that provider;
(d) review and update each applicable maximum allowable cost list every seven business days and apply the updates to reimbursements not later than one business day;
(e) ensure that dispensing fees are not included in the calculation of maximum allowable cost;
(f) establish a reasonable administrative appeal procedure to allow a pharmacy or pharmacy's contracting agent to challenge MAC for a specfic drug as:
(1) Not meeting the requirements of this section;
(2) being below the cost at which the pharmacy may obtain the drug;
(g) include in any administrative appeals procedure the following:
(1) A dedicated telephone number and email address or website for the purpose of submitting administrative appeals; and
(2) the ability to submit an administrative appeal directly to the pharmacy benefits manager regarding the pharmacy benefits plan or program or through a pharmacy service administrative organization;
(h) permit a network pharmacy or a network pharmacy's contracting agent to file an administrative appeal not later than 10 business days after the fill date;
(i) require that the pharmacy benefits manager only request the following information to determine a MAC administrative appeal:
(1) The prescription number;
(2) the provider's name;
(3) the national drug code used during the filing of the claim;
(4) the date of the fill;
(5) the reimbursement amount; and
(6) such other information related to the appealed claim as required by contract; and
(j) (1) provide a response to the appealing network pharmacy not later than 10 business days after receiving an appeal request containing information sufficient for the pharmacy benefits manager to process the appeal as specified by the contract.
(2) If the appeal is upheld, the pharmacy benefits manager:
(A) Shall make the adjustment in the drug price effective not later than one business day after the appeal is resolved;
(B) shall make the adjustment applicable to all similarly situated network pharmacy providers, as determined by the plan sponsor or pharmacy benefits manager, as appropriate; and
(C) * permit the appealing pharmacy to reverse and rebill the appealed claim.
(3) If the appeal is denied, the pharmacy benefits manager shall provide the appealing pharmacy the reason for the denial and the national drug code number from a national or regional wholesaler operating in Kansas where the drug is generally available for purchase at a price equal to or less than the maximum allowable cost, and when applicable, may be substituted lawfully.
History: L. 2016, ch. 13, § 2; L. 2022, ch. 44, § 10; July 1.
(a) This section shall be known and may be cited as the Kansas pharmacy patients fair practices act.
(b) As used in this section:
(1) "Covered person" means the same as defined in K.S.A. 40-3822, and amendments thereto.
(2) "Health carrier" means the same as defined in K.S.A. 40-2,195, and amendments thereto.
(3) "Pharmacy benefits manager" means the same as defined in K.S.A. 40-3822, and amendments thereto.
(c) (1) Co-payments applied by a health carrier for a prescription drug may not exceed the total submitted charges by the network pharmacy.
(2) A pharmacy or pharmacist shall have the right to provide a covered person with information regarding the amount of the covered person's cost share for a prescription drug. Neither a pharmacy nor a pharmacist shall be proscribed by a pharmacy benefits manager from discussing any such information or for selling a more affordable alternative to the covered person if such an alternative is available.
(d) (1) This section applies to any contract between a pharmacy benefits manager and a pharmacy, a pharmacy services administration organization or a group purchasing organization that is entered into or renewed on and after January 1, 2019.
(2) The provisions of this section shall not apply to any policy or certificate that provides coverage for any specified disease, specified accident or accident only coverage, credit, dental, disability income, hospital indemnity, long-term care insurance as defined by K.S.A. 40-2227, and amendments thereto, vision care or any other limited supplemental benefit nor to any medicare supplement policy of insurance as defined by the commissioner of insurance by rule and regulation, any coverage issued as a supplement to liability insurance, workers compensation or similar insurance, automobile medical-payment insurance or any insurance under which benefits are payable with or without regard to fault, whether written on a group, blanket or individual basis.
History: L. 2018, ch. 23, § 1; July 1.
(a) The governing body of any city is hereby authorized to establish, by ordinance, a procedure for the payment of not to exceed 15% of the proceeds of any insurance policy based upon a covered claim payment made for damage or loss to a building or other structure. The ordinance shall apply only to a covered claim payment which is in excess of 75% of the face value of the policy covering a building or other insured structure.
(b) The insurer first shall pay all amounts due the holder of a first real estate mortgage against the building or other structure pursuant to the terms of the policy and endorsements thereto and then shall withhold from the covered claim payment a sum not to exceed the amount authorized pursuant to subsection (a) and shall pay such moneys to the city to deposit into an interest-bearing account, unless the city has issued a certificate pursuant to K.S.A.
40-3906, and amendments thereto.
(c) The city shall release the insured's proceeds and any interest which has accrued on such proceeds received under subsection (b) within 45 days after receipt of such moneys, unless the city has instituted legal proceedings under the provisions of K.S.A.
12-1752, and amendments thereto. If the city has proceeded under the provisions of K.S.A.
12-1752, and amendments thereto, all moneys in excess of that necessary to comply with the provisions of K.S.A.
12-1750 et seq., and amendments thereto, for the removal of the building or structure, less salvage value, shall be paid to the insured.
History: L. 1982, ch. 192, § 2; L. 1997, ch. 102, § 2; L. 2016, ch. 72, § 2; July 1.
The governing body of any city is hereby authorized to create, by ordinance, a lien in favor of any such city in the proceeds of any insurance policy based upon a covered claim payment made for damage or loss to a building or other structure. The lien arises upon any unpaid tax, special ad valorem levy, special assessment or other charge imposed upon real property by or on behalf of the city which is an encumbrance on real property, whether or not evidenced by written instrument, or such tax, levy, assessment, expense or other charge that has remained undischarged for at least one year prior to the filing of a proof of loss.
History: L. 1982, ch. 192, § 3; L. 1998, ch. 84, § 1; L. 2016, ch. 72, § 3; July 1.
(a) The governing body of any county is hereby authorized to establish, by resolution, a procedure for the payment of not to exceed 15% of the proceeds of any insurance policy based upon a covered claim payment made for damage or loss to a building or other structure. The resolution shall not apply to cities which have adopted an ordinance under the provisions of K.S.A. 40-3901, and amendments thereto. The resolution shall apply only to a covered claim payment which is in excess of 75% of the face value of the policy covering a building or other insured structure.
(b) The insurer first shall pay all amounts due the holder of a first real estate mortgage against the building or other structure pursuant to the terms of the policy and endorsements thereto and then shall withhold from the covered claim payment of the sum not to exceed the amount authorized pursuant to subsection (a) and shall pay such moneys to the county to deposit into an interest-bearing account, unless the city has issued a certificate pursuant to K.S.A.
40-3906, and amendments thereto.
(c) The county shall release the insured's proceeds and any interest which has accrued on such proceeds received under subsection (b) within 45 days after receipt of such moneys, unless the county has instituted legal proceedings, using the procedure under K.S.A.
12-1752, and amendments thereto, insofar as the same can be made applicable. If the county has instituted legal proceedings, all moneys in excess of that necessary for the removal of the building or structure, less salvage value, shall be paid to the insured.
History: L. 1982, ch. 192, § 4; L. 1997, ch. 102, § 3; L. 2016, ch. 72, § 4; July 1.
The governing body of any county is hereby authorized to create, by resolution, a lien in favor of any such county in the proceeds of any insurance policy based upon a covered claim payment made for damage or loss to a building or other structure. The lien arises upon any unpaid tax, special ad valorem levy, special assessment or other charge imposed upon real property by or on behalf of the county which is an encumbrance on real property, whether or not evidenced by written instrument, or such tax, levy, assessment, expense or other charge that has remained undischarged for at least one year prior to the filing of a proof of loss. This resolution shall not apply to cities which have adopted an ordinance under the provisions of K.S.A. 40-3902, and amendments thereto.
History: L. 1982, ch. 192, § 5; L. 1998, ch. 84, § 2; L. 2016, ch. 72, § 5; July 1.
Every city or county which adopts an ordinance or resolution under the provisions of K.S.A. 40-3901 through 40-3904, and amendments thereto, shall notify the commissioner of insurance. At least once each quarter of each calendar year, the commissioner shall prepare and distribute a list of all cities and counties adopting an ordinance or resolution under the provisions of this act during the preceding quarter to all insurance companies which issue policies insuring buildings and other structures against loss. Insurance companies shall have 60 days after the commissioner notifies them of the adoption of such ordinance or resolution to establish procedures within such cities or counties to carry out the provisions of this act.
History: L. 1982, ch. 192, § 6; L. 1998, ch. 84, § 3; L. 2016, ch. 72, § 6; July 1.
Any city or county which has adopted an ordinance or resolution under K.S.A. 40-3901 to 40-3904, inclusive, is authorized to certify that in lieu of payment of all or part of the covered claim payment, it has obtained satisfactory proof that the insured has or will remove debris and repair, rebuild or otherwise make the premises safe and secure. In this event, the city or county shall issue a certificate to permit covered claim payment to the insured without deduction pursuant to subsection (b) of K.S.A. 40-3901 and subsection (b) of K.S.A. 40-3903.
History: L. 1982, ch. 192, § 7; July 1.
This act shall apply to all covered claims arising from damage to all buildings or structures.
History: L. 1982, ch. 192, § 8; L. 2016, ch. 72, § 7; July 1.
This act does not make any city or county a party to any insurance contract nor is the insurer liable to any party for any amount in excess of the proceeds otherwise payable under its insurance policy.
History: L. 1982, ch. 192, § 9; July 1.
Insurers complying with this act, or attempting in good faith to comply with this act, shall be immune from civil and criminal liability and such actions shall not be deemed in violation of K.S.A. 40-2404 and any amendments thereto, including withholding payment of any insurance proceeds pursuant to this act, or releasing or disclosing any information pursuant to this act.
History: L. 1982, ch. 192, § 10; July 1.
The commissioner of insurance is hereby authorized to promulgate rules and regulations necessary to carry out the provisions of this act.
History: L. 1982, ch. 192, § 11; July 1.
A domestic mutual insurer issuing nonassessable policies may be converted into a domestic stock insurer. To that end, it may provide and carry out a plan for such conversion by complying with the requirements of this act. Because it is not possible to anticipate all of the circumstances and considerations which may arise incident to a conversion from a mutual insurer to a stock insurer, the commissioner has broad authority in reviewing such conversion, and the procedures and criteria to be applied by the commissioner are flexible within the parameters of this act. This act shall be liberally construed to effect the legislative intent set forth in this section and shall not be interpreted to limit the powers granted to the commissioner by other provisions of law.
History: L. 1985, ch. 154, § 1; L. 1997, ch. 107, § 1; July 1.
(a) A resolution shall be adopted by a ⅔ majority of the entire board of directors of the insurer which shall state the reasons such conversion would benefit the insurer and be in the best interests of its policyholders. Following adoption of such resolution a detailed plan of conversion shall be developed and shall be approved by a ⅔ majority of the entire board of directors. The plan of conversion shall not be effective unless the plan has been so approved by the board of directors.
(b) A draft of the plan of conversion may be submitted to the commissioner for preliminary examination and comment prior to or after the adoption of the resolution described in subsection (a).
(c) After the completion of the process of preliminary examination and comment, the plan shall be submitted to the commissioner for approval in writing, subject to the provisions of K.S.A. 40-4004 and amendments thereto. The plan of conversion shall not be effective unless the plan has been approved by the commissioner.
(d) The plan shall be approved by ⅔ of the policyholders voting in person or by proxy at a meeting of the policyholders called for that purpose, pursuant to the bylaws of the insurer, except that if a majority of all policyholders vote in person or by proxy, then a majority of those voting shall constitute approval, and the plan of conversion shall not be effective unless the plan has been so approved by the policyholders. No such proxy vote shall be effective unless the proxy specifically provides the proxyholder with the authority to vote on the plan of conversion, and unless the proxy is dated subsequent to the day on which the plan of conversion is initially approved by the board of directors of the mutual insurer. Proxy statements relating to the plan may be mailed to the policyholders in accordance with the bylaws of the insurer.
(e) The board of directors by a vote of not less than ⅔ of the entire board may, at any time prior to the issuance of the certificate of authority pursuant to K.S.A. 40-4010 and amendments thereto:
(1) Withdraw the plan, if conversion is deemed to be no longer in the best interests of the insurer or its policyholders; or
(2) amend the plan, except that no amendment which materially changes the plan shall take effect unless such amendment is approved by the commissioner. In the event of a material change to the plan, the commissioner:
(A) Shall order a hearing to be conducted in accordance with the provisions of the Kansas administrative procedure act before approving or disapproving such material change; and
(B) may require that such a change be approved by the policyholders pursuant to subsection (d).
(f) The plan shall be filed in the office of the commissioner after having been approved as provided by subsections (a), (c) and (d).
(g) As used in this act: (1) "Policyholder" means a policyholder of the mutual insurer on the day the plan of conversion is initially approved by the board of directors of the mutual insurer; except that, with respect to a mutual insurance company authorized to transact the business of insurance in the state of Kansas under the authority granted in article 10 or article 12 of chapter 40 of the Kansas Statutes Annotated, "policyholder" means a policyholder of the mutual insurer on the day the plan of conversion is initially approved by the board of directors of the mutual insurer, whose policy or policies have been in effect for not less than two out of three years immediately prior to the date the board of directors approved the plan, or whose policy or policies have been in effect for at least 90 days during the 365 days immediately preceding the date the board of directors approved the plan if the insured is a crop hail insurance policyholder.
(2) "Commissioner" means the commissioner of insurance.
History: L. 1985, ch. 154, § 2; L. 1988, ch. 356, § 128; L. 1997, ch. 107, § 2; July 1.
History: L. 1985, ch. 154, § 3; L. 1987, ch. 181, § 1; Repealed, L. 1997, ch. 107, § 17; July 1.
The plan of conversion shall comply with the terms and conditions set forth in subsection (a), (b), (c) or (d) as follows:
(a) Plan of conversion in which policyholders exchange their membership interests for cash, securities, policy credits, dividends, subscription rights or other consideration, or some combination thereof. A mutual insurer seeking to convert pursuant to this subsection may do so by:
(1) Filing a plan of conversion containing:
(A) A description of the structure, forms and allocation of the proposed consideration to the policyholders, the projected range of the number of shares of capital stock, if any, to be issued by the new stock insurer or parent company of the new stock insurer, or any other company, and such other proposed conditions and provisions as determined by the mutual insurer not to be inconsistent with this act. As used in this act, "parent company" means any company which on or after the effective date of the conversion owns, directly or indirectly, 51% or more of the capital stock of the new stock insurer;
(B) a description of any amendments to the insurer's articles of incorporation;
(C) provisions establishing the method by which the initial board of directors of the stock insurer will be selected; and
(D) any other additional information as the commissioner of insurance may reasonably request.
(2) providing consideration to the policyholders entitled thereto in the form of cash, stock, policy credits, dividends, subscription rights, a combination thereof or such other valuable consideration as the commissioner may approve. With the approval of the commissioner, such consideration may be paid into a trust or other account or entity existing for the benefit of policyholders, which is established by the company for the purpose of effecting the conversion.
(b) Plan of conversion in which policyholders exchange their membership interests solely for subscription rights. A mutual insurer seeking to convert to a stock insurer pursuant to this subsection may do so by:
(1) Filing a plan of conversion containing:
(A) A provision that each policyholder is to receive, without payment, nontransferable subscription rights to purchase a portion of the capital stock of the converted stock company and that, in the aggregate, all policyholders shall have the right, prior to the right of any other party, to purchase 100% of the capital stock of the converted company. As an alternative to subscription rights in the converted stock company, the plan may provide that each eligible member is to receive, without payment, nontransferable subscription rights to purchase a portion of the capital stock of one of the following:
(i) A corporation organized for the purpose of purchasing and holding the stock of the converted stock company;
(ii) a stock insurance company owned by the mutual company into which the mutual company will be merged; or
(iii) an unaffiliated stock insurance company or other corporation that will purchase the stock of the converted stock company;
(B) a provision that the subscription rights shall be allocated in whole shares among the policyholders using a fair and equitable formula. This formula may, but need not, take into account how the different classes of policies of the policyholders contributed to the surplus of the mutual company or any other factors that may be fair and equitable;
(C) a fair and equitable means for allocating shares of capital stock in the event of an oversubscription to shares by policyholders exercising subscription rights received under this section;
(D) at the option of the converting company, a provision that any shares of capital stock not subscribed to by policyholders exercising subscription rights received under this section may be sold in a public offering or through a private placement or other alternative method approved by the commissioner that is fair and equitable to policyholders. The offering to others of shares not purchased by policyholders exercising such subscription rights shall be at a price not less than the offering price to such policyholders;
(E) a provision which sets the total price of the capital stock equal to the estimated pro forma market value of the converted stock company based upon an independent evaluation by one or more qualified experts. This pro forma market value may be the value that is estimated to be necessary to attract full subscription for the shares, as indicated by the independent evaluation and may be stated as a range of pro forma market value;
(F) a provision which sets the purchase price per share of capital stock equal to any reasonable amount;
(G) a provision that any person or group of persons acting in concert shall not acquire, in the public offering or pursuant to the exercise of subscription rights, more than 5% of the capital stock of the converted stock company, except with the approval of the commissioner. This limitation does not apply to any entity that is to purchase 100% of the capital stock of the converted company as part of the plan of conversion approved by the commissioner; and
(H) a provision that the rights of a holder of a surplus note to participate in the conversion, if any, shall be governed by the terms of the surplus note; and
(2) providing subscription rights to the policyholders entitled thereto in accordance with the provisions of the plan of conversion as described in paragraph (1). With the approval of the commissioner, stock that will be issued pursuant to such subscription rights may be provided to a trust or other account or entity existing for the benefit of policyholders which is established by the company for the purpose of effecting the conversion.
(c) Plan of conversion in which policyholders exchange their membership interests for membership interests in a mutual holding company.
(1) A plan of conversion adopted pursuant to this subsection shall provide that the mutual insurer will become a stock insurer and that the owners of policies of the converted insurer that are in force on the effective date of the plan of conversion or thereafter will become members of a mutual holding company organized pursuant to paragraph (2) for as long as their policies remain in force;
(2) a mutual insurer seeking to convert to a stock insurer pursuant to this subsection may do so by:
(A) Forming a mutual holding company and continuing the corporate existence of the insurer as a stock insurance company that is a wholly-owned subsidiary (except to the extent qualifying shares are required to be held by directors of an insurance company admitted and authorized to do business in Kansas pursuant to K.S.A. 40-305 and amendments thereto) of a stock holding company of which at least 51% of the voting stock is held by the mutual holding company;
(B) forming a mutual holding company and continuing the corporate existence of the insurer as a stock insurance company of which at least 51% of the voting stock is held by the mutual holding company; or
(C) forming a mutual holding company and continuing the corporate existence of the insurer as a stock insurance company with another ownership structure that is approved by the commissioner with at least 51% of the voting stock of the stock insurance company is ultimately held by the mutual holding company.
(3) a mutual holding company is not an insurer for purposes of this act, but the provisions of this act with regard to corporate organization and procedure of mutual insurers and the election of directors by mutual insurers, and those provisions of chapter 17 of the Kansas Statutes Annotated and amendments thereto that are applicable to mutual insurers, shall apply to the mutual holding company;
(4) a mutual holding company and any stock holding company shall each be deemed to be a "holding company" of the insurer within the meaning of article 33 of chapter 40 of the Kansas Statutes Annotated and amendments thereto. Approval of the plan of conversion by the commissioner pursuant to this act shall constitute approval of the acquisition of control by the mutual holding company and stock holding company, if applicable, under K.S.A. 40-3304 and amendments thereto, without any separate filings or other action;
(5) a mutual holding company shall not dissolve, liquidate or wind-up and dissolve except through proceedings under article 36 of chapter 40 of the Kansas Statutes Annotated and amendments thereto for the liquidation or dissolution of the converted insurer or as the commissioner of insurance may otherwise approve. A mutual holding company may, however, convert to a stock corporation in accordance with the terms of this article and a plan of conversion approved by the commissioner of insurance to be fair and equitable after a hearing upon notice to the company's members;
(6) the charter of the mutual holding company shall be filed with the commissioner and shall contain the matters required to be contained in the charter of a mutual insurer by article 5 or article 12 of chapter 40 of the Kansas Statutes Annotated and amendments thereto, as applicable, except that the name of the mutual holding company shall contain the word "mutual" and shall not contain the word "insurance" and the company's powers shall not include doing an insurance business;
(7) the commissioner of insurance may, by adoption of rules and regulations, require a mutual holding company to file annual statements with the commissioner in such form as the commissioner prescribes;
(8) any subsidiaries of the company that have been reorganized pursuant to this act and amendments thereto may remain as subsidiaries of such company or become subsidiaries of the mutual or stock holding company provided that if such subsidiaries shall become subsidiaries of a stock holding company, then the reorganized company shall be reimbursed the value of its holdings in such subsidiaries, as reflected on the company's most recently filed financial statements, in the event shares of the stock holding company are or have been issued to other than the mutual holding company;
(9) with the written approval of the commissioner, and subject to conditions that the commissioner may impose, a mutual holding company may:
(A) Merge or consolidate with, or acquire the assets of, a mutual holding company;
(B) together with its converted insurer subsidiary, merge or consolidate with or acquire the assets of any other insurer; or
(C) engage in any other merger, consolidation or acquisition transaction which may be approved by the commissioner;
(10) a member of a mutual holding company is not, as a member, personally liable for the acts, debts, liabilities or obligations of such company. No assessment of any kind may be imposed upon the members of a mutual holding company by the board of directors, members or creditors of such company or because of any liability of any company owned or controlled by the mutual holding company or because of any act, debt or liability of the mutual holding company;
(11) a membership interest in a mutual holding company shall not constitute a security under the laws of this state; and
(12) the commissioner shall retain jurisdiction over any mutual holding company or stock holding company organized pursuant to this section to assure that policyholder interests are protected; and
(13) as used in this section, "at least 51% of the voting stock" means shares of the capital stock which carry the right to cast a majority of the votes entitled to be cast by all of the outstanding shares of capital stock of the company for the election of directors and on all other matters submitted to a vote of the shareholders of the company.
(d) Plan of conversion in which policyholders exchange their membership interests for an option to purchase a proportionate amount of stock in the converted company.
A mutual insurer seeking to convert pursuant to this subsection may do so by filing a plan of conversion containing:
(1) A description of any amendments to the insurer's articles of incorporation to effect a conversion from a mutual corporation into a stock corporation. Any other amendments proposed for the articles of incorporation shall be set forth in the plan.
(2) The establishment of a conversion value, as of the calendar quarter ending immediately preceding the date of the adoption of the resolution specified in subsection (a) of K.S.A. 40-4002, and amendments thereto. The conversion value shall be equal to the company's policyholders' surplus, determined in accordance with the statutory method of accounting used in preparing the last annual statement filed with the commissioner of insurance. The insurer shall submit a list of qualified disinterested appraisers, from which the commissioner shall appoint one or more such appraisers, who shall establish the conversion value in accordance with the above procedure.
(3) The procedure by which each policyholder shall receive a proportionate amount of the conversion value in the manner prescribed herein and in paragraph (4). Such amount shall be based upon net premium paid to the general account of the insurer within three years prior to the date on which the board of directors approved the plan.
(4) Provisions whereby the insurer or any holding company of the insurer shall distribute such proportionate conversion value, in the following method:
(A) Each policyholder will be issued an option to purchase stock in the converted company;
(B) the total stated value of the stock to be issued shall be equal to the conversion value as determined in paragraph (2);
(C) the stock option shall provide that the policyholders may purchase the stock at its stated value;
(D) the maximum amount of stock that may be purchased by each policyholder shall be in proportion to the policyholder's share of the conversion value, with the number of shares rounded to the nearest whole number, plus any shares purchased pursuant to purchased stock options, subject to the limitations provided in subparagraph (J);
(E) policyholders not exercising their option to purchase the stock shall be entitled to sell such option to any person or corporation, including the parent corporation;
(F) the sale of any such stock option shall transfer to the purchaser all rights in and conditions to the option;
(G) all stock options shall be exercised within 60 days from the date such options are distributed to the policyholders and the options shall expire at the end of such sixty-day period;
(H) the converted company or the parent corporation shall purchase, at a price not less than the amount set forth in the plan, all stock options that have not been exercised within 60 days from the date such options are distributed to the policyholders;
(I) the converted company or the parent corporation shall purchase, at the stated value, all stock not purchased pursuant to the stock options and such purchase must be made within 60 days from the date the stock options expire;
(J) notwithstanding the provisions of subparagraph (D), ownership of the voting stock of the insurer is subject to the provisions of K.S.A. 40-4008 and amendments thereto.
The above distribution method shall constitute full payment and discharge of the policyholder's proportionate conversion value, but this provision shall not be held to prohibit the converted company or the parent corporation from including in the plan provisions for the distribution of any other valuable consideration to policyholders. Notwithstanding any other provision of law, the policyholders shall have no other rights resulting from membership in a mutual insurance company with respect to the insurer.
(5) A statement as to the number of shares to be authorized for the insurer and their value. The paid-in capital and surplus of the converted capital stock insurer shall be in an amount not less than two times the minimum initial paid-in capital and surplus required of a domestic stock insurer doing business as of the same date as the converted company, to transact like kinds of insurance.
(6) Provisions establishing the method by which the initial board of directors of the stock insurer will be selected.
History: L. 1997, ch. 107, § 3; L. 1999, ch. 77, § 1; April 15.
The commissioner may require that the conversion plan of a mutual life insurer provide for the establishment, for policyholder dividend purposes only, of a closed block. In the event that the commissioner requires such a closed block, the closed block will consist of all of the participating individual policies of life insurance of the mutual life insurer in force on the effective date of the plan of conversion for which the insurer has an experience-based dividend scale payable in the year in which the plan is adopted. Assets of the insurer shall be allocated to any such closed block in an amount that produces cash flows, together with anticipated revenues from the closed block business, expected to be reasonably sufficient: (1) To support the closed block business, including payment of claims and those expenses and taxes specified in the plan, and (2) to provide for continuation of dividend scales in effect on the adoption date if the experience underlying the scales continues and for appropriate adjustments in the scales if the experience changes. The plan may provide for conditions under which the converted insurer may cease to maintain the closed block and its allocated assets. Regardless of such a cessation, the obligation under the policies constituting the closed block business remain the obligations of the converted insurer. Dividends on those policies shall be apportioned by the board of directors of the converted insurer in accordance with the terms of the policies.
History: L. 1997, ch. 107, § 4; July 1.
(a) All policies in force on the effective date of conversion remain in force under the terms of the policies, except that the following rights, to the extent they existed in the mutual company, shall be extinguished on the effective date of the conversion:
(1) Any voting rights of the policyholders in the mutual insurance company that were provided under the policies;
(2) any assessment provisions provided for under the policies; and
(3) any right to share in the surplus of the mutual company provided for under the policies, except that:
(A) Holders of participating policies in effect on the date of conversion continue to have a right to receive dividends as provided in the participating policies, if any, unless the holders of such participating policies receive a nonparticipating policy as a substitute for the participating policy pursuant to subparagraph (B); and
(B) upon the renewal date of a participating policy, the converted stock company may issue the insured a nonparticipating policy as a substitute for the participating policy, except that no such substitutions may be issued for the mutual company's life policies, guaranteed renewable accident and health policies and guaranteed renewable, noncancelable accident and health policies.
(b) Unless otherwise ordered by the commissioner of insurance and notwithstanding any provisions of law to the contrary, policyholders are not required to be given preemptive rights, and, except as provided in the plan of conversion and in subsection (a), policyholders shall have no other rights resulting from membership in a mutual insurance company with respect to the insurer.
History: L. 1997, ch. 107, § 5; July 1.
(a) The commissioner shall examine the plan submitted pursuant to subsection (b) or (c) of K.S.A. 40-4002, and amendments thereto. As a part of such examination, the commissioner shall order a hearing on the plan to be conducted in accordance with the provisions of the Kansas administrative procedure act and shall give not less than 20 days' written notice of the date of hearing to the insurer and give not less than 20 days' written notice to policyholders by publication or otherwise. The commissioner shall approve the plan if the commissioner finds that:
(1) The plan of conversion is fair and equitable to policyholders;
(2) the plan of conversion complies with the provisions of this act;
(3) the plan of conversion does not unjustly enrich any director, officer, agent or employee of the insurer; and
(4) the new stock insurer would meet minimum requirements to be issued a certificate of authority by the commissioner to transact business in this state and the continued operations of the new stock insurer would not be hazardous to existing or future policyholders or the public.
(b) The amount of consideration provided by the converting insurer to policyholders shall be deemed to be fair and equitable pursuant to subsection (a), if the consideration is at least the amount of statutory surplus attributable to contributions of policyholders.
(c) Upon submission of a plan of conversion, the commissioner may request any additional documents or information in the possession of the insurer or its affiliates as are reasonably necessary to enable the commissioner to make the findings required by this section for the approval of the plan.
History: L. 1985, ch. 154, § 4; L. 1986, ch. 318, § 44; L. 1987, ch. 181, § 2; L. 1988, ch. 356, § 129; L. 1997, ch. 107, § 6; July 1.
The meeting called for approval of the plan by the policyholders prescribed by K.S.A. 40-4002 and amendments thereto shall be called by a majority of the board of directors, the chairperson of the board or the president. A copy of the plan and any information the commissioner deems necessary to policyholder understanding, including a comprehensible summary of the plan in a form approved by the commissioner, shall accompany the notice.
History: L. 1985, ch. 154, § 5; L. 1997, ch. 107, § 7; July 1.
(a) For five years from the conversion date, no person (including any individual, corporation, firm or affiliated group of individuals, corporations or firms), other than a parent corporation, may own, directly or indirectly, more than 5% of the voting stock (including any securities that may be convertible into voting stock) of the converted insurer, unless:
(1) The person is a policyholder whose allocated share of the consideration provided for in the plan of conversion is 5% or more of the voting stock (including any securities that may be convertible into voting stock), and such individual may not purchase stock totaling more than the individual's allocated share of such consideration; or
(2) the purchase is permitted by the commissioner and authorized by the converted company's board of directors.
(b) In the event of any violation of this section, or in the event of any action that, if consummated, would constitute a violation of this section, all voting securities of the converted insurer (or of the person controlling the converted insurer) that is acquired by any person in excess of the maximum amount permitted to be acquired by the person pursuant to this section shall be deemed to be nonvoting securities of the converted insurer (or of the person controlling the converted insurer). The violation or action may be enforced or enjoined by an appropriate proceeding commenced by the converted insurer, the person controlling the converted insurer, the commissioner, any policyholder or stockholder of the converted insurer on behalf of the converted insurer (or on behalf of the person controlling the converted insurer) in the district court in which the converted insurer has its home office or in any other court having jurisdiction. The court may issue any order it finds necessary to cure the violation or to prevent the proposed action that would constitute a violation.
(c) Nothing provided in this act shall be deemed to prohibit the insurer's directors, officers, agents or employees from being eligible to purchase stock or other securities of the insurer, subject to the provisions of subsection (a).
History: L. 1985, ch. 154, § 6; L. 1997, ch. 107, § 8; July 1.
(a) No director, officer, agent or employee of the insurer shall secure any unfair advantage through a plan of conversion by reducing the volume of new business written, by cancellation or by reducing or by any other means seeking to reduce, limit or alter the number or identity of the insurer's policyholders entitled to participate in such plan.
(b) No director, officer, agent or employee of the insurer shall receive any fee, commission or other valuable consideration whatsoever, other than regular salary and compensation, for in any manner aiding, promoting or assisting in the conversion except as set forth in the plan approved by the commissioner of insurance. This provision shall not be deemed to prohibit the payment of reasonable fees and compensation to attorneys at law, accountants, appraisers, actuaries, financial advisers or other similar professionals for services performed in the independent practice of their professions, even though such person may also be directors of the insurer.
History: L. 1985, ch. 154, § 7; L. 1997, ch. 107, § 9; July 1.
Within 30 days of receipt of the filing of the approved plan in accordance with subsection (f) of K.S.A. 40-4002 and the amended articles of incorporation, the commissioner shall issue a new certificate of authority to the insurer. Notwithstanding the actions of any other jurisdiction, the issuance of such certificate shall be deemed the final act of conversion and the mutual insurer shall concurrently become a stock insurer. The date of the issuance of such certificate shall be the "conversion date" of the insurer. The stock insurer shall be a continuation of the mutual insurer and deemed to have been organized at the time the converted mutual insurer was organized. The conversion shall in no way annul, modify or change any of such insurer's existing suits, rights, contracts or liabilities except as provided in the plan. The insurer, after conversion, shall exercise all the rights and powers and perform all the duties conferred or imposed by law upon insurers writing the classes of insurance written by it and shall retain the rights and contracts existing prior to conversion, subject to the effect of the plan.
History: L. 1985, ch. 154, § 8; L. 1997, ch. 107, § 10; July 1.
The directors and officers of the mutual insurer shall serve until new directors and officers have been duly elected and qualified pursuant to the plan and articles of incorporation or bylaws of the converted insurer or of the affiliates of the converted insurer, if applicable, unless otherwise determined by the board of directors of the converting insurer.
History: L. 1985, ch. 154, § 9; L. 1997, ch. 107, § 11; July 1.
The offer or sale of securities issued under the plan developed and approved in accordance with the provisions of this act shall be exempt from the Kansas securities laws.
History: L. 1985, ch. 154, § 10; L. 1997, ch. 107, § 12; July 1.
No action challenging the validity of a conversion, or any aspect of such conversion under this act, may be commenced more than 30 days after the final act of conversion.
In any action challenging the plan of conversion or charging that the directors of the converting insurer, the converted insurer, the mutual holding company or the stock holding company, as applicable or any other person or persons have acted improperly in connection with any aspect of the conversion, the insurer or converted insurer in whose right such action is brought or the defendant or defendants shall be entitled at any stage of the proceedings before final judgment to require the plaintiff or plaintiffs to give security for the reasonable expenses including attorney fees, which may be incurred by the converting insurer, converted insurer or any other parties defendant in connection with such action. Thereafter, the amount of such security, from time to time, may be increased or decreased in the discretion of the court having jurisdiction of such action upon a showing that the security provided has or may become inadequate or excessive.
History: L. 1985, ch. 154, § 11; L. 1997, ch. 107, § 13; July 1.
The commissioner may adopt rules and regulations to carry out the provisions of this act.
History: L. 1985, ch. 154, § 12; L. 1997, ch. 107, § 14; July 1.
The commissioner shall also have the authority to retain experts and may charge and collect from the insurer the actual amount of expenses, including the expenses of retaining experts, reasonably incurred by the state in discharge of the commissioner's duties hereunder, including the determination of a valuation of the insurer.
History: L. 1985, ch. 154, § 13; L. 1997, ch. 107, § 15; July 1.
Not later than 24 hours after issuance of the certificate of authority to the converted stock insurer, a certified copy of the amended articles of incorporation of the insurer shall be filed with the secretary of state.
History: L. 1985, ch. 154, § 14; L. 1997, ch. 107, § 16; July 1.
As used in this act:
(a) "Commissioner" means the insurance commissioner of this state or the commissioner, director or superintendent of insurance in any other state.
(b) "Completed operations liability" means liability arising out of the installation, maintenance or repair of any product at a site which is not owned or controlled by any person who: (1) Performs that work; or (2) hires an independent contractor to perform that work; but shall include liability for activities which are completed or abandoned before the date of the occurrence giving rise to the liability.
(c) "Domicile", for purposes of determining the state in which a purchasing group is domiciled, means: (1) For a corporation, the state in which the purchasing group is incorporated; and (2) for an unincorporated entity, the state of its principal place of business.
(d) "Hazardous financial condition" means that, based on its present or reasonably anticipated financial condition, a risk retention group, although not yet financially impaired or insolvent, is unlikely to be able to: (1) Meet obligations to policyholders with respect to known claims and reasonably anticipated claims; or (2) pay other obligations in the normal course of business.
(e) "Insurance" means primary insurance, excess insurance, reinsurance, surplus lines insurance, and any other arrangement for shifting and distributing risk which is determined to be insurance under the laws of this state.
(f) "Liability" means legal liability for damages (including costs of defense, legal costs and fees, and other claims expenses) because of injuries to other persons, damage to their property, or other damage or loss to such other persons resulting from or arising out of: (1) Any business (whether profit or nonprofit), trade, product, services (including professional services), premises or operations; or (2) any activity of any state or local government, or any agency or political subdivision thereof; and (3) does not include personal risk liability and an employer's liability with respect to its employees other than legal liability under the federal employers' liability act.
(g) "Personal risk liability" means liability for damages because of injury to any person, damage to property, or other loss or damage resulting from any personal, familial, or household responsibilities or activities, rather than from responsibilities or activities referred to in subsection (f).
(h) "Plan of operation or a feasibility study" means an analysis which presents the expected activities and results of a risk retention group including, at a minimum: (1) The coverages, deductibles, coverage limits, rates and rating classification systems for each line of insurance the group intends to offer;
(2) historical and expected loss experience of the proposed members and national experience of similar exposures;
(3) pro forma financial statements and projections;
(4) appropriate opinions by a qualified, independent casualty actuary, including a determination of minimum premium or participation levels required to commence operations and to prevent a hazardous financial condition;
(5) identification of management, underwriting procedures, managerial oversight methods, investment policies; and
(6) such other matters as may be prescribed by the commissioner for liability insurance companies authorized by the insurance laws of the state.
(i) "Product liability" means liability for damages because of any personal injury, death, emotional harm, consequential economic damage, or property damage (including damages resulting from the loss of use of property) arising out of the manufacture, design, importation, distribution, packaging, labeling, lease or sale of a product, but does not include the liability of any person for those damages if the product involved was in the possession of such a person when the incident giving rise to the claim occurred.
(j) "Purchasing group" means any group which:
(1) Has as one of its purposes the purchase of liability insurance on a group basis;
(2) purchases such insurance only for its group members and only to cover their similar or related liability exposure, as described in subparagraph (3);
(3) is composed of members whose businesses or activities are similar or related with respect to the liability to which members are exposed by virtue of any related, similar, or common business, trade, product, services, premises, or operations; and
(4) is domiciled in any state.
(k) "Risk retention group" means any corporation or other limited liability association formed under the laws of any state, Bermuda, or the Cayman Islands:
(1) Whose primary activity consists of assuming and spreading all, or any portion, of the liability exposure of its group's members;
(2) which is organized for the primary purpose of conducting the activity described in subparagraph (1);
(3) which is chartered and licensed as a liability insurance company and authorized to engage in the business of insurance under the laws of any state; or before January 1, 1985 was chartered or licensed and authorized to engage in the business of insurance under the laws of Bermuda or the Cayman Islands and, before such date, had certified to the insurance commissioner of at least one state that it satisfied the capitalization requirements of such state, except that any such group shall be considered to be a risk retention group only if it has been engaged in business continuously since such date and only for the operations liability (as such terms were defined in the product liability risk retention act of 1981 before the date of the enactment of the risk retention act of 1986);
(4) which does not exclude any person from membership in the group solely to provide for members of such a group a competitive advantage over such a person;
(5) which has as its members only persons who have an ownership interest in the group and which has as its owners only persons who are members who are provided insurance by the risk retention group; or has as its sole member and sole owner an organization which is owned by persons who are provided insurance by the risk retention group;
(6) whose members are engaged in businesses or activities similar or related with respect to the liability of which such members are exposed by virtue of any related, similar, or common business trade, product, services, premises, or operations;
(7) whose activities do not include the provision of insurance other than liability insurance for assuming and spreading all or any portion of the liability of its group members; and reinsurance with respect to the liability of any other risk retention group (or any members of such other group) which is engaged in businesses or activities so that such group or member meets the requirement described in subparagraph (6) from membership in the risk retention group which provides such reinsurance; and
(8) the name of which includes the phrase "risk retention group".
(l) "State" means any state of the United States and the District of Columbia.
History: L. 1986, ch. 166, § 1; L. 1987, ch. 172, § 1; April 30.
A risk retention group seeking to be chartered in this state must be chartered and licensed as a liability insurance company authorized by the insurance laws of this state and, except as provided elsewhere in this act, must comply with all of the laws, rules and regulations and requirements applicable to such insurers chartered and licensed in this state and with K.S.A. 40-4103, and amendments thereto, to the extent such requirements are not a limitation on laws, rules and regulations or requirements of this state. Before it may offer insurance in any state, each risk retention group shall also submit for approval to the insurance commissioner of this state a plan of operation or a feasibility study and revisions of such plan or study if the group intends to offer any additional lines of liability insurance. Immediately upon receipt of an application for charter, this state shall provide summary information concerning the filing to the national association of insurance commissioners including the name of the risk retention group, the identity of the initial members of the group, the identity of those individuals who organized the group or who will provide administrative services or otherwise influence or control the activities of the group, the amount and nature of initial capitalization, the coverage to be afforded and the states in which the group intends to operate. Providing notification to the national association of insurance commissioners is in addition to and shall not be sufficient to satisfy the requirements of K.S.A. 40-4103, and amendments thereto, and all other sections of this act.
History: L. 1986, ch. 166, § 2; L. 1987, ch. 172, § 2; April 30.
Risk retention groups chartered in states other than this state seeking to do business as a risk retention group in this state shall observe and abide by the laws of this state as follows:
(a)
Notice of operations and designation of commissioner as agent.
Before offering insurance in this state, a risk retention group shall submit to the commissioner:
(1) A statement identifying the state or states in which the risk retention group is chartered and licensed as a liability insurance company, date of chartering, its principal place of business and such other information, including information on its membership, as the commissioner of this state may require to verify that the risk retention group is qualified under K.S.A. 40-4101(k), and amendments thereto;
(2) a copy of its plan of operations or a feasibility study and revisions of such plan or study submitted to its state of domicile, except that the provision relating to the submission of a plan of operation or a feasibility study shall not apply with respect to any line or classification of liability insurance that was:
(A) Defined in the product liability risk retention act of 1981 before October 27, 1986; and
(B) offered before such date by any risk retention group that had been chartered and operating for not less than three years before such date;
(3) a statement of registration that designates the commissioner as its agent for the purpose of receiving service of legal documents or process; and
(4) a notification fee not to exceed $250. Not later than December 1 of each year, the commissioner shall set and cause to be published in the Kansas register such fee for the next calendar year.
(b)
Financial condition.
Any risk retention group doing business in this state shall submit to the commissioner:
(1) A copy of the group's financial statement submitted to its state of domicile that contains a statement of opinion on loss and loss adjustment expense reserves made by a member of the American academy of actuaries or a qualified loss reserve specialist under criteria established by the national association of insurance commissioners;
(2) a copy of each examination of the risk retention group as certified by the commissioner or public official conducting the examination;
(3) upon request by the commissioner, a copy of any audit performed with respect to the risk retention group; and
(4) such information as may be required to verify its continuing qualification as a risk retention group under K.S.A. 40-4101(k), and amendments thereto.
(c)
Taxation.
(1) All premiums paid for coverages within this state to risk retention groups chartered outside this state shall be subject to taxation at the same rate and subject to the same interest, fines and penalties for nonpayment as that provided by K.S.A. 40-246c, and amendments thereto. Risk retention groups chartered or licensed in this state shall be taxed in accordance with K.S.A. 40-252, and amendments thereto.
(2) To the extent agents or brokers are utilized, they shall report and pay the taxes for the premiums for risks that they have placed with or on behalf of a risk retention group not chartered in this state.
(3) To the extent agents or brokers are not utilized or fail to pay the tax, each risk retention group shall pay the tax for risks insured within the state. Each risk retention group shall report all premiums paid to it for risks insured within the state.
(d)
Compliance with unfair claims settlement practices law.
Any risk retention group, its agents and representatives, shall comply with K.S.A. 40-2404(9), and amendments thereto.
(e)
Deceptive, false or fraudulent practices.
Any risk retention group shall comply with the laws of this state regarding deceptive, false or fraudulent acts or practices, except that if the commissioner seeks an injunction regarding such conduct, the injunction shall be obtained from a court of competent jurisdiction.
(f)
Examination regarding financial condition.
Any risk retention group shall submit to an examination in accordance with K.S.A. 40-222 and 40-223, and amendments thereto, by the commissioner to determine its financial condition if the commissioner of the jurisdiction in which the group is chartered has not initiated an examination or does not initiate an examination within 60 days after a request by the commissioner of this state.
(g)
Notice to purchasers.
Any policy issued by a risk retention group shall contain in 10 point type on the front page and the declaration page, the following notice:
NOTICE
This policy is issued by your risk retention group. Your risk retention group may not be subject to all of the insurance laws and regulations of your state. State insurance insolvency guaranty funds are not available for your risk retention group.
(h)
Prohibited acts regarding solicitation or sale.
The following acts by a risk retention group are hereby prohibited:
(1) The solicitation or sale of insurance by a risk retention group to any person who is not eligible for membership in such group; and
(2) the solicitation or sale of insurance by, or operation of, a risk retention group that is in a hazardous financial condition or is financially impaired.
(i)
Prohibition on ownership by an insurance company.
No risk retention group shall be allowed to do business in this state if an insurance company is directly or indirectly a retention group all of whose members are insurance companies.
(j)
Prohibited coverage.
No risk retention group may offer insurance policy coverage prohibited by the laws of this state or declared unlawful by the supreme court of the state of Kansas.
(k)
Delinquency proceedings.
A risk retention group not chartered in this state and doing business in this state must comply with a lawful order issued in a voluntary dissolution proceeding or in a delinquency proceeding commenced by a state insurance commissioner if there has been a finding of financial impairment after an examination under subsection (f).
History: L. 1986, ch. 166, § 3; L. 1987, ch. 172, § 3; L. 1992, ch. 154, § 5; L. 2021, ch. 108, § 19; L. 2025, ch. 87, § 27; July 1.
History: L. 1986, ch. 166, §§ 4 to 7; Repealed, L. 1987, ch. 172, § 15; April 30.
No risk retention group shall be permitted to join or contribute financially to any insurance insolvency guaranty fund, or similar mechanism, in this state, nor shall any risk retention group, or its insured, receive any benefit from any such fund for claims arising out of the operations of such risk retention group.
History: L. 1986, ch. 166, § 8; L. 1987, ch. 172, § 4; April 30.
A policy of insurance issued to a risk retention group or any member of that group shall not be required to be countersigned as otherwise provided by K.S.A. 40-246, and amendments thereto.
History: L. 1986, ch. 166, § 9; L. 1987, ch. 172, § 5; April 30.
History: L. 1986, ch. 166, §§ 10 to 12; Repealed, L. 1987, ch. 172, § 15; April 30.
History: L. 1986, ch. 166, § 13; L. 1987, ch. 172, § 10; Repealed, L. 1997, ch. 24, § 7; July 1.
The commissioner is hereby authorized to adopt such rules and regulations relating to risk retention groups as may be necessary to carry out the provisions of this act.
History: L. 1986, ch. 166, § 14; L. 1987, ch. 172, § 13; April 30.
Any purchasing group meeting the criteria established under the provisions of the federal liability risk retention act of 1986 shall be exempt from any law of this state relating to the creation of groups for the purchase of insurance, prohibition of group purchasing or any law that would discriminate against a purchasing group or its members. In addition, an insurer shall be exempt from any law of this state which prohibits providing, or offering to provide, to a purchasing group or its members advantages based on their loss and expense experience not afforded to other persons with respect to rates, policy forms, coverage or other matters. A purchasing group shall be subject to all other applicable laws of this state.
History: L. 1987, ch. 172, § 6; April 30.
(a) (1) A purchasing group that intends to do business in this state shall furnish notice to the commissioner:
(A) Identifying the state in which the group is domiciled;
(B) specifying the lines and classifications of liability insurance that the purchasing group intends to purchase;
(C) identifying the insurance company from which the group intends to purchase its insurance and the domicile of such company;
(D) identifying the principal place of business of the group; and
(E) providing such other information as may be required by the commissioner to verify that the purchasing group is qualified under K.S.A. 40-4101(j), and amendments thereto.
(2) The notice submitted to the commissioner shall be accompanied by a notification feenot to exceed $250.
(b) The purchasing group shall file with the insurance department its written consent, irrevocable, that any action or garnishment proceeding may be commenced against such group in the proper court of any county in this state in which the cause of action shall arise or in which the plaintiff may reside by the service of process on the commissioner of insurance of this state and stipulating and agreeing that such service shall be taken and held in all courts to be as valid and binding as if due service had been made upon the president or chief officer of such corporation. Such consent shall be executed by the president of the company and shall be accompanied by a certified copy of the order or resolution of the board of directors, trustees or managers authorizing the president to execute the same. The summons, accompanied by a fee not to exceed $25, shall be directed to the commissioner of insurance and shall require the defendant to answer not less than 40 days from its date. Such summons, and a certified copy of the petition shall be immediately forwarded by the clerk of the court to the commissioner of insurance, who shall immediately forward a copy of the summons and the certified copy of the petition, to the president of the group sued, and thereupon the commissioner of insurance shall make return of the summons to the court from which it issued, showing the date of the receipt by the commissioner, the date of forwarding of such copies and the name and address of the person to whom the commissioner forwarded the copy. Such return shall be made under the commissioner's hand and seal of office and have the same force and effect as a due and sufficient return made by the sheriff on process directed to the sheriff. The foregoing shall not apply in the case of a purchasing group that:
(1) (A) Was domiciled before April 2, 1986; and
(B) is domiciled on and after October 27, 1986, in any state of the United States;
(2) (A) before October 27, 1986, purchased insurance from an insurance carrier licensed in any state; and
(B) since October 27, 1986, purchased its insurance from an insurance carrier licensed in any state;
(3) was a purchasing group under the requirements of the product liability retention act of 1981 before October 27, 1986; and
(4) does not purchase insurance that was not authorized for purposes of an exemption under that act, as in effect before October 27, 1986.
(c) Not later than December 1 of each year, the commissioner shall set and cause to be published in the Kansas register the fees required pursuant to this section for the next calendar year.
History: L. 1987, ch. 172, § 7; L. 1992, ch. 154, § 6; L. 2025, ch. 87, § 28; July 1.
A purchasing group may not purchase insurance from a risk retention group that is not chartered in a state or from an insurer not admitted in the state in which the purchasing group is located, unless the purchase is effected through a licensed agent or broker acting pursuant to the surplus lines laws and regulations of such state.
History: L. 1987, ch. 172, § 8; April 30.
The commissioner is authorized to make use of any of the powers established under the insurance code of this state to enforce the laws of this state so long as those powers are not specifically preempted by the product liability risk retention act of 1981, as amended by the risk retention amendments of 1986. Such authorization includes, but is not limited to, the commissioner's administrative authority to investigate, issue subpoenas, conduct depositions and hearings, issue orders and impose penalties. With regard to any investigation, administrative proceeding, or litigation, the commissioner can rely on the procedural law and regulations of the state. The injunctive authority of the commissioner in regard to risk retention groups is restricted by the requirement that any injunction be issued by a court of competent jurisdiction.
History: L. 1987, ch. 172, § 9; April 30.
Any person acting, or offering to act, as an agent or broker for a risk retention group, which solicits members, sells insurance coverage, purchases coverage for its members located within the state or otherwise does business in this state shall, before commencing any such activity, obtain a license from the commissioner.
History: L. 1987, ch. 172, § 11; April 30.
An order issued by any district court of the United States enjoining a risk retention group from soliciting or selling insurance, or operating, in any state (or in all states or in any territory or possession of the United States) upon a finding that such a group is in a hazardous financial condition, shall be enforceable in the courts of the state.
History: L. 1987, ch. 172, § 12; April 30.
As used in this act, unless the context requires otherwise:
(a) "Prepaid service plan" means any person, company, corporation, partnership or other legal entity who collects periodic fees on a prepaid basis from residents of this state in connection with for-profit legal or dental coverage other than: (1) An employer on behalf of its employees or the employees of one or more subsidiary or affiliated corporations of such employer; (2) a union or association on behalf of its members; (3) an organization transacting business in this state pursuant to article 19a of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, including their sales representatives when engaged in the performance of their duties as such; (4) an insurance company duly authorized to conduct insurance pursuant to K.S.A. 40-1102(1)(m), and amendments thereto; or (5) a company providing products and services to customers for a fee where customers receive consultations with a licensed attorney connected to the customer by the company, so long as the company does not directly provide legal services, pay for legal services beyond a minimal administrative fee per customer or indemnify or reimburse the customer for any legal expenses incurred.
(b) "Provider" means any attorney or dentist currently licensed and in good standing in this state who enters into a provider agreement as defined in this act.
(c) "Member" means an individual or person on behalf of a group of individuals who enters into a membership agreement with a prepaid service plan which agrees to provide legal or dental services to the member: (1) For a predetermined monthly membership fee; (2) at a reduced rate in exchange for such a monthly membership fee; or (3) a combination of both a predetermined monthly fee and a reduced rate in exchange for such a monthly membership fee.
(d) "Membership agreement" means the written contract between the member and the prepaid service plan.
(e) "Provider agreement" means the written contract between the provider and the prepaid service plan.
History: L. 1987, ch. 157, § 1; L. 2015, ch. 45, § 2; July 1.
(a) A prepaid service plan shall not operate in Kansas without entering into a provider agreement with the provider and a membership agreement with each member in accordance with the provisions of this section.
(b) Each provider agreement shall be retained as part of the official records of both the provider and the prepaid service plan for the duration of the agreement and five years thereafter. Each provider agreement shall contain provisions which include the requirements of K.S.A. 40-4203 through 40-4207 and shall include a guarantee for the provision of services to the member for the duration of the membership agreement regardless of whether the prepaid service plan ceases doing business for any reason.
(c) Each membership agreement shall contain the terms of the agreement, including a list of the benefits to be provided.
History: L. 1987, ch. 157, § 2; January 1, 1988.
History: L. 1987, ch. 157, § 3; L. 1992, ch. 154, § 7; Repealed, L. 2023, ch. 49, § 6; July 1.
Whenever a member utilizes the services of a prepaid service plan under the terms of a written contract as required in K.S.A. 40-4202, the payment to the provider of any amount by or on behalf of the member by the prepaid service plan shall be deemed payment to that provider when received. Nothing in this act shall limit any right of the provider against the prepaid service plan resulting from its failure to make payments to the provider.
History: L. 1987, ch. 157, § 4; January 1, 1988.
For the duration of the written agreements referred to in K.S.A. 40-4202 and for five years thereafter, every prepaid service plan shall maintain at its principal administrative office adequate books and records of all transactions between the prepaid service plan and the providers and members thereof. Such books and records shall be maintained in accordance with prudent standards of insurance recordkeeping. The commissioner of insurance shall have access to such books and records for the purpose of examination, audit and inspection. Any information contained therein which is a trade secret under the uniform trade secrets act (K.S.A. 60-3320 et seq., and amendments thereto), including, but not limited to, the identity and addresses of members, shall be confidential, except that the commissioner may use such information in any proceedings instituted against a prepaid service plan.
History: L. 1987, ch. 157, § 5; L. 2005, ch. 67, § 2; July 1.
A prepaid service plan may only use a provider's name in advertisements and promotional materials after obtaining the provider's approval.
History: L. 1987, ch. 157, § 6; January 1, 1988.
All membership fees collected by a prepaid service plan on behalf of members shall be held by the prepaid service plan in a fiduciary capacity and shall be deposited promptly after receipt in a bank account established and maintained by the prepaid service plan. The prepaid service plan shall maintain records clearly recording the deposits in and withdrawals from such account on behalf of or for each member. The prepaid service plan shall keep copies of all such records.
History: L. 1987, ch. 157, § 7; January 1, 1988.
The compensation paid to the prepaid service plan shall in no way be contingent on claim experience. This section shall not prevent the compensation of a prepaid service plan from being based on membership fees collected or number of claims paid or processed.
History: L. 1987, ch. 157, § 8; January 1, 1988.
(a) (1) No person shall act as or hold such person out to be a prepaid service plan in this state unless such person holds a certificate of registration as a prepaid service plan issued by the commissioner of insurance. An application for such certificate may be made to the commissioner of insurance on forms prescribed by the commissioner and shall include:
(A) The completed application form;
(B) a list of each individual who solicits memberships on behalf of such prepaid service plan; and
(C) a filing fee not to exceed $100.
(2) The certificate of registration may be continued for successive annual periods by notifying the commissioner of such intent, paying an annual continuation fee not to exceed $50 and advising the commissioner of insurance of any additions to or deletions from the list of individuals who solicit memberships on behalf of such prepaid service plan since the last reporting date.
(b) The certificate of registration shall be issued to or continued for a prepaid service plan by the commissioner of insurance unless the commissioner of insurance, after due notice and hearing, determines that the prepaid service plan is not competent, trustworthy, financially responsible or of good personal and business reputation or has had a previous application for a certificate of registration denied for cause since January 1, 1988, or within five years of the date of application, whichever is later.
(c) Not later than December 1 of each year, the commissioner shall set and cause to be published in the Kansas register the fees required pursuant to this section for the next calendar year.
History: L. 1987, ch. 157, § 9; L. 2023, ch. 49, § 2; L. 2025, ch. 87, § 29; July 1.
History: L. 1987, ch. 157, § 10; Repealed, L. 1997, ch. 24, § 7; July 1.
(a) Each prepaid service plan shall deposit and maintain with the commissioner of insurance securities of the type eligible for deposit by insurers. Such securities shall have at all times a market value in accordance with the following:
(1) A prepaid service plan which has transacted no business in this state prior to the effective date of this act, shall deposit an initial amount of $50,000 with the commissioner of insurance, prior to the issuance of its certificate of registration and before receiving any membership fees;
(2) a prepaid service plan transacting business in this state prior to the effective date of this act and having in force in this state less than $300,000 of annual membership fees shall deposit with the commissioner of insurance a sum equal to 50% of the membership fees in force or $50,000, whichever is less;
(3) a prepaid service plan transacting business in this state prior to the effective date of this act and having in force in this state more than $300,000 but less than $750,000 of annual membership fees, shall deposit with the commissioner of insurance an amount of not less than $75,000; and
(4) a prepaid service plan transacting business in this state prior to the effective date of this act and having in force in this state $750,000 or more of annual membership fees, shall deposit with the commissioner of insurance an amount of not less than $100,000.
(b) In lieu of any deposit of securities required under subsection (a), a prepaid service plan may file with the commissioner of insurance a surety bond in such form, amount and conditions as prescribed by the commissioner or present the commissioner with an irrevocable letter of credit issued by a state or federally chartered bank domiciled in Kansas. Any such surety bond or irrevocable letter of credit issued or written for a specific term shall be renewed or replaced not less than 90 days prior to expiration. In the event satisfactory evidence of such renewal or replacement is not received by the commissioner at least 60 days prior to expiration, the commissioner is hereby authorized to draw upon the letter of credit or surety bond to the extent possible and necessary to assure that the obligations of the prepaid service plan to its members are provided for in accordance with subsection (e). The surety bond or irrevocable letter of credit shall be for the same purpose as the deposit of securities for which it is in lieu thereof. The commissioner of insurance shall not approve any surety bond under the terms of which the protection afforded against insolvency is not equivalent to the protection afforded by those securities provided for in subsection (a).
(c) Securities or surety bonds deposited with or irrevocable letters of credit presented to the commissioner of insurance pursuant to this section shall be for the benefit of any person or persons sustaining an actionable injury due to the failure of the prepaid service plan to faithfully perform its obligations to its members or those providers with whom they have contracted, and such securities, surety bonds or irrevocable letters of credit shall be subject to action thereon by any such person or persons for such purposes in the event of insolvency or impairment of the prepaid service plan.
(d) The commissioner of insurance shall be responsible for the safekeeping of all securities deposited with the commissioner under this section. Such securities shall not be subject to taxation on account of being in this state, but shall be held exclusively and solely to guarantee the prepaid service plan's performance of its obligations to its members.
(e) The deposit of securities or surety bond or the irrevocable letter of credit required under this section shall be maintained unimpaired as long as the prepaid service plan continues in business in this state. When a prepaid service plan ceases to do business in this state and furnishes the commissioner of insurance proof satisfactory that such prepaid service plan has discharged or otherwise adequately provided for all its obligations to its members in this state, the commissioner of insurance shall release the deposited securities to the parties entitled thereto on presentation of receipts for such securities, shall release any surety bond filed in lieu of such deposit or shall consent to revocation of any letter of credit presented in lieu of such deposit.
(f) The commissioner of insurance, at any time, may enter an order increasing the amount of the deposit of securities, surety bond or irrevocable letter of credit specified under this section if the commissioner of insurance finds that there has been a substantial change in the facts, including an increase in the amounts of membership fees in force in this state on which the original determination was based. The prepaid service plan may request a hearing on any such increase within 30 days of the issuance of the commissioner's order. A hearing shall be held within 30 days of such a request by the prepaid service plan. Failure by a prepaid service plan to meet the new requirements ordered under this subsection within 30 days after a final decision by the commissioner of insurance or 30 days after the period for submitting a request for a hearing on the matter constitutes a ground for revocation of the certificate of registration of the prepaid service plan.
History: L. 1987, ch. 157, § 11; L. 1989, ch. 145, § 1; July 1.
As used in the captive insurance act, unless the context requires otherwise:
(a) "Affiliated company" means any person, other than a natural person in that person's individual capacity, in the same corporate system as a parent, or an associate member by common ownership, control, operation or management, any affiliated fidfin trust and any affiliated technology-enabled fiduciary financial institution.
(b) "Affiliated fidfin trust" means a trust, including a fidfin trust of which an affiliated technology-enabled fiduciary financial institution acts as a trustee or custodian.
(c) "Affiliated technology-enabled fiduciary financial institution" means a technology-enabled fiduciary financial institution:
(1) That is related to a technology-enabled fiduciary financial institution insurance company by common ownership; or
(2) at least 5% of the equity interests of which, including any equity interests in the technology-enabled fiduciary financial institution's holding company are owned directly, indirectly or beneficially by a technology-enabled fiduciary financial institution insurance company. In calculating a technology-enabled fiduciary financial institution insurance company's ownership of a technology-enabled fiduciary financial institution: (A) Both voting and nonvoting equity interests shall be included in such calculation; and (B) any equity interests of the technology-enabled fiduciary financial institution owned by an affiliate of such technology-enabled fiduciary financial institution insurance company shall be attributed to such technology-enabled fiduciary financial institution insurance company.
(d) "Association" means any legal association of persons, corporations, limited liability companies, partnerships, associations or other entities that have been in continuous existence for at least one year or such lesser period of time approved by the commissioner, whether or not in conjunction with some or all of the member organizations that:
(1) Own, control or hold with power to vote all of the outstanding voting securities of an association captive insurance company incorporated as a stock insurer;
(2) have complete voting control over an association captive insurance company incorporated as a mutual insurer;
(3) constitute all of the subscribers of an association captive insurance company formed as a limited liability company; or
(4) have complete voting control over an association captive insurance company formed as a limited liability company.
(e) "Association captive insurance company" means any captive insurance company that insures risks of association members.
(f) "Association member" means any person that belongs to an association.
(g) "Capital and surplus" means the amount by which the value of all of the assets exceeds all of the liabilities of the captive insurance company, as determined under the method of accounting utilized by the captive insurance company in accordance with the applicable provisions of this act.
(h) "Captive insurance company" means any pure captive insurance company or association captive insurance company. For purposes of this act, a branch captive insurance company shall be a pure captive insurance company with respect to operations in this state, unless otherwise permitted by the commissioner.
(i) "Commissioner" means the commissioner of insurance.
(j) "Common ownership" means at least 5% equity ownership, whether voting or nonvoting, that is held directly, indirectly or beneficially through one or more entities, including ownership in a technology-enabled fiduciary financial institution's holding company.
(k) "Controlled unaffiliated business" means any person other than a natural person in that natural person's individual capacity:
(1) That is not a part of the corporate system of a parent and its affiliated companies;
(2) that has an existing contractual relationship with such parent or any such affiliated company; and
(3) whose risks are managed by a pure captive insurance company.
(l) "Department" means the Kansas insurance department.
(m) "Domestic" means any insurance company formed under the laws of the state of Kansas.
(n) "Fidfin trust" means the same as defined in K.S.A. 9-2301, and amendments thereto.
(o) "In-kind asset" means:
(1) Any loan, financing or extension of credit, including to an affiliated fidfin trust, originated by a technology-enabled fiduciary financial institution;
(2) one or more equity interests in one or more investment funds, each an interest in an investment fund, or one or more equity interests in one or more technology-enabled fiduciary financial institutions;
(3) any loan, financing or extension of credit secured by the pledge of equity of one or more interests in an investment fund or the cash flow derived therefrom;
(4) any other assets that serve as collateral securing such loans, equity or debt financing or extensions of credit described in this subsection; and
(5) any beneficial interests in trusts that own assets described in this subsection that are held by an insurance company for the purpose of enabling such insurance company to meet its obligations to make claim payments under payment-in-kind policies by delivering such assets.
(p) "Insurer" means the same as "insurance company" as that term is defined in K.S.A. 40-222c, and amendments thereto.
(q) "Interest in an investment fund," "equity interest in an investment fund" and terms of similar import mean the ownership or contractual rights to the economics, directly or indirectly, of an investment fund, including pursuant to economic direction agreements, contractual rights, interests and entitlements to any economics derived from an investment fund.
(r) "Investment fund" means any collective investment vehicle, whether organized as a limited partnership, limited liability company or in some other form, and whether organized in the United States or a foreign jurisdiction, when the interests in such vehicle qualify as alternative assets as defined in K.S.A. 9-2301, and amendments thereto.
(s) "Investor in an investment fund" and terms of similar import means any party who owns an interest in an investment fund.
(t) "Manager" means with respect to an investment fund, the general partner of a limited partnership, the manager of a limited liability company, any person with equivalent authority in a similar business entity or any investment manager who manages the investments of an investment fund pursuant to a contract.
(u) "Member organization" means any individual, corporation, limited liability company, partnership, association or other entity that belongs to an association.
(v) "Natural person" means a human being.
(w) "Organizational documents" means the captive insurance company's articles of organization, bylaws, operating agreement or other foundational document that establishes the captive insurance company as a legal entity or prescribes its existence.
(x) "Parent" means a corporation, partnership or individual that directly or indirectly owns, controls or holds with power to vote more than 50% of the outstanding voting securities or other voting interest of a pure captive insurance company, or as assigned in the plan of operation.
(y) "Payment-in-kind policy" means a policy that, along with any applicable schedules, is required to be in writing and which satisfies the following conditions:
(1) The policyholder of such policy is a qualified policyholder;
(2) is issued by a technology-enabled fiduciary financial institution insurance company or an insurance company organized in a jurisdiction other than Kansas;
(3) provides that such insurance company has the option, in such insurance company's sole discretion, to make claim payments, in whole or in part, in cash or in the form of in-kind assets rather than cash pursuant to schedules attached to the policy as required by this subsection and agreed to in writing by the qualified policyholder;
(4) provides for such payment-in-kind policy to be fully enforceable in accordance with such policy's terms and this subsection;
(5) may provide for such payment-in-kind policy or provisions relating to in-kind assets and payments thereof to be governed by, and construed in accordance with, the laws of the state of Kansas and such policy or provisions shall control over any contrary provision of state law regarding conflict of laws and any such provision shall be fully enforceable;
(6) may provide that any suit, action or proceeding arising out of or relating to such payment-in-kind policy shall be brought in any district court of this state or the United States district court for the district of Kansas and any such provision shall be fully enforceable;
(7) may be a contract of suretyship or credit insurance in accordance with K.S.A. 2025 Supp. 40-4354, and amendments thereto;
(8) contains one or more schedules to such payment-in-kind policy that sets out a description of the specific in-kind assets that the insurance company may deliver to the qualified policyholder to make claim payments as agreed to in writing by the qualified policyholder;
(9) may include a copy of the governing documents in effect at the time of issuance of such payment-in-kind policy of any legal entity that is the issuer of or obligor under such in-kind assets;
(10) includes a provision that the qualified policyholder agrees that the insurance company has no obligation to provide, and the qualified policyholder has no additional rights to, any further disclosure regarding the in-kind assets and shall not rely on any other disclosures provided by the insurance company other than the disclosure required by this subsection;
(11) includes a provision that the qualified policyholder agrees that such insurance company has no obligation to make claim payments in any form other than the in-kind assets specified in such schedules;
(12) requires the qualified policyholder to acknowledge that such insurance company has no obligation to deliver to such qualified policyholder any underlying assets in the chain of ownership below the in-kind assets specified in such schedules; and
(13) requires the qualified policyholder to acknowledge that:
(A) Such qualified policyholder has no recourse against the insurance company with respect to any in-kind assets other than those in-kind assets scheduled and attached to such payment-in-kind policy; and
(B) any such recourse shall be limited to only those scheduled in-kind assets that the insurance company, in the insurance company's sole discretion, makes available to such qualified policyholder as an in-kind payment in response to a claim initiated by such qualified policyholder.
(z) "Person" means a natural person, partnership, trust, estate, association, corporation, limited liability company, custodian, nominee or other individual or entity in its own or any representative capacity, in each case whether domestic, foreign or alien.
(aa) "Personal lines of insurance" means personal motor vehicle, homeowner's insurance coverage, residential fire insurance or any component thereof.
(bb) "Pure captive insurance company" means any company that insures risks of its parent and affiliated companies and controlled unaffiliated business.
(cc) "Qualified policyholder" means:
(1) An affiliated fidfin trust;
(2) the owner or deemed owner of an affiliated fidfin trust if such affiliated fidfin trust has a certificate of ownership;
(3) a qualified purchaser as defined in section 2(a)(51) of the federal investment company act of 1940, as in effect on July 1, 2022; or
(4) an institutional investor as defined in the Kansas uniform securities act.
(dd) "Risk retention group" means a captive insurance company organized under the laws of the state of Kansas pursuant to the liability risk retention act of 1986, 15 U.S.C. § 3901 et seq., as amended, as a stock or mutual corporation, a reciprocal or other limited liability entity.
(ee) "Technology-enabled fiduciary financial institution" means the same as defined in K.S.A. 9-2301, and amendments thereto.
(ff) "Technology-enabled fiduciary financial institution insurance company" means a pure captive insurance company that:
(1) Is related to a technology-enabled fiduciary financial institution by common ownership; or
(2) owns, directly, indirectly or beneficially at least 5% of the equity interests of a technology-enabled fiduciary financial institution, including any equity interests in such technology-enabled fiduciary financial institution's holding company. In calculating a technology-enabled fiduciary financial institution insurance company's ownership of a technology-enabled fiduciary financial institution:
(A) Both voting and nonvoting equity interests shall be included in such calculation; and
(B) any equity interests of the technology-enabled fiduciary financial institution owned by an affiliate of such technology-enabled fiduciary financial institution insurance company shall be attributed to such technology-enabled fiduciary financial institution insurance company.
(gg) "Technology-enabled fiduciary financial institution policy" means a contract of insurance or suretyship issued by a technology-enabled fiduciary financial institution insurance company.
(hh) "Technology-enabled fiduciary financial institution policyholder" means the:
(1) Insured, in the case of a technology-enabled fiduciary financial institution policy that is a contract of insurance; or
(2) obligee, in the case of a technology-enabled fiduciary financial institution policy that is a contract of suretyship.
History: L. 1988, ch. 156, § 1; L. 1990, ch. 177, § 1; L. 2018, ch. 50, § 36; L. 2022, ch. 29, § 2; April 14.
(a) Any captive insurance company, when permitted by its organizational documents, may apply to the commissioner for a certificate of authority to do any and all insurance comprised in K.S.A. 40-901 et seq., 40-1102(1)(a) and (1)(c) through (1)(n), and amendments thereto, and to issue life, accident and health insurance policies, except that:
(1) A pure captive insurance company shall not insure any risks other than those of its parent and affiliated companies, any controlled unaffiliated business or combination thereof;
(2) no association captive insurance company shall insure any risks other than those of its association and those of the member organizations of its association. No association captive insurance company shall expose itself to loss on any one risk or hazard in an amount exceeding 10% of its paid-up capital and surplus;
(3) no captive insurance company shall provide personal lines of insurance, employers' liability insurance coverage, long-term care coverage, critical care coverage, surety, title insurance, credit insurance or any component thereof, except that a technology-enabled fiduciary financial institution insurance company shall be permitted to provide contracts of suretyship and credit insurance in accordance with K.S.A. 2025 Supp. 40-4354, and amendments thereto;
(4) a captive insurance company may provide workers compensation insurance, insurance in the nature of workers compensation insurance and the reinsurance of such policies unless prohibited by federal law, the provisions of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, or any other state having jurisdiction over the transaction;
(5) a captive insurance company may provide excess or stop-loss accident and health insurance unless prohibited by federal law or the laws of the state having jurisdiction over the transaction;
(6) any captive insurance company may provide workers compensation insurance, insurance in the nature of workers' compensation insurance and reinsurance of such policies unless prohibited by federal law, the laws of the state of Kansas or any other state having jurisdiction over the transaction;
(7) no captive insurance company shall provide accident and health, life insurance or annuities on a direct basis;
(8) no captive insurance company authorized as a life insurance company shall transact business other than life insurance; and
(9) no captive insurance company authorized to transact business under article 9 or 11 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, shall engage in the business of life insurance.
(b) No captive insurance company organized under the laws of this state shall do any insurance business in this state unless such captive insurance company:
(1) First obtains from the commissioner a certificate of authority authorizing it to do insurance business in this state;
(2) has its board of directors, members, partners, managers, committee of managers or other governing body hold at least one meeting each year in this state;
(3) maintains its principal place of business in this state; and
(4) authorizes the commissioner to accept service of process on its behalf in accordance with K.S.A. 40-218, and amendments thereto.
(c) Before receiving a certificate of authority, an applicant captive insurance company shall file with the commissioner:
(1) A copy of the applicant captive insurance company's organizational documents; and
(2) a plan of operation or a feasibility study describing the anticipated activities and results of the applicant captive insurance company that shall include:
(A) The company's loss prevention program of its parent and insureds, as applicable;
(B) historical and expected loss experience of the risks to be insured or reinsured by the applicant captive insurance company;
(C) pro forma financial statements and projections of the proposed business operations of the applicant captive insurance company;
(D) an analysis of the adequacy of the applicant captive insurance company's proposed premiums, assets and capital and surplus levels relative to the risks to be insured or reinsured by the captive insurance company;
(E) a statement of the applicant captive insurance company's net retained limited liability on any contract of insurance or reinsurance that such insurance company intends to issue and the nature of any reinsurance it intends to cede;
(F) a statement certifying that the applicant captive insurance company's investment policy is in compliance with this act and specifying the type of investments to be made;
(G) a statement identifying the geographic areas in which the applicant captive insurance company intends to operate;
(H) a statement identifying the persons or organizations that will perform the applicant captive insurance company's major operational functions, including management, underwriting, accounting, asset investment, claims adjusting and loss control and the adequacy of the expertise, experience and character of such persons or organizations; and
(I) whenever required by the commissioner, an appropriate opinion by a qualified independent actuary regarding the adequacy of the applicant captive insurance company's proposed capital, surplus and premium levels;
(3) a description of the coverages, deductibles, coverage limits, rates and forms, together with any additional information that the commissioner may require;
(4) such other items deemed to be relevant by the commissioner in ascertaining whether the proposed captive insurance company will be able to meet its obligations; and
(5) any modification or change in the items required under this subsection that shall require the prior approval of the commissioner.
(d) Notwithstanding any other provision of this act, the commissioner may issue a provisional certificate of authority to any applicant captive insurance company if the commissioner deems that the public interest will be served by the issuance of such a provisional certificate.
(1) As a condition precedent to the issuance of a provisional certificate of authority under this subsection, the applicant shall have filed a complete application containing all information required in subsection (c) and paid all necessary fees. The commissioner shall have made a preliminary finding that the expertise, experience and character of the person who shall control and manage the applicant captive are acceptable.
(2) The commissioner may by order limit the authority of any provisional certificate holder in any way deemed to be necessary in order to protect insureds and the public. The commissioner may revoke a provisional certificate holder if the interests of the insureds or the public are endangered. If the applicant fails to complete the regular application for a certificate of authority, the provisional certificate of authority shall terminate by operation of law.
(3) The commissioner may enact all rules and regulations necessary to implement a program for the issuance of provisional certificates of authority.
(e) Each captive insurance company shall pay to the commissioner a nonrefundable fee of up to $2,500 for examining, investigating and processing its application for a certificate of authority. The commissioner is authorized to retain legal, financial, actuarial, analysis and examination services from outside the department, the reasonable costs of which shall be charged against the applicant. In addition, it shall pay a renewal fee of $2,500 for each year thereafter. Not later than December 1 of each year, the commissioner shall set and cause to be published in the Kansas register the fee required by this subsection for the next calendar year.
(f) If the commissioner is satisfied that the documents and statements that such captive insurance company has filed comply with the provisions of this act, the commissioner may grant a certificate of authority authorizing a:
(1) Captive insurance company other than a technology-enabled fiduciary financial institution to do insurance business in this state until March 1 thereafter, which certificate of authority may be renewed; and
(2) technology-enabled fiduciary financial institution insurance company to do insurance business in this state until the later of March 1 thereafter or the maturity date of the last payment-in-kind asset held by such technology-enabled fiduciary financial institution insurance company pursuant to this act.
(g) Information submitted under this section shall be and remain confidential and shall not be made public by the commissioner or any employee or agent of the commissioner without the written consent of the company, except that:
(1) Such information may be discoverable by a party in a civil action or contested case to which the captive insurance company that submitted such information is a party, upon a showing by the party seeking to discover such information that:
(A) The information sought is relevant to and necessary for the furtherance of such action or case;
(B) the information sought is unavailable from other nonconfidential sources;
(C) a subpoena issued by a judicial or administrative officer or competent jurisdiction has been submitted to the commissioner; and
(D) the privacy of a qualified policyholder shall be protected in any court proceeding concerning such qualified policyholder if the technology-enabled fiduciary financial institution insurance company so petitions the court. Upon the filing of such petition, any information, including, but not limited to, an instrument, inventory, statement or verified report produced by the technology-enabled fiduciary financial institution insurance company regarding a policy issued to a qualified policyholder or payment-in-kind assets held by the technology-enabled fiduciary financial institution insurance company to satisfy claims of such qualified policyholder, all payment-in-kind policies, all petitions relevant to such information and all court orders thereon, shall be sealed upon filing and shall not be made a part of the public record of the proceeding, except that such petition shall be available to the court, the commissioner, the technology-enabled fiduciary financial institution insurance company, their attorneys and to such other interested persons as the court may order upon a showing of good cause;
(2) the commissioner may disclose such information to a public officer having jurisdiction over the regulation of insurance in another state, if:
(A) Such public official shall agree in writing to maintain the confidentiality of such information; and
(B) the laws of the state in which such public official serves requires such information to be and to remain confidential;
(3) access may also be granted to the national association of insurance commissioners and its affiliates, and the international association of supervisors and its affiliates. Such parties shall agree in writing prior to receiving the information to provide to it the same confidential treatment as required by this section, unless the company gives prior written consent; and
(4) the privacy of those who have established an affiliated fidfin trust or alternative asset custody account shall be protected in any court proceeding concerning such trust or custody account if the acting trustee, custodian, trustor or any beneficiary so petition the court. Upon the filing of such a petition, the instrument, inventory, statement filed by any trustee or custodian, annual verified report of the trustee or custodian and all petitions relevant to trust administration and all court orders thereon shall be sealed upon filing and shall not be made a part of the public record of the proceeding, except that such petition shall be available to the court, the trustor, the trustee, the custodian, any beneficiary, their attorneys and to such other interested persons as the court may order upon a showing of good cause.
History: L. 1988, ch. 156, § 2; L. 2018, ch. 50, § 37; L. 2022, ch. 29, § 3; L. 2025, ch. 99, § 24; L. 2025, ch. 125, § 8; July 1.
(a) The word "captive" shall be incorporated into the name of every captive insurance company organized under the laws of this state. No captive insurance company shall adopt a name that is the same, deceptively similar or likely to be confused with or mistaken for any other existing business name registered in the state of Kansas.
(b) The provisions of subsection (a) shall not apply to a technology-enabled fiduciary finance insurance company if such insurance company complies with the provisions of K.S.A. 2025 Supp. 40-4354(d), and amendments thereto.
History: L. 1988, ch. 156, § 3; L. 1990, ch. 177, § 2; L. 2018, ch. 50, § 38; L. 2022, ch. 29, § 4; April 14.
(a) No captive insurance company shall be issued a certificate of authority unless such company shall possess and thereafter maintain unimpaired paid-in capital and surplus of not less than:
(1) $250,000, in the case of a pure captive insurance company;
(2) $500,000, in the case of an association captive insurance company incorporated as a stock insurer; and
(3) $100,000, in the case of a protected cell captive insurance company.
(b) Such capital may be in the form of cash or, upon approval of the commissioner, an irrevocable letter of credit issued by a bank chartered by the state of Kansas or the United States comptroller of currency, domiciled in Kansas, and approved by the commissioner.
(c) In connection with the issuance of a certificate of authority, the commissioner may prescribe additional minimum capital and surplus based upon the type, volume and nature of the insurance business transacted.
(d) Loans of minimum capital and surplus funds shall be prohibited. Notwithstanding the foregoing, the minimum capital and surplus funds may be received by the issuance of a surplus note as approved by the commissioner.
(e) No pure captive insurance company shall make a loan or an investment in its parent company or affiliates without prior written approval of the commissioner, and any such loan or investment shall be evidenced by documentation approved by the commissioner.
History: L. 1988, ch. 156, § 4; L. 2018, ch. 50, § 39; L. 2025, ch. 99, § 25; July 1.
History: L. 1988, ch. 156, § 5; Repealed, L. 2018, ch. 50, § 50; July 1.
(a) A pure captive insurance company shall be incorporated as a stock insurer, as a nonstock corporation, or may be formed as a limited liability company, partnership or limited partnership.
(b) An association captive insurance company may be incorporated as a stock corporation or as a nonstock corporation, or may be formed as a limited liability company, partnership or limited partnership.
(c) A captive insurance company incorporated or organized in Kansas shall have one or more incorporators or organizers, as applicable, at least one of whom shall be a resident of Kansas.
(d) In the case of a captive insurance company:
(1) Formed as a corporation, with at least one of the members of the board of directors who shall be a resident of Kansas, or have that member's personal place of business in Kansas;
(2) formed as a limited liability company, with at least one of the managers who shall be a resident of, or have its principal place of business in Kansas;
(3) formed as a partnership, with at least one member or person in whom management of the partnership is vested or to whom rights and powers to manage and control the business and affairs of the partnership have been delegated, shall be a resident of, or have such member's or person's principal place of business in Kansas; or
(4) formed as a limited partnership, with at least one general partner or person in whom management of the limited partnership is vested or to whom rights and powers to manage and control the business and affairs of the limited partnership have been delegated, shall be a resident of, or have such partner's or person's principal place of business in Kansas.
(e) The articles of incorporation or bylaws of a captive insurance company formed as a corporation may authorize a quorum of its board of directors to consist of no less than 1/3 of the full board of directors, provided that a quorum shall not consist of fewer than two directors.
(f) The articles of incorporation, such certificate and the organization fee shall be transmitted to the secretary of state, who shall thereupon record both the articles of incorporation and the certificate. Before the articles of incorporation are transmitted to the secretary of state, the incorporators shall petition the commissioner to issue a certificate setting forth such commissioner's findings that the establishment and maintenance of the proposed corporation will promote the general good of the state.
(1) In arriving at such finding the commissioner shall consider:
(A) The character, reputation, financial standing and purpose of the incorporators;
(B) the character, reputation, financial responsibility, insurance experience and business qualifications of the officers and directors; and
(C) such other aspects as the commissioner shall deem advisable.
(2) The articles of incorporation, certificate of general good and the filing fee shall be transmitted to the secretary of state, who shall thereupon record both the articles of incorporation and the certificate.
(g) The capital stock of a captive insurance company incorporated as a stock insurer shall be issued at not less than par value.
(h) A captive insurance company incorporated, formed or organized under the laws of Kansas or under the laws of another jurisdiction that is authorized under the provisions of this act shall have the privileges and be subject to the provisions of the laws of Kansas or the laws of such other jurisdiction, as applicable, under which such captive insurance company is incorporated, formed or organized as well as the applicable provisions contained in this act.
(i) Captive insurance companies formed under the provisions of this chapter shall have the privileges and be subject to the provisions of the general corporation code as well as the applicable provisions contained in this act. In the event of conflict between the provisions of the general corporation code and the provisions of this act, the latter shall control.
History: L. 1988, ch. 156, § 6; L. 2018, ch. 50, § 40; July 1.
(a) Prior to March 1 of each year, each captive insurance company shall submit to the commissioner a report of its financial condition, verified by oath of two of its executive officers.
(b) The report may be filed using generally accepted accounting principles, unless the commissioner approves the use of statutory accounting principles, with any appropriate or necessary modifications or adaptions thereof required or approved or accepted by the commissioner for the type of insurance and kinds of insurers to be reported upon, and as supplemented by additional information required by the commissioner. The commissioner shall by rules and regulations prescribe the forms by which captive insurance companies shall report.
(c) Any captive insurance company may make written application to the commissioner for filing the report required by subsection (a) on a fiscal year end. If an alternative reporting date is granted by the commissioner:
(1) The annual report shall be due 60 days after the fiscal year end; and
(2) in order to provide sufficient detail to support the premium tax return, the captive insurance company shall file prior to March 1 of each year for each calendar year end such form or information as the commissioner shall by rules and regulations prescribe, verified by the oath by two of its executive officers or other authorized persons.
(d) The captive insurance company shall file a report of financial condition on a quarterly basis to be designated by the commissioner. The contents and form of the report shall be governed by subsection (b).
(e) All reports shall be given the same confidential treatment as provided in K.S.A. 40-4308, and amendments thereto.
History: L. 1988, ch. 156, § 7; L. 2018, ch. 50, § 41; July 1.
(a) Whenever the commissioner deems necessary, but at least once every five years, the commissioner may make, or direct to be made, a financial examination of any captive insurance company in the process of organization or applying for admission or doing business in Kansas. The commissioner may engage in continuous analysis for the preparation of the examination. In addition, at the commissioner's discretion, the commissioner may make, or direct to be made, a market regulation examination of any insurance company doing business in Kansas.
(b) In scheduling and determining the nature, scope and frequency of examinations of financial condition, the commissioner shall consider such matters as the results of financial statement analyses and ratios, changes in management or ownership, actuarial opinions, reports of independent certified public accountants and other criteria as set forth in the examiner's handbook adopted by the national association of insurance commissioners in effect when the commissioner exercises discretion under this subsection.
(c) The commissioner shall have free access to the books and papers of any such company that relate to its business and to the books and papers kept by any of its agents and may examine under oath, which the commissioner shall be empowered to administer, the directors, officers, agents or employees of any such company in relation to its affairs, transactions and condition.
(d) For the purpose of such analysis, the commissioner may require reports and other documents be filed with the commissioner.
(e) The commissioner may also examine or investigate any person, or the business of any person, insofar as such examination or investigation is, in the sole discretion of the commissioner, necessary or material to the examination of the company, but such examination or investigation shall not infringe upon or extend to any communications or information accorded privileged or confidential status under any other laws of this state.
(f) Upon determining that an examination should be conducted, the commissioner or the commissioner's designee shall appoint one or more examiners to perform the examination and instruct such examiners as to the scope of the examination. The commissioner may also employ such other guidelines or procedures as the commissioner may deem appropriate.
(g) When making an examination under this act, the commissioner may retain attorneys, appraisers, independent actuaries, independent certified public accountants or other professionals and specialists as examiners, the reasonable cost of which shall be paid by the company that is the subject of the examination.
(h) (1) Not later than 30 days following completion of the examination or at such earlier time as the commissioner shall prescribe, the examiner in charge shall file with the deparment a verified written report of examination under oath. Not later than 30 days following receipt of the verified report, the department shall transmit the report to the company examined, together with a notice that shall afford such company examined a reasonable opportunity of not more than 30 days to make a written submission or rebuttal with respect to any matters contained in the examination report.
(2) Within 30 days of the end of the period allowed for the receipt of written submissions or rebuttals, the commissioner shall fully consider and review the report, together with any written submissions or rebuttals and any relevant portions of the examiners' workpapers, and enter an order:
(A) Adopting the examination report as filed or with modification or corrections. If the examination report reveals that the company is operating in violation of any law, rule and regulation or prior order of the commissioner, the commissioner may order the company to take any action the commissioner considers necessary and appropriate to cure such violations;
(B) rejecting the examination report with directions to the examiners to reopen the examination for purposes of obtaining additional data, documentation or information; or
(C) call for and conduct a fact-finding hearing in accordance with K.S.A. 40-281, and amendments thereto, for purposes of obtaining additional documentation, data, information and testimony.
(3) All orders entered as a result of revelations contained in the final examination report shall be accompanied by findings and conclusions resulting from the commissioner's consideration and review of the examination report, relevant examiner work papers and any written submissions or rebuttals. Within 30 days of the issuance of the adopted report, the company shall file affidavits executed by each of its directors stating under oath that they have received a copy of the adopted report and related orders.
(4) Upon the adoption of the examination report of an association captive insurance company, the commissioner shall hold the content of the examination report as private and confidential as to the pure captive insurance company. Nothing contained in this act shall be construed to limit the commissioner's authority to use and, if appropriate, to make public any final or preliminary examination report in the furtherance of any legal or regulatory action that the commissioner may, in the commissioner's discretion, deem appropriate.
(i) Nothing contained in this act shall be construed to limit the commissioner's authority to terminate or suspend any examination in order to pursue other legal or regulatory action pursuant to the insurance laws of this state.
(j) All examination reports, preliminary examination reports or results, working papers, recorded information, documents and copies thereof produced by, obtained by or disclosed to the commissioner or any other person in the course of an examination made under this section are confidential and are not subject to subpoena and may not be made public by the commissioner or an employee or agent of the commissioner without the written consent of the company, except to the extent provided in this subsection. Nothing in this subsection shall prevent the commissioner from using such information in furtherance of the commissioner's regulatory authority under this act. The commissioner may grant access to such information to public officers having jurisdiction over the regulation of insurance in any other state or country or to law enforcement officers of Kansas or any other state or agency of the federal government at any time. Access may also be granted to the national association of insurance commissioners and its affiliates and the international association of insurance supervisors and its affiliates. Persons receiving such information must agree in writing prior to receiving the information to provide to it the same confidential treatment as required by this section, unless the prior written consent of the company to which it pertains has been obtained.
(k) The commissioner may receive documents, materials or information, including otherwise confidential and privileged documents, materials or information, from the national association of insurance commissioners, and its affiliates and subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions and shall maintain as confidential or privileged any document, material or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information. Documents received pursuant to this section shall not be subject to disclosure pursuant to the open records act, K.S.A. 45-215 et seq., and amendments thereto.
History: L. 1988, ch. 156, § 8; L. 2018, ch. 50, § 42; L. 2023, ch. 25, § 2; L. 2025, ch. 99, § 26; July 1.
(a) The certificate of authority of a captive insurance company to do an insurance business in this state may be suspended or revoked by the commissioner for any of the following reasons:
(1) The captive insurance company is financially impaired, insolvent or otherwise deemed to be in a hazardous financial condition pursuant to K.S.A. 40-222b, and amendments thereto;
(2) failure to meet the requirements of K.S.A. 40-4304, and amendments thereto;
(3) refusal or failure to submit the report, required by K.S.A. 40-4307, and amendments thereto, or any other report or statement required by law or by lawful order of the commissioner;
(4) failure to comply with the provisions of its own organizational documents;
(5) failure to pay any tax or fee, or to submit to pay the cost of examination or any legal obligation relative thereto, as required by Kansas law;
(6) use of methods that, although not otherwise specifically prohibited by law, nevertheless render its operation detrimental or its condition unsound with respect to the public or to its policyholders;
(7) failure otherwise to comply with the laws of this state.
(b) Whenever it appears to the commissioner that any captive insurance company has committed any of the acts specified in subsection (a), the commissioner shall give the company notice and an opportunity for hearing in accordance with the provisions of the Kansas administrative procedure act. If the commissioner finds, upon examination, hearing or other evidence, that any captive insurance company has committed any of the acts specified in subsection (a), the commissioner may suspend or revoke such certificate of authority if the commissioner deems it in the best interests of the public and the policyholders of such captive insurance company, notwithstanding any other provisions of this act.
(c) Although issued and delivered to the captive insurance company, the certificate of authority at all times shall be the property of this state. Upon any expiration, suspension or termination thereof, the captive insurance company shall promptly deliver the certificate of authority to the commissioner.
(d) Suspension of a captive insurance company's certificate of authority shall be for such period as the commissioner specifies in the order of suspension. During the suspension period, the commissioner may rescind or shorten the suspension by further order.
(e) During the suspension period, the captive insurance company may not solicit or write any new business, but must file annual statements, pay fees and taxes as required under this act, and unless otherwise provided in the order of suspension, may service its business already in force as if the certificate of authority had continued in full force.
History: L. 1988, ch. 156, § 9; L. 2018, ch. 50, § 43; July 1.
(a) Captive insurance companies shall comply with:
(1) Except for any payment-in-kind assets held by a technology-enabled fiduciary financial institution insurance company, the investment requirements contained in articles 2a and 2b of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, as applicable; and
(2) such investment requirements as may otherwise be approved by the commissioner upon application by any such captive insurance company.
(b) Investments of association captive insurance companies shall be valued in accordance with the valuation procedures established by the national association of insurance commissioners, except to the extent it is inconsistent with the accounting standards in use by the company and approved by the commissioner.
(c) Insurance companies organized in a jurisdiction other than Kansas and Kansas technology-enabled fiduciary financial institution insurance companies may hold in-kind assets in accordance with K.S.A. 2025 Supp. 40-4354, and amendments thereto, and any such in-kind assets required to be held shall be counted as part of the reserves, capital and surplus of such insurance companies required for the primary and predominant business activity of the writing of insurance or the reinsuring of risks underwritten by technology-enabled fiduciary financial institution insurance companies.
(d) A technology-enabled fiduciary financial institution insurance company shall be permitted to hold equity interests in an affiliated technology-enabled fiduciary financial institution.
History: L. 1988, ch. 156, § 10; L. 2018, ch. 50, § 44; L. 2022, ch. 29, § 5; April 14.
(a) Any captive insurance company organized under the laws of this state may, with the consent of the commissioner, assume all or any part of an individual risk or all or any part of a particular class of risks by affiliated insurers.
(b) Any captive insurance company may take a credit or reduction from liability for the reinsurance of risks or portions of risks ceded to a reinsurer in accordance with K.S.A. 40-221a, and amendments thereto, or as otherwise approved by the commissioner. The commissioner may require any other documents, financial information or other evidence that such reinsurer will be able to provide adequate security for its financial obligations. The commissioner may deny authorization or impose any limitation on the activities of a reinsurer that in the commissioner's judgment are necessary and proper to provide adequate security for the ceding captive insurance company and for the protection and consequent benefit of the public at large.
History: L. 1988, ch. 156, § 11; L. 1990, ch. 177, § 3; L. 2018, ch. 50, § 45; July 1.
No captive insurance company shall be required to join a rating organization or a policy form organization.
History: L. 1988, ch. 156, § 12; L. 2025, ch. 99, § 27; July 1.
No captive insurance company shall be permitted to join or contribute financially to any plan, pool, association or guaranty or insolvency fund in this state, nor shall any captive insurance company, or its insured, or its parent or any affiliated company, receive any benefit from any such plan, pool, association or guaranty or insolvency fund for claims arising out of the operations of such captive insurance company. Prior to insuring a risk or hazard of an association member, the association captive insurance company must notify the association member that it does not participate in any guaranty or insolvency fund in Kansas.
History: L. 1988, ch. 156, § 13; L. 2018, ch. 50, § 46; July 1.
(a) Each captive insurance company shall, at the time it files the report required by K.S.A. 40-4307, and amendments thereto, pay a tax on all premiums received on risks located in this state.
(b) Each captive insurance company shall pay the commissioner a tax at the rate of 2/10 of 1% on each dollar of direct premiums collected or contracted for, during the year ending December 31 next preceding, on policies or contracts of insurance written by the captive insurance company, after deducting from the direct premiums subject to the tax amounts paid to policyholders as return premiums with respect to such preceding year only, which amounts shall include only dividends or distributions of unabsorbed premiums or premium deposits returned or credited to policyholders, up to a maximum tax for such year of $500,000, except that no tax shall be due or payable as a consideration received for annuity contracts.
(c) Each captive insurance company shall pay to the commissioner no later than March 1 of each year a tax at the rate of 1/10 of 1% on each dollar assumed reinsurance premiums collected or contracted for, during the year end December 31 next preceding, on policies or contracts of insurance written by the captive insurance company, up to a maximum tax for such year of $300,000. However, no such tax applies to premiums for risks or portion of risks that are subject to taxation on a direct basis pursuant to subsection (b), and no such tax shall be payable in connection with the receipt of assets in exchange for the assumption of loss reserves and other liabilities of another insurer under common ownership and control if such transaction is part of a plan to discontinue the operations of such other insurer and if the intent of the company by the state or any county, city or municipality within Kansas, except ad valorem taxes on real and personal property used in the production of income.
(d) (1) A company redomesticating under K.S.A. 2025 Supp. 40-4355, and amendments thereto, shall only be liable for taxes due pursuant to subsections (b) and (c) on premiums paid to the company after redomestication.
(2) A company redomesticating under this section after July 1 of any year shall only be subject to 1/2 of the minimum premium tax specified in subsections (b) and (c).
(3) A foreign or alien company redomesticating pursuant to K.S.A. 2025 Supp. 40-4355, and amendments thereto, shall report all premium taxes due pursuant to subsections (b) and (c) but may, in either its first or its second year of operations, but not both, after redomesticating into this state, elect to forego the payment of premium taxes. A company making such an election that surrenders its certificate of authority or redomesticates to another jurisdiction within five years of redomestication into this state shall immediately pay a tax in an amount equal to the foregone premium tax plus 10% per annum from the date of the foregone premium.
(e) The tax provided in this section shall be calculated on an annual basis, notwithstanding that policies or contracts of insurance or contracts of reinsurance are issued on a multi-year basis. In the case of multi-year policies or contracts, the premium shall be prorated for purposes of determining the tax under this section.
(f) The tax provided for in this section shall constitute all taxes collectible under the laws of the state of Kansas from any captive insurance company, and no other occupation tax or any other tax shall be levied or collected from any captive insurance company by the state or any political subdivision thereof.
History: L. 1988, ch. 156, § 14; L. 2018, ch. 50, § 47; L. 2025, ch. 99, § 28; July 1.
To the extent the insurance provided or solicited by a captive insurance company involves persons or property not owned or controlled by a parent, affiliate or industrial insured, the provisions of article 24 of chapter 40 of the Kansas Statutes Annotated shall apply.
History: L. 1988, ch. 156, § 15; July 1.
History: L. 1988, ch. 156, § 16; Repealed, L. 2018, ch. 50, § 50; July 1.
The commissioner may adopt such rules and regulations relating to captive insurance companies as are necessary to carry out the provisions of this act. The commissioner, on a case-by-case basis, may by order, exempt a captive insurance company from the provisions of this act and any rule or regulation adopted by the commissioner that, as reasonably determined by the commissioner, based on such factors deemed relevant by the commissioner, consistent with the purposes of this act, are inappropriate to apply to such captive insurance company.
History: L. 1988, ch. 156, § 17; L. 2018, ch. 50, § 48; July 1.
(a) No provisions of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, other than those contained in this act or contained in specific references contained in this act or specific references contained in statutory sections cited in subsections (b) and (c), shall apply to captive insurance companies.
(b) The provisions of K.S.A. 40-2209 and 40-2215, and amendments thereto, shall apply to captive insurance companies and to all contracts issued under the act of which this section is a part.
(c) The provisions of article 33 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, shall continue to apply to insurers, as applicable.
(d) To the extent not inconsistent with this act, the provisions of article 36 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, shall apply to captive insurance companies authorized under this act.
History: L. 1988, ch. 156, § 18; L. 1991, ch. 134, § 12; L. 2018, ch. 50, § 49; July 1.
The commissioner may adopt rules and regulations establishing standards to ensure that a pure captive insurance company's parent or any of its affiliated companies is able to exercise control of the risk management function of any controlled unaffiliated business to be insured by the pure captive insurance company, except that, until such time as rules and regulations under this section are adopted, the commissioner may approve the coverage of such risks by a pure captive insurance company on a case-by-case basis.
History: L. 2018, ch. 50, § 2; July 1.
The following actions shall not be taken without the prior approval of the commissioner:
(a) The dissolution of a captive insurance company;
(b) the sale, exchange, lease, mortgage, assignment, pledge or other transfer of or granting of a security interest in all or substantially all of the assets of a captive insurance company;
(c) the making of a loan, investment or extension of credit by a captive insurance company, provided each such transaction is equal to or exceeds 3% of the captive insurance company's admitted assets, except as provided in K.S.A. 40-430, and amendments thereto;
(d) any distribution or dividend out of the capital and surplus, or otherwise;
(e) any merger or consolidation to which a captive insurance company is a party;
(f) any conversion of a captive insurance company to another business form;
(g) any transfer to or domestication in any jurisdiction by a captive insurance company; or
(h) any amendment of the organizational documents of a captive insurance company.
History: L. 2018, ch. 50, § 3; July 1.
(a) Unless otherwise approved by the commissioner, a captive insurance company shall maintain its books, records, documents, accounts, vouchers and agreements in Kansas. Notwithstanding the foregoing, all electronic documents shall be accessible within the state. A captive insurance company shall make its books, records, documents, accounts, vouchers and agreements available for inspection by the commissioner at any time. A captive insurance company shall keep its books, records, documents, accounts, vouchers and agreements in such manner that its financial condition, affairs and operations can be readily ascertained and in such manner that the commissioner may readily verify its financial statements and determine its compliance with all relevant statutes.
(b) Unless otherwise approved by the commissioner, all original books, records, documents, accounts, vouchers and agreements of a captive insurance company must be preserved and kept available in Kansas for the purpose of examination and inspection until the commissioner approves their destruction or other disposition. If the commissioner approves the preservation and keeping of the foregoing outside of Kansas, the captive insurance company shall maintain a complete and true copy of each such original within the state. Books, records, documents, accounts, vouchers and agreements may be photographed, reproduced on film or stored and reproduced electronically.
(c) If any company, by its officers, directors, employees or agents, fails to comply with subsections (a) and (b), the commissioner, after notice and opportunity for hearing, may impose a civil penalty of up to $5,000 for each violation or act, along with a penalty of up to $1,000 for each week thereafter that such report or document is not provided. A violation of subsection (a) or (b) shall also be grounds for suspension or refusal of, or nonrenewal of, the certificate of authority held by the captive insurance company. Any proceeding for suspension, revocation or refusal of any certificate of authority shall be conducted in accordance with the provisions of the Kansas administrative procedure act.
History: L. 2018, ch. 50, § 4; July 1.
There is hereby created a fund in the state treasury to be known as the captive insurance regulatory and supervision fund to be administered by the commissioner. All moneys credited to such fund shall be expended only for the purpose of providing for the administration of this act. All fees received by the commissioner under the captive insurance act shall be remitted to the state treasurer in accordance with the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount in the state treasury to the credit of the captive insurance regulatory and supervision fund. All expenditures from the fund shall be made in accordance with appropriation acts upon warrants of the director of accounts and reports issued pursuant to vouchers approved by the commissioner. All amounts received by the department pursuant to this act shall be credited to this fund.
History: L. 2018, ch. 50, § 5; July 1.
(a) As used in this section, unless the context requires otherwise, "dormant captive insurance company" means a captive insurance company that has:
(1) Ceased transacting the business of insurance, including the issuance of insurance policies; and
(2) no remaining liabilities associated with insurance business transactions or insurance policies issued prior to the filing of its application for a certificate of dormancy under this section.
(b) A captive insurance company domiciled in Kansas that meets the criteria of subsection (a) may apply to the commissioner for a certificate of dormancy. The certificate of dormancy shall be subject to renewal every five years and shall be forfeited if not renewed within such time.
(c) A dormant captive insurance company that has been issued a certificate of dormancy shall:
(1) Possess and thereafter maintain unimpaired, paid-in capital and surplus of not less than $25,000;
(2) prior to March 15 of each year, submit to the commissioner a report of its financial condition, verified by oath by two of its executive officers, in a form as may be prescribed by the commissioner; and
(3) pay a license renewal fee not to exceed $500. Not later than December 1 of each year, the commissioner shall set and cause to be published in the Kansas register such fee required pursuant to this paragraph.
(d) A dormant captive insurance company shall not be subject to or liable for the payment of any tax under K.S.A. 40-4314, and amendments thereto, or as provided in article 28 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto.
(e) A dormant captive insurance company shall apply to the commissioner for approval to surrender its certificate of dormancy and resume conducting the business of insurance prior to issuing any insurance policies.
(f) A certificate of dormancy shall be revoked if a dormant captive insurance company no longer meets the criteria of subsection (a).
(g) The commissioner may promulgate rules and regulations as necessary to carry out the provisions of this section.
History: L. 2018, ch. 50, § 6; L. 2025, ch. 87, § 31; July 1.
The captive insurance company shall notify the commissioner in writing within 10 days of any material change in the financial condition or management of the captive insurance company. The commissioner shall designate material changes through rules and regulations.
History: L. 2018, ch. 50, § 7; July 1.
(a) A branch captive insurance company, as defined in K.S.A. 40-4326, and amendments thereto, may be established in Kansas in accordance with the provisions of the captive insurance act. In addition to the general provisions of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, the provisions of the captive insurance act shall apply to branch captive insurance companies. In the event of conflict between the provisions of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, and the provisions of the captive insurance act, the latter shall control.
(b) No branch captive insurance company shall do any insurance business in Kansas unless it maintains the principal place of business for its branch operations, as defined in K.S.A. 40-4326, and amendments thereto, in Kansas and it appoints a principal representative in Kansas who is a resident of Kansas.
History: L. 2018, ch. 50, § 8; July 1.
As used in K.S.A. 40-4325 through 40-4331, and amendments thereto:
(a) "Alien" means formed under the laws of any country or jurisdiction other than the United States of America or any of its states, districts, commonwealths or possessions.
(b) "Alien captive insurance company" means any insurance company formed to write insurance business of a nature that the commissioner determines is otherwise permissible under this act and is licensed or authorized pursuant to the laws of an alien jurisdiction that imposes statutory or regulatory standards in a form acceptable to the commissioner on companies transacting business of insurance in such jurisdiction.
(c) "Branch business" means any insurance business transacted by a branch captive insurance company in Kansas.
(d) "Branch captive insurance company" means any alien captive insurance company that has been issued a certificate of authority by the commissioner to transact the business of insurance in Kansas through a business unit with a principal place of business in Kansas, and has not otherwise been issued a certificate of authority by the commissioner to transact insurance under this act.
(5) "Branch operations" means any business operations of a branch captive insurance company in Kansas.
(6) "Principal representative" shall mean a person designated as such by the branch captive insurance company as its principal representative on such forms and with such information as required by the commissioner.
History: L. 2018, ch. 50, § 9; July 1.
(a) No branch captive insurance company shall be issued a certificate of authority unless it shall possess and thereafter maintain, as security for the payment of liabilities attributable to the branch operations:
(1) Minimum capital and surplus of an amount equal to the amount set forth in K.S.A. 40-4304, and amendments thereto, as the minimum capital requirement for a pure captive insurance company; and
(2) reserves on such insurance policies or such reinsurance contracts as may be issued or assumed by the branch captive insurance company through its branch operations, including reserves for losses, allocated loss adjustment expenses, incurred but not reported losses, and unearned premiums with regard to business written through the branch operations, except that, the commissioner may permit a branch captive insurance company to credit against any such reserve requirement in accordance with K.S.A. 40-221a, and amendments thereto.
(b) Subject to the prior approval of the commissioner, the amounts required in subsection (a) may be held in the form of:
(1) A trust formed under a trust agreement and funded by assets acceptable to the commissioner;
(2) an irrevocable letter of credit issued or confirmed by a bank approved by the commissioner; or
(3) any combination thereof.
(c) The commissioner may, on a case-by-case basis, exempt a branch captive insurance company from any or all of the requirements of this section, provided the commissioner finds satisfactory evidence of the branch captive insurer's financial stability.
History: L. 2018, ch. 50, § 10; July 1.
(a) In the case of a captive insurance company authorized as a branch captive, the branch captive insurance company shall petition the commissioner to issue a certificate setting forth the commissioner's finding that, after considering the character, reputation, financial responsibility, insurance experience and business qualifications of the officers and directors of the branch captive insurance company, the licensing and maintenance of the branch operations will promote the general good of Kansas. The branch captive insurance company may register to do business in Kansas after the commissioner's certificate is issued.
(b) In making this determination, the commissioner or the commissioner's designee shall have free access to the books and papers of any such company that relate to its business and to the books and papers kept by any of its agents and may examine under oath, which the commissioner is empowered to administer, the directors, officers, agents or employees of any such company in relation to its affairs, transactions and condition.
History: L. 2018, ch. 50, § 11; July 1.
(a) A branch captive insurance company shall file with the commissioner a copy of all reports and statements required to be filed under the laws of the jurisdiction in which the alien captive insurance company is formed, verified by oath of two of its executive officers. Such reports and statements shall be filed with the commissioner on the same day that such reports and statements are due in the domiciliary jurisdiction of the alien captive insurance company.
(b) If the commissioner is satisfied that the annual report filed in accordance with subsection (a) provides adequate information concerning the financial condition of the branch captive insurance company, the commissioner may waive the requirement for completion of the annual report required under K.S.A. 40-4307, and amendments thereto. If the commissioner is not satisfied with the reports and statements filed pursuant to subsection (a), a report that meets the requirements of K.S.A. 40-4307, and amendments thereto, shall be filed with the commissioner at such date as the commissioner shall establish.
(c) If the branch captive insurance company is not required to file reports or statements in its domiciliary jurisdiction, the requirements of K.S.A. 40-4307, and amendments thereto, shall apply.
(d) All reports shall be provided the same confidential treatment as provided in K.S.A. 40-4308, and amendments thereto.
History: L. 2018, ch. 50, § 12; July 1.
(a) The examination of a branch captive insurance company pursuant to K.S.A. 40-4308, and amendments thereto, shall be of branch business and branch operations only, so long as the branch captive insurance company provides annually to the commissioner a certificate of compliance, or its equivalent, issued by or filed with the licensing authority of the domiciliary jurisdiction of the branch captive insurance company, and demonstrates to the commissioner's satisfaction that it is operating in sound financial condition in accordance with all applicable laws and regulations of such jurisdiction.
(b) As a condition of the issuance of a certificate of authority under this act, a branch captive insurance company shall grant authority to the commissioner for examination of the affairs of a branch captive insurance company in the jurisdiction in which the branch captive insurance company is formed, operates or maintains books and records.
(c) All reports shall be given the same confidential treatment as provided in K.S.A. 40-4308, and amendments thereto.
History: L. 2018, ch. 50, § 13; July 1.
In the case of a branch captive insurance company, the tax provided for in K.S.A. 40-4314, and amendments thereto, shall apply only to the branch business of such company.
History: L. 2018, ch. 50, § 14; July 1.
As used in K.S.A. 40-4332 through 40-4352, and amendments thereto:
(a) "Affiliate" means a company that controls, is controlled by or under common control with a special purpose insurance captive.
(b) "Affiliated agreements" means written agreements, including a special purpose insurance captive contract, between a special purpose insurance captive and its affiliate.
(c) "Ceded reinsurance agreements" means reinsurance agreements entered into by the special purpose insurance captive with affiliates or unaffiliated parties for the purpose of obtaining reinsurance for all or some portion of the risks assumed by the special purpose insurance captive under special purpose insurance captive contracts.
(d) "Ceding company" means the insurer ceding business to the special purpose insurance captive under the special purpose insurance captive contract.
(e) "Commissioner" means the commissioner of insurance, or the commissioner's designee.
(f) "Department" means the Kansas insurance department.
(g) "Letter of credit" means a letter issued by a qualified United States financial institution to serve as a guarantee of payment. The letter of credit shall be clean and irrevocable.
(h) "NAIC" means the national association of insurance commissioners.
(i) "Organizational documents" means the special purpose insurance captive's articles of organization, bylaws, operating agreement or other foundational document that establishes the special purpose insurance captive as a legal entity or prescribes its existence.
(j) "Permitted investments" means investments authorized by articles 2a and 2b of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, or as specifically authorized by the commissioner by order.
(k) "Risk-based capital" or "RBC" has the same meaning the term is defined in K.S.A. 40-2d01, and amendments thereto.
(l) "Securitization" means a transaction or a group of related transactions, which may include capital market offerings, that are effected through related risk transfer instruments and facilitating administrative agreements where all or part of the result of such transactions is used to fund a special purpose insurance captive's obligations under a reinsurance contract with a ceding insurer and by which proceeds are: (1) Obtained by a special purpose insurance captive, directly or indirectly, through the issuance of securities by the special purpose insurance captive or any other person; or (2) provided through one or more letters of credit or other assets for the benefit of the special purpose insurance captive that the commissioner authorizes to treat as admitted assets for purposes of the special purpose insurance captive's annual statement, where all or any part of such proceeds, letters of credit, or assets, as applicable, are used to fund the special purpose insurance captive's obligations under a reinsurance contract with a ceding insurer. The term "securitization" does not include the issuance of a letter of credit for the benefit of the commissioner to satisfy all or part of the special purpose insurance captive's capital and surplus requirements under the captive insurance act.
(m) "Special purpose insurance captive" means a captive insurance company that has received a certificate of authority from the commissioner for the limited purposes provided for in K.S.A. 40-4334, and amendments thereto.
(n) "Special purpose insurance captive contract" means a written contract between the special purpose insurance captive and the ceding company under which the special purpose insurance captive agrees to provide reinsurance protection to the ceding company for risks associated with the ceding company's written or assumed annuity, life insurance or accident and health insurance business.
(o) "State" means the state of Kansas.
(p) "Surplus note" means an unsecured subordinated debt obligation, including any contingent obligation for the repayment of a sum of money upon a written agreement that the loan or advance with interest shall be repaid only out of funds as specified in the approved plan of operation, or any approved amendment thereto.
(q) "Valuation manual" means the manual of valuation instructions adopted by the NAIC.
History: L. 2018, ch. 50, § 15; July 1.
(a) No provision of the Kansas insurance laws, other than those specifically referenced in K.S.A. 40-4332 through 40-4352, and amendments thereto, apply to a special purpose insurance captive, its operations, assets, investments and special purpose insurance captive contracts. Notwithstanding the foregoing, article 33 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, shall continue to apply as applicable.
(b) In the event of a conflict between any provision of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, and K.S.A. 40-4332 through 40-4352, and amendments thereto, the latter shall control as to the special purpose insurance captive and its operations, assets, dividends, special purpose insurance captive contracts, and surplus notes and investments. The commissioner may exempt all, or any one, special purpose insurance captive by rules and regulations or order from the provisions of K.S.A. 40-4332 through 40-4352, and amendments thereto, that the commissioner determines to be inappropriate, but may not expand the application of these sections.
History: L. 2018, ch. 50, § 16; July 1.
(a) To transact business in Kansas, a special purpose insurance captive shall:
(1) Obtain from the commissioner a certificate of authority authorizing it to conduct reinsurance business in Kansas;
(2) hold at least one meeting of its board of directors each year within Kansas;
(3) maintain its principal place of business in Kansas;
(4) authorize the commissioner to accept service of process on its behalf in accordance with K.S.A. 40-218, and amendments thereto;
(5) maintain unimpaired paid-in capital and surplus of not less than $5,000,000;
(6) maintain a risk-based capital of at least 200%; and
(7) pay all applicable fees as required by this act.
(b) A special purpose insurance captive, when permitted by its organizational documents, may apply to the commissioner for a certificate of authority to conduct reinsurance in Kansas as authorized by this section.
(1) An authorized special purpose insurance captive may only reinsure the risks of its ceding company. A special purpose insurance captive may reinsure risks of more than one ceding company if all ceding companies from which a special purpose insurance captive assumes risks are affiliated with one another.
(2) An authorized special purpose insurance captive may cede all or a portion of its assumed risks under ceded reinsurance agreements.
(3) An authorized special purpose insurance captive may take credit or a reduction from liability for the reinsurance of risks or portions of risks ceded to a reinsurer in accordance with K.S.A. 40-221a, and amendments thereto, or as otherwise approved by the commissioner.
(c) To obtain a certificate of authority to transact business as a special purpose insurance captive in Kansas, the special purpose insurance captive shall:
(1) File an application that shall include the following:
(A) Certified copies of its organizational documents;
(B) a statement under oath from any of the applicant's officers as to the financial condition of the applicant as of the time the application is filed;
(C) evidence of the applicant's assets as of the time of the application;
(D) complete biographical sketches for each officer and director on forms created by the NAIC;
(E) a plan of operation as described in K.S.A. 40-4335, and amendments thereto;
(F) an affidavit signed by the applicant that the special purpose insurance captive will operate only in accordance with the provisions of this section and its plan of operation;
(G) a description of the investment strategy the special purpose insurance captive will follow; and
(H) a description of the source and form of the initial minimum capital proposed in the plan of operation; and
(2) have deposited with the commissioner of insurance pursuant to K.S.A. 40-229a, and amendments thereto, securities authorized by K.S.A. 40-2a01 et seq., and amendments thereto, in an amount equal to not less than the minimum capital stock required of such company for the protection of its policyholders or creditors, or both;
(3) demonstrate that the minimum surplus required is established and held in Kansas; and
(4) provide copies of any filings made by the ceding company with the ceding company's domiciliary insurance regulator to obtain approval for the ceding company to enter into the special purpose insurance captive contract and copies of any filings made by any affiliate of the special purpose insurance captive to obtain regulatory approval to contribute capital to the special purpose insurance captive or to acquire direct or indirect ownership of the special purpose insurance captive. The special purpose insurance captive shall provide copies of any letters of approval or disapproval received from the insurance regulator responding to such filing.
(d) The commissioner may require the special purpose insurance captive to revise its plan of operation under K.S.A. 40-4335, and amendments thereto, and meet all requirements imposed by a revised plan of operation as approved by the commissioner thereunder.
(e) The department shall act upon a complete application within 30 days of its filing. Upon good cause shown, the commissioner may extend the time to act on the application by 30 days.
(f) In the event that the ceding company is not required to make filings with its domiciliary insurance regulator as described in subsection (c)(4), no such filing shall be required under subsection (c)(4) in Kansas if the applicant provides the commissioner with a certification signed by one of its officers attesting that no such filing is required with the ceding company's domiciliary regulator.
(g) Once granted, a certificate of authority under this section shall continue until March 1 of each year. At such time, the certificate of authority may be renewed at the discretion of the commissioner.
(h) A special purpose insurance captive shall pay to the commissioner a nonrefundable application fee not to exceed $10,000 for examining, investigating and processing its application for certificate of authority, and the commissioner is authorized to retain legal, financial, actuarial and examination services from outside the department, the reasonable costs of which may be additionally charged against the applicant. In addition, each special purpose insurance captive shall pay a renewal fee not to exceed $10,000 for each subsequent year. Not later than December 1 of each year, the commissioner shall set and cause to be published in the Kansas register the fee required pursuant to this subsection for the next calendar year.
History: L. 2018, ch. 50, § 17; L. 2025, ch. 87, § 32; July 1.
(a) A special purpose insurance captive must file, as part of its application, a plan of operation to consist of a description of the contemplated financing transaction or transactions and a detailed description of transaction documents to which the special purpose insurance captive will be a party, including, but not limited to, the special purpose insurance captive contract and related transactions to which the special purpose insurance captive will be a party that must include:
(1) Draft documentation or, at the commissioner's discretion, a written summary of all material agreements to which the special purpose insurance captive is to be a party that are to be entered into to effectuate the special purpose insurance captive contract and the financing transaction;
(2) the purpose of the transaction;
(3) maximum amounts;
(4) interrelationships of the various transactions, to which the special purpose insurance captive will be a party, required to effectuate the financing;
(5) the investment strategy and plan for the special purpose insurance captive;
(6) a description of the underwriting, reporting and claims payment methods by which losses covered by the special purpose insurance captive contract will be reported, accounted for and settled;
(7) the initial minimum capital to be held by the special purpose insurance captive; and
(8) a pro forma balance sheet and income statements illustrating the performance of the special purpose insurance captive, the special purpose insurance captive contract, and any ceded reinsurance agreements under scenarios reasonably requested by the commissioner or specified by rules and regulations.
(b) The pro forma balance sheets and income statements filed under this section must be updated by the special purpose insurance captive and filed with the commissioner in the event of a material deviation from the original or most recently filed plan of operation.
(1) The plan of operation must specify which deviations are to be considered material; and
(2) any other documents or descriptions the commissioner deems appropriate to explain such material deviation.
History: L. 2018, ch. 50, § 18; July 1.
(a) In order to approve an application and issue a certificate of authority to a special purpose insurance captive, the commissioner must find that:
(1) The proposed plan of operation provides a reasonable and expected successful operation;
(2) the terms of the transactions proposed in the plan of operation to which the special purpose insurance captive is a party comply with K.S.A. 40-4332 through 40-4352, and amendments thereto; and
(3) the commissioner of the domiciliary state of each ceding company has notified the commissioner in writing or the applicant has otherwise provided assurance satisfactory to the commissioner that such regulator has either approved or granted a disapproval of the special purpose insurance captive contract.
(b) In evaluating the expectation of a successful operation, the commissioner shall consider whether the proposed special purpose insurance captive and its management are of known good character and reasonably believed not to be affiliated, directly or indirectly, with a person known to have been involved with the improper manipulation of assets, accounts or reinsurance. In the event the commissioner of the state of domicile of any ceding company is not required to review the special purpose insurance captive contract, then the approval described in subsection (a)(3) shall not be required for licensing of the special purpose insurance captive hereunder.
History: L. 2018, ch. 50, § 19; July 1.
A special purpose insurance captive may be incorporated as a stock insurer subject to the provisions in K.S.A. 40-205, and amendments thereto, or as a nonstock corporation, or may be formed as a limited liability company, partnership or limited partnership.
History: L. 2018, ch. 50, § 20; July 1.
(a) Activities of a special purpose insurance captive shall be limited to those necessary to accomplish its purpose as outlined in its plan of operation.
(b) The name of a special purpose insurance captive shall not be deceptively similar to or likely to be confused with another existing business name registered in the state.
(c) A special purpose insurance captive must have at least three incorporators or organizers, at least one of whom shall be a resident of the state.
(d) The capital stock of a special purpose insurance captive incorporated as a stock company shall be issued at not less than par value.
History: L. 2018, ch. 50, § 21; July 1.
A special purpose insurance captive may enter into a special purpose insurance captive contract with a ceding company, provided:
(a) The special purpose insurance captive has been granted a certificate of authority to transact business as a special purpose insurance captive under this section; and
(b) the special purpose insurance captive provides the commissioner with evidence of approval or disapproval from the insurance regulatory official of the ceding company's state or country of domicile to enter into the special purpose insurance captive contract. If the ceding company's domiciliary insurance regulatory official does not customarily provide evidence of such approval or disapproval, the commissioner shall approve the special purpose insurance captive's execution of such special purpose insurance captive contract, if such special purpose insurance captive contract would be acceptable and if an assuming insurer domiciled in Kansas were to propose execution of the same with its ceding company for the purpose of assuming such reinsurance and an officer of the special purpose insurance captive provides the commissioner with a certification that terms of the special purpose insurance captive contract meet the requirements for the ceding company to obtain credit in its state of domicile for reinsurance ceded under the special purpose insurance captive contract.
History: L. 2018, ch. 50, § 22; July 1.
(a) A special purpose insurance captive may issue approved securities, subject to and in accordance with applicable law, its approved plan of operation and its organizational documents. A special purpose insurance captive may enter into and perform all its obligations under any required contract to facilitate the issuance of these securities.
(b) The commissioner may approve the use of surplus notes. If the commissioner so approves, the special purpose insurance captive shall:
(1) Account for the proceeds of surplus notes as surplus and not debt for purposes of statutory accounting; and
(2) submit for prior approval of the commissioner periodic written requests for payments of interest on and repayments of principal of surplus notes.
(c) The obligation to repay principal or interest, or both, on the securities issued by the special purpose insurance captive shall reflect the risk associated with the reinsurance obligations assumed by the special purpose insurance captive.
History: L. 2018, ch. 50, § 23; July 1.
A special purpose insurance captive's assets shall be managed in accordance with an investment management agreement filed with and approved by order of the commissioner. A special purpose insurance captive shall invest at least 90% of its assets in cash and securities that are investment grade at the time of the acquisition. The balance may be invested in cash, securities or other assets otherwise permitted in chapter 40 of the Kansas Statutes Annotated, and amendments thereto.
History: L. 2018, ch. 50, § 24; July 1.
Admitted assets of the special purpose insurance captive shall include permitted investments, proceeds from a securitization, premium and other amounts payable by a ceding insurer to the special purpose insurance captive, and any other assets approved by the commissioner. Additionally, letters of credit and guarantees of a parent may be recognized as an admitted asset on the special purpose insurance captive's financial statements with prior approval of the commissioner. The commissioner may, by order, reduce the amount of admitted assets previously approved if the commissioner determines that the value of those assets has decreased. At least 30 days prior to issuing any such order, the commissioner shall notify the special purpose insurance captive and provide it with an opportunity to remedy the issues identified by the commissioner. If the issues identified by the commissioner have not been resolved to the commissioner's satisfaction at the end of the 30-day period, the commissioner shall issue the order. The special purpose insurance captive shall have the right to a hearing, at which the insurer may challenge any determination or action by the commissioner. The special purpose insurance captive shall notify the commissioner of its request for hearing within 15 days after the issuance of the order. Hearings under this section shall be conducted in accordance with the provisions of the Kansas administrative procedure act.
History: L. 2018, ch. 50, § 25; July 1.
A special purpose insurance captive shall not:
(a) Enter into a special purpose insurance captive contract with a person that is not authorized to transact the business of insurance or reinsurance in at least its state or country of domicile; or
(b) lend or otherwise invest or place in custody, trust or under management any of its assets with, or to borrow money or receive a loan, other than according to the plan of operation filed with and approved by the commissioner.
History: L. 2018, ch. 50, § 26; July 1.
(a) A special purpose insurance captive shall not declare or pay dividends or distributions in any form to its owners other than in accordance with the transaction agreements or plan of operation.
(b) Dividends and distributions may not decrease the capital of the special purpose insurance captive below the minimum capital requirements.
(c) All dividends and distributions shall be approved by the commissioner. After giving effect to the dividends, the assets of the special purpose insurance captive, including assets held in trust and letters of credit issued for the exclusive benefit of the special purpose insurance captive, must be sufficient to satisfy the commissioner so that it can meet its obligations, in order to be approved.
(d) Dividends and distributions may be declared by the management of the special purpose insurance captive, provided that the dividend amount or form does not violate the provisions of this section or jeopardize the fulfillment of the obligations of the special purpose insurance captive.
History: L. 2018, ch. 50, § 27; July 1.
Any material changes to a special purpose insurance captive's plan of operation shall require the prior written approval of the commissioner. The plan of operation must specify which deviations shall be considered material.
History: L. 2018, ch. 50, § 28; July 1.
Copies of all completed affiliated agreements to which the special purpose insurance captive is a party, including, but not limited to, the special purpose insurance captive contract or contracts and any reinsurance agreements to which the special purpose insurance captive is a party must be filed with the commissioner for prior approval.
History: L. 2018, ch. 50, § 29; July 1.
(a) Prior to March 1 of each year, each captive insurance company shall submit to the commissioner a report of its financial condition, verified by oath by two of its executive officers or other authorized persons.
(b) A special purpose insurance captive shall report using statutory accounting principles, unless the commissioner requires, approves or accepts the use of generally accepted accounting principles or another comprehensive basis of accounting, in each case with any appropriate or necessary modifications or adaptations required or approved or accepted by the commissioner and as supplemented by additional information required by the commissioner. The commissioner shall, by rules and regulations or order, establish the form and content of the annual report to be filed by a special purpose insurance captive.
(c) A special purpose insurance captive shall file a report of financial condition on a quarterly basis to be designated by the commissioner. The contents and form of the report shall be governed by subsection (b).
(d) A special purpose insurance captive shall file annually with the commissioner an actuarial opinion on reserves for all risks assumed by the special purpose insurance captive pursuant to its reinsurance contracts provided by an internal actuary and may discount its reserves in accordance with that actuarial opinion, subject to approval by the commissioner. A special purpose insurance captive shall file biennially an opinion of a qualified independent actuary acceptable to the commissioner concerning the methods and assumptions used to set reserves. Each opinion shall be governed by K.S.A. 40-409, and amendments thereto. The opinion and memorandum shall be filed with the report of financial condition required by subsection (a).
(e) A special purpose insurance captive may make written application to file its annual report on a fiscal year basis. If an alternative reporting date is granted, the commissioner shall establish the due date and content of any filing required by the special purpose insurance captive in addition to its annual report.
(f) Unless otherwise approved in advance by the commissioner, a special purpose insurance captive company shall maintain its books, records, documents, accounts, vouchers and agreements in Kansas. A special purpose insurance captive shall make its books, records, documents, accounts, vouchers and agreements available for inspection by the commissioner at any time. A special purpose insurance captive shall keep its books and records in such manner that its financial condition, affairs and operations can be readily ascertained and so that the commissioner may readily verify its financial statements and determine its compliance with this act.
(g) Unless otherwise approved in advance by the commissioner, all original books, records, documents, accounts, vouchers and agreements shall be preserved and kept available in this state for the purpose of examination and inspection and until such time as the commissioner approves the destruction or other disposition of such books, records, documents, accounts, vouchers and agreements. If the commissioner approves the keeping of the items listed in this subsection outside this state, the special purpose insurance captive shall maintain within this state a complete and true copy of each such original. Books, records, documents, accounts, vouchers and agreements may be photographed, reproduced on film, or stored and reproduced electronically.
History: L. 2018, ch. 50, § 30; July 1.
(a) Whenever the commissioner of insurance deems it necessary, but at least once every five years, the commissioner may make, or direct to be made, a financial examination of any special purpose insurance captive. The commissioner may engage in continuous analysis for the preparation of the examination. In addition, at the commissioner's discretion, the commissioner may make, or direct to be made, a market regulation examination of any insurance company doing business in this state.
(b) In scheduling and determining the nature, scope and frequency of examinations of financial condition, the commissioner shall consider such matters, such as the results of financial statement analyses and ratios, changes in management or ownership, actuarial opinions, reports of independent certified public accountants and other criteria as set forth in the examiner's handbook adopted by the national association of insurance commissioners and in effect when the commissioner exercises discretion under this subsection.
(c) The commissioner, for the purpose of making such examination or analysis, shall have free access to the books and papers of any such company that relate to its business and to the books and papers kept by any of its agents and may examine under oath, which the commissioner is empowered to administer, the directors, officers, agents or employees of any such company in relation to its affairs, transactions and condition.
(d) For the purpose of such analysis, the commissioner may require reports and other documents to be filed with the commissioner.
(e) The commissioner may also examine or investigate any person, or the business of any person, insofar as such examination or investigation is, in the sole discretion of the commissioner, necessary or material to the examination of the company, but such examination or investigation shall not infringe upon or extend to any communications or information accorded privileged or confidential status under any other laws of this state.
(f) Upon determining that an examination should be conducted, the commissioner shall appoint one or more examiners to perform the examination and instruct them as to the scope of the examination. The commissioner may also employ such other guidelines or procedures as the commissioner may deem appropriate.
(g) When making an examination under this act, the commissioner may retain attorneys, appraisers, independent actuaries, independent certified public accountants or other professionals and specialists as examiners, the reasonable cost of which shall be borne by the company that is the subject of the examination.
(h) (1) No later than 30 days following completion of the examination or at such earlier time as the commissioner shall prescribe, the examiner in charge shall file with the department a verified written report of examination under oath. No later than 30 days following receipt of the verified report, the department shall transmit the report to the company examined, together with a notice that shall afford such company examined a reasonable opportunity of not more than 30 days to make a written submission or rebuttal with respect to any matters contained in the examination report.
(2) Within 30 days of the end of the period allowed for the receipt of written submissions or rebuttals, the commissioner shall fully consider and review the report, together with any written submissions or rebuttals and any relevant portions of the examiners' workpapers and enter an order:
(A) Adopting the examination report as filed or with modification or corrections. If the examination report reveals that the company is operating in violation of any law, rules and regulations or prior order of the commissioner, the commissioner may order the company to take any action the commissioner considers necessary and appropriate to cure such violations;
(B) rejecting the examination report with directions to the examiners to reopen the examination for purposes of obtaining additional data, documentation or information, and refiling pursuant to subsection (k); or
(C) call for and conduct a fact-finding hearing in accordance with K.S.A. 40-281, and amendments thereto, for purposes of obtaining additional documentation, data, information and testimony.
(3) All orders entered as a result of revelations contained in the examination report shall be accompanied by findings and conclusions resulting from the commissioner's consideration and review of the examination report, relevant examiner workpapers and any written submissions or rebuttals. Within 30 days of the issuance of the adopted report, the company shall file affidavits executed by each of its directors stating under oath that they have received a copy of the adopted report and related orders.
(4) Upon the adoption of the examination report, the commissioner shall hold the content of the examination report as private and confidential information for a period of 30 days. Thereafter, the commissioner may open the report for public inspection, so long as no court of competent jurisdiction has stayed its publication. Nothing contained in this act shall be construed to limit the commissioner's authority to use and, if appropriate, to make public any final or preliminary examination report in the furtherance of any legal or regulatory action that the commissioner may, in the commissioner's sole discretion, deem appropriate.
(i) Nothing contained in this act shall be construed to limit the commissioner's authority to terminate or suspend any examination in order to pursue other legal or regulatory action pursuant to the insurance laws of Kansas.
(j) K.S.A. 40-4350, and amendments thereto, shall apply to the confidentiality of all working papers, recorded information, documents and copies thereof produced by, obtained by or disclosed to the commissioner or any other person in the course of an examination made under this act, including analyses by the commissioner pertaining to either the financial condition or the market regulation.
History: L. 2018, ch. 50, § 31; July 1.
(a) Each special purpose insurance captive shall pay to the commissioner on or before May 1 of each year a premium tax at the rate of 0.214 of 1% on the first $20,000,000 of the assumed reinsurance premium, 0.143 of 1% on the next $20,000,000, 0.048 of 1% on the next $20,000,000 and 0.024 of 1% of each dollar thereafter. No reinsurance premium tax shall be payable in connection with the receipt of assets in exchange for the assumption of loss reserves and other liabilities of another insurer under common ownership and control if such transaction is part of a plan to discontinue the operations of such other insurer, and if the intent of the parties to such transaction is to renew or maintain such business with the captive insurance company.
(b) The premium tax imposed by subsection (a) shall constitute all taxes collectible under the laws of this state from any special purpose insurance captive, and no other occupation tax or other taxes shall be levied or collected from any captive insurance company by the state or any county, city or municipality within this state, except ad valorem taxes on real and personal property used in the production of income.
(c) Every special purpose insurance captive shall, on or before February 1 of each year, make a return on a form provided by the commissioner, verified by the affidavit of the company's president and secretary or other authorized officers, to the commissioner stating the amount of all direct premiums received and assumed reinsurance premiums received, whether in cash or in notes, during the year ending on December 31 next preceding. Upon receipt of such returns, the commissioner shall verify the same and certify the amount of tax due from the various companies on the basis and at the rate provided in this section, on or before March 31 of each year. The commissioner shall immediately thereafter notify and assess each company the amount of tax due.
(d) A special purpose insurance captive failing to make returns as required by subsection (c), or failing to pay within the time required all taxes assessed by this section, shall be subject to the provisions of K.S.A. 40-2806, and amendments thereto.
History: L. 2018, ch. 50, § 32; July 1.
(a) Documents, materials or other information obtained by or disclosed to the commissioner pursuant to K.S.A. 40-4332 through 40-4352, and amendments thereto, shall:
(1) Be confidential and privileged, except as provided in K.S.A. 40-4347, and amendments thereto; and
(2) not be subject to disclosure under the Kansas open records act, K.S.A. 45-215 et seq., and amendments thereto.
(b) The commissioner shall not otherwise make the documents, materials or other information public without the prior written consent of the insurer to which it pertains unless the commissioner, after giving the insurer and its affiliates that would be affected thereby notice and opportunity to be heard in accordance with the provisions of the Kansas administrative procedure act, determines that the interests of policyholders, shareholders or the public would be served by the publication thereof, in which event, the commissioner may publish all or any part thereof in such a manner as the commissioner may deem appropriate. In making such determination, the commissioner of insurance also shall take into consideration any potential adverse consequences of the disclosure thereof.
(c) Neither the commissioner of insurance nor any person who received documents, materials or other information while acting under the authority of the commissioner of insurance or with whom such documents, materials or other information are shared pursuant to this section shall be permitted or required to testify in any private civil action concerning any confidential documents, materials or information subject to subsection (a).
(d) In order to assist in the performance of the commissioner's duties, the commissioner of insurance may:
(1) Share documents, materials or other information, including the confidential and privileged documents, materials or information subject to subsection (a), with federal and international regulatory agencies and the NAIC and its affiliates, if the recipient agrees in writing to maintain the confidentiality and privileged status of the document, material or other information and has verified in writing the legal authority to maintain confidentiality;
(2) receive documents, materials or information, including otherwise confidential and privileged documents, materials or information from the national association of insurance commissioners, and its affiliates and subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions and shall maintain as confidential or privileged any document, material or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information. Documents received pursuant to this section shall not be subject to disclosure pursuant to the open records act, K.S.A. 45-215 et seq., and amendments thereto; and
(3) Sharing agreements provided for in subsection (d) shall:
(A) Specify procedures and protocols regarding the confidentiality and security of information shared with the national association of insurance commissioners and its affiliates and subsidiaries pursuant to this act, including procedures and protocols for sharing by the national association of insurance commissioners with other state, federal or international regulators;
(B) specify that ownership of information shared with the NAIC and its affiliates and subsidiaries pursuant to this act remains with the commissioner, and the NAIC's use of the information is subject to the direction of the commissioner;
(C) require prompt notice to be given to an insurer and its affiliates whose confidential information in the possession of the NAIC pursuant to this act that such information is subject to a request or subpoena to the NAIC for disclosure or production; and
(D) require the NAIC and its affiliates and subsidiaries to consent to intervention by an insurer in any judicial or administrative action in which the NAIC and its affiliates and subsidiaries may be required to disclose confidential information about the insurer and its affiliates shared with the NAIC and its affiliates and subsidiaries pursuant to this act. Documents, materials or other information in the possession or control of the national association of insurance commissioners shall be confidential by law and privileged, shall not be subject to the open records act, K.S.A. 45-215 et seq., and amendments thereto, shall not be subject to subpoena and shall not be subject to discovery or admissible in evidence in any private civil action.
(e) The sharing of information by the commissioner of insurance pursuant to this act shall not constitute a delegation of regulatory authority or rulemaking authority, and the commissioner of insurance is solely responsible for the administration, execution and enforcement of the provisions of this act.
(f) No waiver of any applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the commissioner of insurance under this act or as a result of sharing as authorized in subsection (d).
History: L. 2018, ch. 50, § 33; L. 2023, ch. 25, § 3; July 1.
(a) The commissioner may, after notice and hearing, issue an order, subject to the Kansas administrative procedure act, to conserve, rehabilitate or liquidate a special purpose insurance captive domiciled in this state on one or more of the following grounds:
(1) There has been embezzlement, wrongful sequestration, dissipation or diversion of the assets of the special purpose insurance captive;
(2) the special purpose insurance captive is financially impaired, insolvent or otherwise deemed to be in a hazardous financial condition pursuant to K.S.A. 40-222b, and amendments thereto; or
(3) the holders of a majority in outstanding principal amount of each class of special purpose insurance captive securities or surplus notes request or consent to conservation, rehabilitation or liquidation under the provisions of this section.
(b) Upon any order of conservation, rehabilitation or liquidation of a special purpose insurance captive, the receiver shall manage the assets and liabilities of the special purpose insurance captive under the provisions of chapter 40 of the Kansas Statutes Annotated, and amendments thereto.
(c) With respect to amounts recoverable under a special purpose insurance captive contract, the amount recoverable by the receiver must not be reduced or diminished as a result of the entry of an order of conservation, rehabilitation or liquidation with respect to the ceding company, notwithstanding another provision in the special purpose insurance captive contract or other documentation governing the special purpose insurance captive's transactions.
History: L. 2018, ch. 50, § 34; July 1.
The commissioner may promulgate all rules and regulations necessary to effectuate the provisions of K.S.A. 40-4332 through 40-4352, and amendments thereto.
History: L. 2018, ch. 50, § 35; July 1.
K.S.A. 40-4301 through 40-4304, 40-4306 through 40-4315, * 40-4317 through 40-4353, and amendments thereto, and K.S.A. 2025 Supp. 40-4354, and amendments thereto, shall be known and may be cited as the captive insurance act.
History: L. 2018, ch. 50, § 1; L. 2022, ch. 29, § 6; April 14.
(a) In addition to the types of insurance permitted under K.S.A. 40-4302, and amendments thereto, the certificate of authority issued to a technology-enabled fiduciary financial institution insurance company shall authorize such insurance company to provide contracts of suretyship or credit insurance where the obligee under the contract of suretyship or the insured under the contract of credit insurance, as the case may be, is:
(1) An affiliated technology-enabled fiduciary financial institution;
(2) an affiliated fidfin trust; or
(3) any other affiliated company.
(b) (1) In addition to the types of insurance otherwise permitted, and without any limitation, under K.S.A. 40-4302, and amendments thereto, the certificate of authority issued to a technology-enabled fiduciary financial institution insurance company shall authorize such insurance company to insure its affiliated companies that are investors in an investment fund against liability, loss or damage resulting from owning an interest in an investment fund from any of the following risks:
(A) Fraud, theft or conversion of assets by a manager of an investment fund;
(B) the obligation of an investor in an investment fund to indemnify or exculpate a manager of such investment fund;
(C) any obligation of an affiliated technology-enabled fiduciary financial institution, affiliated fidfin trust or affiliated company to indemnify or exculpate an affiliated company or an investment fund in which any affiliated fidfin trust is an investor, or of which an affiliated fidfin trust is an affiliated company or of which any affiliated fidfin trust is a manager;
(D) the inability of an investor to recover damages from a manager of such investment fund as a result of exculpation provisions in the governing documents of such investment fund;
(E) breach of representations or warranties made by a transferor, assignor or investor in an investment fund in connection with a transfer or assignment of an interest in an investment fund; or
(F) breach of an obligation of a transferor, assignor or investor in an investment fund to pass through to the transferee, assignee or substitute investor in an investment fund any and all economic benefits of a transferred or assigned interest in an investment fund.
(2) To the extent that such coverages in this subsection are not included within any of the classes enumerated in K.S.A. 40-1102, and amendments thereto, such coverages shall be deemed as included in K.S.A. 40-1102(1)(n), and amendments thereto, and the commissioner shall assign such coverages to an appropriate line of business for financial reporting purposes and all other purposes under chapter 40 of the Kansas Statutes Annotated, and amendments thereto.
(c) For the purpose of any policy or product offered by a technology-enabled fiduciary financial institution insurance company as insurance, fortuitous events shall include, without limitation:
(1) The denial of, or failure to provide, consent by a manager of an investment fund to the assignment or transfer of interests in an investment fund from an investor to an affiliated fidfin trust;
(2) any action taken by a manager of an investment fund that affects the economic value of an investor's interest in an investment fund in response to the attempted transfer of such interest in an investment fund to an affiliated fidfin trust;
(3) after an attempted transfer of an interest in an investment fund from an investor to an affiliated fidfin trust, the failure of such investor to transmit any distributions or other economic value from such interest in an investment fund to the applicable affiliated fidfin trust;
(4) after an attempted transfer of an interest in an investment fund from an investor to an affiliated fidfin trust, any action taken by another investor in such investment fund that affects:
(A) The economic value of such interest in an investment fund; or
(B) such transferor's ability to transfer such interest in an investment fund to the applicable affiliated fidfin trust; and
(5) any other risks related to the transfer of an interest in an investment fund from an investor to an affiliated fidfin trust.
(d) Notwithstanding the provisions of K.S.A. 40-4303, and amendments thereto, a technology-enabled fiduciary financial institution insurance company shall not be required to incorporate the word "captive" into its name if such insurance company incorporates into its name any of the following identifiers:
(1) "Technology-enabled fiduciary financial institution insurance company" or "TEFFI insurance company";
(2) "Kansas e-commerce fidfin insurance company"; or
(3) "KEFFI."
(e) For purposes of K.S.A. 40-4302(b)(3), and amendments thereto, the principal place of business in this state of a technology-enabled fiduciary financial institution insurance company may be located in the same or shared office premises with an affiliated technology-enabled fiduciary financial institution or other technology-enabled fiduciary financial institution insurance company.
(f) Any natural person who serves as a member of the board of directors of an affiliated technology-enabled fiduciary financial institution or other affiliated company may concurrently fulfill the Kansas residency requirement of K.S.A. 9-2306(b), and amendments thereto, and may:
(1) Serve on the board of directors of a technology-enabled fiduciary financial institution insurance company that is organized as a corporation or serve as a manager of a technology-enabled fiduciary financial institution that is organized as a limited liability company; and
(2) fulfill the applicable Kansas residency requirements of K.S.A. 40-4306(d), and amendments thereto.
(g) (1) A technology-enabled fiduciary financial institution insurance company may enter into service contracts with any other technology-enabled fiduciary financial institution insurance company, an affiliated technology-enabled fiduciary financial institution or affiliated companies that provide for services to be performed:
(A) For the technology-enabled fiduciary financial institution insurance company, including such insurance companies that operate with or without direct employees; or
(B) by the technology-enabled fiduciary financial institution insurance company.
(2) Any personnel who perform services for a technology-enabled fiduciary financial institution insurance company, either as employees of such insurance company or pursuant to service contracts, may concurrently perform services for any other technology-enabled fiduciary financial institution insurance company, an affiliated technology-enabled fiduciary financial institution or an affiliated company thereof, either as employees or pursuant to service contracts.
(h) (1) If a technology-enabled fiduciary financial institution insurance company issues payment-in-kind policies that expressly require such insurance company to hold a sufficient amount of in-kind assets to meet the full obligations of such payment-in-kind policies, such insurance company shall hold in-kind assets in a total amount determined to be actuarially prudent to meet its obligations to make claim payments under such payment-in-kind policies, but in no event shall such amount be less than the sum of the aggregate obligations of and for all such payment-in-kind policies. If a technology-enabled fiduciary financial institution insurance company issues payment-in-kind policies that do not expressly require such insurance company to hold a certain amount of in-kind assets, such insurance company shall hold in-kind assets to the extent determined to be actuarially prudent by such insurance company and confirmed by a third-party actuary selected by such insurance company, to enable such insurance company to meet its obligations to make claim payments under such payment-in-kind policies. Such third-party actuary shall have an actuarial designation meeting the national association of insurance commissioners minimum property and casualty actuarial educational standards for a property and casualty appointed actuary as published on the website for the national association of insurance commissioners. For the purposes of the captive insurance act, a technology-enabled fiduciary financial institution insurance company shall value any in-kind asset or combination of in-kind assets in accordance with generally accepted accounting principles, as applied by such insurance company in its sole discretion.
(2) A technology-enabled fiduciary financial institution insurance company shall satisfy claims under a payment-in-kind policy by delivering to the qualified policyholder in-kind assets or a combination of in-kind assets pursuant to the schedules attached to such payment-in-kind policy. The in-kind assets or combination of in-kind assets delivered to a qualified policyholder may be:
(A) An interest or interests in an investment fund that is the subject of such payment-in-kind policy; or
(B) any other in-kind assets or combination of in-kind assets as shall be selected by such insurance company in its sole discretion if such assets have a like or equal value and otherwise comply with the schedules attached to such payment-in-kind policy.
(3) Any in-kind assets held pursuant to this subsection shall be required to be counted as part of the reserves, capital and surplus of a technology-enabled fiduciary financial institution insurance company maintained and reported as for the primary and predominant business activity of the writing of insurance or the reinsuring of risks, except that a technology-enabled fiduciary financial institution insurance company that satisfies the requirements of K.S.A. 40-4304, and amendments thereto, shall not be required to hold any other assets so long as such in-kind assets are sufficient to meet its obligations to make claim payments under payment-in-kind policies by delivering such in-kind assets to qualified policyholders.
(4) All revenue and income generated by the in-kind assets required to be held pursuant to this subsection, including interest, capital gains and investment revenue and income, whether realized or unrealized, shall be deemed income derived from the business activity of the writing of insurance or the reinsuring of risks underwritten by technology-enabled fiduciary financial institution insurance companies. If such amounts represent net income, then such income shall be reported as statutory revenues from the business activity of the writing of insurance or the reinsuring of risks. If such amounts represent a net loss, then such loss shall be reported as statutory net losses included with losses from claims. Such amounts shall be reported and included in statutory financial statements. All payment-in-kind assets required to be held by a technology-enabled fiduciary financial institution insurance company under this subsection shall be reported on its statutory balance sheet as being dedicated to the satisfaction of such company's payment-in-kind obligations resulting from the business activity of the writing of insurance or the reinsuring of risks.
(5) A technology-enabled fiduciary financial institution insurance company will be required to report any items required to be included under this subsection in a statutory financial statement in the segment reporting section of the footnotes prepared in accordance with generally accepted accounting principles.
(6) A technology-enabled fiduciary financial institution insurance company will be required to include in its complete statutory financial statements in the footnotes reporting other information prepared in accordance with generally accepted accounting principles.
(i) Any insurance company regardless of the jurisdiction in which such insurance company is organized and operates is permitted to hold equity interests in an affiliated technology-enabled fiduciary financial institution and may utilize such equity interests as in-kind assets when issuing payment-in-kind policies to such affiliated technology-enabled fiduciary financial institution or other qualified policyholder.
(j) A technology-enabled fiduciary financial institution insurance company shall not be required to employ, engage or contract more than one employee in this state to provide services for such technology-enabled fiduciary financial institution insurance company or to facilitate any examinations required by the captive insurance act.
(k) A technology-enabled fiduciary financial institution insurance company or other insurance company organized under the provisions of K.S.A. 40-4306, and amendments thereto, that has been issued a certificate of authority under K.S.A. 40-4302, and amendments thereto, shall be an "insurance company" as defined in K.S.A. 40-222c, and amendments thereto. An insurance company described in this subsection shall be considered to have as its primary and predominant business activity the writing of insurance or the reinsuring of risks underwritten by insurance companies and shall be subject to the supervision of the commissioner.
(l) A technology-enabled fiduciary financial institution insurance company that has been issued a certificate of authority under K.S.A. 40-4302, and amendments thereto, shall be permitted, subject to compliance with the provisions of K.S.A. 40-214, and amendments thereto, to do business in any other state or territory of the United States.
(m) A technology-enabled fiduciary financial institution policy may include a provision that such policy shall be governed by, and construed in accordance with, the laws of the state of Kansas and such policy provision shall control over any contrary provision of state law regarding conflict of laws.
(n) A technology-enabled fiduciary financial institution policy may include a provision that any suit, action or proceeding arising out of or relating to such technology-enabled fiduciary financial institution policy shall be brought in any district court of this state or the United States district court for the district of Kansas and any such provision shall be fully enforceable.
(o) A technology-enabled fiduciary financial institution policy issued in connection with an affiliated fidfin trust or fidfin transaction as defined in K.S.A. 9-2301, and amendments thereto, shall respect the form, treatment and character of such affiliated fidfin trust or fidfin transaction under the laws of this state notwithstanding the treatment or characterization of such transaction under generally accepted accounting principles or for tax purposes.
(p) A payment-in-kind policy issued to a qualified policyholder shall be fully enforceable in accordance with such policy's terms and conditions as defined in K.S.A. 40-4301, and amendments thereto.
(q) The provisions of this section shall be construed in a manner that shall not be disruptive to state efforts to establish a coherent policy with respect to a technology-enabled fiduciary financial institution insurance company, a technology-enabled fiduciary financial institution policy, payment-in-kind policies, technology-enabled fiduciary financial institutions or any other matter of substantial public concern related thereto.
(r) This section shall be a part of and supplemental to the captive insurance act.
History: L. 2022, ch. 29, § 1; April 14.
(a) A foreign or alien insurer may become a domestic captive insurance company by complying with all of the requirements of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, relating to the organization and licensing of a domestic captive insurance company of the same type, with the approval of the commissioner. A company redomesticating to this state pursuant to this section may be organized under any lawful corporate form permitted by chapter 40 of the Kansas Statutes Annotated, and amendments thereto.
(b) A redomestication pursuant to this section shall be authorized for insurance companies domiciled in foreign or alien jurisdictions that authorize the redomestication of insurance companies if, as a result of the actions taken by the company pursuant to this section to redomesticate to this state, such insurance company will no longer be a domestic legal entity of foreign or alien jurisdiction. A company wishing to redomesticate pursuant to this section shall provide evidence that the applicable regulatory authority of its domicile consents to the redomestication.
(c) An insurance company wishing to redomesticate under this section shall file organizational documents with the secretary of state that comply with article 43 of chapter 40 and chapters 17 and 56a of the Kansas Statutes Annotated, and amendments thereto, as applicable, or any other applicable provision governing formation of such type of entity.
(d) The insurance company shall file a copy of the secretary of state's acknowledgement letter with the commissioner, who shall then issue a certificate of authority, pursuant to K.S.A. 40-4302, and amendments thereto.
(e) Upon the completion of a redomestication under this section, the captive insurance company shall be subject to the laws of this state and considered domiciled in this state. Such captive insurance company shall be deemed to have a formation date corresponding to its original formation date in the foreign or alien domicile.
(f) For the purposes of the financial examination required pursuant to K.S.A. 40-4308, and amendments thereto, any examination conducted by the foreign or alien domicile that is substantially similar to an examination that would have been done in this state had the company been domiciled in this state shall be recognized for the purposes of establishing the period of time when the next examination is due.
History: L. 2025, ch. 99, § 11; July 1.
K.S.A. 2025 Supp. 40-4361 through 40-4370, and amendments thereto, shall be known and may be cited as the Kansas protected cell captive insurance company act.
History: L. 2025, ch. 99, § 1; July 1.
(a) One or more sponsors may form a protected cell captive insurance company under this act. This act shall apply to protected cell captive insurance companies.
(b) A protected cell captive insurance company shall be incorporated as a stock insurer with its capital divided into shares and held by the stockholders as a mutual corporation, as a nonprofit corporation with one or more members or as a limited liability company.
History: L. 2025, ch. 99, § 2; July 1.
As used in this act, unless the context requires otherwise:
(a) "Act" means the Kansas protected cell captive insurance company act;
(b) "general account" means all assets and liabilities of a protected cell captive insurance company not attributable to a protected cell;
(c) "participant" means a person or an entity, authorized to be a participant by K.S.A. 2025 Supp. 40-4365, and amendments thereto, or any affiliate of a participant, that is insured by a protected cell captive insurance company if the losses of the participant are limited through a participant contract;
(d) "participant contract" means a contract by which a protected cell captive insurance company insures the risks of a participant and limits the losses of each such participant to its pro rata share of the assets of one or more protected cells identified in such participant contract;
(e) "protected cell" means a separate account that is established by a protected cell captive insurance company formed or licensed pursuant to this act and in which an identified pool of assets and liabilities are segregated and insulated by means of this act from the remainder of the protected cell captive insurance company's assets and liabilities in accordance with the terms of one or more participant contracts to fund the liability of the protected cell captive insurance company with respect to the participants as set forth in the participant contracts;
(f) "protected cell assets" means all assets, contract rights and general intangibles identified with and attributable to a specific protected cell of a protected cell captive insurance company;
(g) "protected cell captive insurance company" means any captive insurance company:
(1) In which the minimum capital and surplus required by the chapter are provided by one or more sponsors;
(2) that is formed or licensed under this act;
(3) that insures the risks of separate participants through participant contracts; and
(4) that funds its liability to each participant through one or more protected cells and segregates the assets of each protected cell from the assets of other protected cells and from the assets of the protected cell captive insurance company's general account;
(h) "protected cell liabilities" means all liabilities and other obligations identified with and attributed to a specific protected cell of a protected cell captive insurance company; and*
(i) "protected cell liabilities" means all liabilities and other obligations identified with and attributed to a specific protected cell of a protected cell captive insurance company; and
(j) "sponsor" means any person or entity that is approved by the commissioner to provide all or part of the capital and surplus required by this act and organize and operate a protected cell captive insurance company.
History: L. 2025, ch. 99, § 3; July 1.
In addition to the information required by K.S.A. 40-4302, and amendments thereto, each applicant-protected cell captive insurance company shall file with the commissioner the following:
(a) Materials demonstrating how the applicant will account for the loss and expense experience of each protected cell at a level of detail found to be sufficient by the commissioner, and how it will report such experience to the commissioner;
(b) a statement acknowledging that all financial records of the applicant, including records pertaining to any protected cells, shall be made available for inspection or examination by the commissioner or the commissioner's designated agent;
(c) all contracts or sample contracts between the applicant and any participants; and
(d) evidence that expenses shall be allocated to each protected cell in a fair and equitable manner.
History: L. 2025, ch. 99, § 4; July 1.
A protected cell captive insurance company formed or licensed under this chapter may establish and maintain one or more incorporated or unincorporated protected cells to insure risks of one or more participants, subject to the following conditions:
(a) (1) A protected cell captive insurance company may establish one or more protected cells if the commissioner has approved in writing a plan of operation or amendments to a plan of operation submitted by the protected cell captive insurance company with respect to each protected cell. A plan of operation includes, but is not limited to, the specific business objectives and investment guidelines of the protected cell, except that the commissioner may require additional information in the plan of operation. The commissioner may put into effect a plan of operation or amendments to a plan of operation on or before the date that the approval is signed if the effective date is not earlier than the date that the plan of operation or amendments to the plan of operation were filed with the department;
(2) upon the commissioner's written approval of the plan of operation, the protected cell captive insurance company, in accordance with the approved plan of operation, may attribute insurance obligations with respect to its insurance business to the protected cell;
(3) a protected cell shall have its own distinct name or designation that shall include the words "protected cell" or "incorporated cell." An incorporated cell formed as a series of a limited liability company shall bear a distinct name or designation as reflected in its formation documents and include the words "series cell." Such names or designations may also be reasonably abbreviated, including, without limitation, pc or p.c. for "protected cell," ic, i.c., ipc, or i.p.c. for "incorporated cell" and sc, s.c., spc or s.p.c. for "series cell";
(4) the protected cell captive insurance company shall transfer all assets attributable to a protected cell to one or more separately established and identified protected cell accounts bearing the name or designation of such protected cell. Protected cell assets shall be held in the protected cell accounts for the purpose of satisfying the obligations of such protected cell;
(5) an incorporated protected cell may be organized and operated in any form of business organization authorized by the commissioner, including, but not limited to, an individual series of a limited liability company as provided for in the Kansas revised limited liability company act. Each incorporated protected cell of a protected cell captive insurer shall be treated as a captive insurer for purposes of this act and shall have the power to enter into contracts, including an individual series of a limited liability company. Unless otherwise permitted by the organizational documents of a protected cell captive insurer, each incorporated protected cell of the protected cell captive insurer shall have the same directors, secretary and registered office as the protected cell captive insurer; and
(6) all attributions of assets and liabilities between a protected cell and the general account shall be in accordance with the plan of operation and participant contracts approved by the commissioner. No other attribution of assets or liabilities shall be made by a protected cell captive insurance company between the protected cell captive insurance company's general account and its protected cells. Any attribution of assets and liabilities between the general account and a protected cell shall be in cash or in readily marketable securities with established market values.
(b) The creation of a protected cell does not create, with respect to such protected cell, a legal person separate from the protected cell captive insurance company unless the protected cell is an incorporated cell. Amounts attributed to a protected cell under this section, including assets transferred to a protected cell account, are deemed to be owned by the protected cell. No protected cell captive insurance company shall be, or represent itself as a trustee with respect to those protected cell assets of such protected cell account. Notwithstanding the provisions of this subsection, the protected cell captive insurance company may allow for a security interest to attach to protected cell assets or a protected cell account when in favor of a creditor of the protected cell and otherwise allowed under applicable law.
(c) This act shall not be construed to prohibit the protected cell captive insurance company from contracting with or arranging for an investment advisor, commodity trading advisor or other third party to manage the protected cell assets of a protected cell if all remuneration, expenses and other compensation of the third-party advisor or manager are payable from the protected cell assets of such protected cell and not from the protected cell assets of other protected cells or the assets of the protected cell captive insurance company's general account.
(d) (1) A protected cell captive insurance company shall establish administrative and accounting procedures necessary to properly identify the one or more protected cells of the protected cell captive insurance company and the protected cell assets and protected cell liabilities attributable to the protected cells. The directors of a protected cell captive insurance company shall keep protected cell assets and protected cell liabilities:
(A) Separate and separately identifiable from the assets and liabilities of the protected cell captive insurance company's general account; and
(B) attributable to one protected cell that is separate and separately identifiable from protected cell assets and protected cell liabilities attributable to other protected cells.
(2) If subsection (d)(1) is violated, then the remedy of tracing is applicable to protected cell assets when commingled with protected cell assets of other protected cells or the assets of the protected cell captive insurance company's general account. The remedy of tracing shall not be construed as an exclusive remedy.
(e) When establishing a protected cell, the protected cell captive insurance company shall attribute to the protected cell assets a value that is at least equal to the reserves and other insurance liabilities attributed to such protected cell.
(f) Each protected cell shall be accounted for separately on the books and records of the protected cell captive insurance company to reflect the financial condition and results of operations of such protected cell, net income or loss, dividends or other distributions to participants and such other factors as may be provided in the participant contract or required by the commissioner.
(g) No asset of a protected cell shall be chargeable with liabilities arising out of any other insurance business that the protected cell captive insurance company may conduct.
(h) No sale, exchange or other transfer of assets shall be made by such protected cell captive insurance company between or among any of its protected cells without the consent of such protected cells.
(i) No sale, exchange, transfer of assets, dividend or distribution shall be made from a protected cell to another protected cell captive insurance company or participant without the commissioner's approval. In no event shall the commissioner's approval be given if the sale, exchange, transfer, dividend or distribution would result in the insolvency or impairment of a protected cell.
(j) All attributions of assets and liabilities to the protected cells and the general account shall be in accordance with the plan of operation approved by the commissioner. No other attribution of assets or liabilities shall be made by a protected cell captive insurance company between its general account and any protected cell or between any protected cells. The protected cell captive insurance company shall attribute all insurance obligations, assets and liabilities relating to a reinsurance contract entered into with respect to a protected cell to such protected cell. The performance under such reinsurance contract and any tax benefits, losses, refunds or credits allocated pursuant to a tax allocation agreement to which the protected cell captive insurance company is a party, including any payments made by or due to be made to the protected cell captive insurance company pursuant to the terms of such agreement, shall reflect the insurance obligations, assets and liabilities relating to the reinsurance contract that are attributed to such protected cell.
(k) In connection with the conservation, rehabilitation or liquidation of a protected cell captive insurance company, the assets and liabilities of a protected cell shall, to the extent that the commissioner determines that such assets and liabilities are separable, at all times be kept separate from and shall not be commingled with those of other protected cells and the protected cell captive insurance company.
(l) Each protected cell captive insurance company shall annually file with the commissioner such financial reports as required by the commissioner. Any such financial report shall include, without limitation, accounting statements detailing the financial experience of each protected cell.
(m) Each protected cell captive insurance company shall notify the commissioner in writing within 10 business days of any protected cell that is insolvent or otherwise unable to meet its claim or expense obligations.
(n) No participant contract shall take effect without the commissioner's prior written approval. The addition of each new protected cell, the withdrawal of any participant or the termination of any existing protected cell shall constitute a change in the plan of operation requiring the commissioner's prior written approval.
(o) The business written by a protected cell captive insurance company, with respect to each protected cell, shall be:
(1) Fronted by an insurance company licensed under the laws of any state;
(2) reinsured by a reinsurer authorized or approved by this state; or
(3) secured by a trust fund in the United States for the benefit of policyholders and claimants or funded by an irrevocable letter of credit or other arrangement that is acceptable to the commissioner. The amount of security provided shall be not less than the reserves associated with those liabilities that are neither fronted nor reinsured, including reserves for losses, allocated loss adjustment expenses, incurred but not reported losses and unearned premiums for business written through the participant's protected cell. The commissioner may require the protected cell captive insurance company to increase the funding of any security arrangement established under this subsection. If the form of security is a letter of credit, the letter of credit shall be issued or confirmed by a bank approved by the commissioner. A trust maintained pursuant to this subsection shall be established in a form and upon such terms approved by the commissioner.
(p) Notwithstanding this act or other laws of Kansas, and in addition to article 36 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, in the event of an insolvency of a protected cell captive insurance company in which the commissioner determines that one or more protected cells remain solvent, the commissioner may separate such cells from the protected cell captive insurance company and may allow, on application of the protected cell captive insurance company, for the conversion of such protected cells into one or more new or existing protected cell captive insurance companies or one or more other captive insurance companies, pursuant to such plan of operation as the commissioner deems acceptable.
(q) Biographical affidavits shall not be required for participants in unincorporated cells. Biographical affidavits shall be required for owners of incorporated cells, including series members of a series LLC.
(r) A protected cell captive insurance company formed or licensed under this act may establish and operate unincorporated and incorporated protected cells.
History: L. 2025, ch. 99, § 5; July 1.
(a) Associations, corporations, limited liability companies, partnerships, trusts and other business entities may be participants in any protected cell captive insurance company formed or licensed under this chapter.
(b) A sponsor may be a participant in a protected cell captive insurance company.
(c) A participant shall not be required to be a shareholder of the protected cell captive insurance company or any affiliate thereof.
(d) A participant shall insure only such participant's own risks through a protected cell captive insurance company, unless otherwise approved by the commissioner.
History: L. 2025, ch. 99, § 6; July 1.
(a) Notwithstanding the provisions of K.S.A. 2025 Supp. 40-4364, and amendments thereto, the assets of two or more protected cells may be combined for purposes of investment, and such combination shall not be construed as defeating the segregation of such assets for accounting or other purposes.
(b) Notwithstanding any other provision of this act, the commissioner may approve the use of alternative reliable methods of valuation and rating.
History: L. 2025, ch. 99, § 7; July 1.
(a) Except as otherwise provided in this section the insurers supervision, rehabilitation and liquidation act shall apply to a protected cell captive insurance company.
(b) Upon any order of supervision, rehabilitation, or liquidation of a protected cell captive insurance company, the receiver shall manage the assets and liabilities of the protected cell captive insurance company pursuant to this section.
(c) Notwithstanding the provisions of the insurers supervision, rehabilitation and liquidation act:
(1) No assets of a protected cell shall be used to pay any expenses or claims other than those attributable to such protected cell; and
(2) a protected cell captive insurance company's capital and surplus shall be available at all times to pay any expenses of or claims against the protected cell captive insurance company.
History: L. 2025, ch. 99, § 8; July 1.
(a) The pleadings in any legal action brought by or against a protected cell captive insurance company shall specify which protected cell or cells should be named as a party to the suit. If the general account is party to this suit, it shall be separately identified in the pleadings as if it were a protected cell.
(b) A legal action brought against a protected cell captive insurance company that does not specify one or more protected cells shall be deemed to have been brought against the general account only.
(c) Any protected cell that is not named in the pleadings of the legal action shall not be deemed to be a party to the legal action. Any protected cell that is erroneously named as a party or named without proper cause shall be entitled to prompt dismissal from the legal action.
(d) Unless specified by the plan of operation, participant contract or other prior contractual agreement, the assets of one protected cell may not be encumbered or seized to satisfy the obligations of or a judgment against any other protected cell. No protected cell shall have a duty to defend the rights and obligations of any other protected cell.
(e) In any legal action involving a protected cell captive insurance company or a protected cell, any papers, documents or property of a nonparty protected cell shall be afforded the same status during discovery as the documents or property of any other unrelated third party. A nonparty protected cell shall have standing to appear and petition for any appropriate relief to protect the confidentiality of its papers or documents.
History: L. 2025, ch. 99, § 9; July 1.
(a) (1) Upon the application of a protected cell captive insurance company, one of its protected cells may be converted to any form of captive insurance company authorized pursuant to chapter 40 of the Kansas Statutes Annotated, and amendments thereto, with the consent of the commissioner. The commissioner may issue to the converting protected cell a certificate of authority with an effective date of its original date of formation as a protected cell.
(2) The following shall be the criteria for determining the filing or submission requirements of:
(A) A series of a limited liability company, the cell shall file organizational documents with the secretary of state that comply with article 43 of chapter 40 and chapters 17 and 56A of the Kansas Statutes Annotated, and amendments thereto, as applicable. The organizational documents shall include the date of formation as a series. Upon conversion, the formation date of the series shall be deemed as the formation date of the new entity. The new entity shall possess all assets and liabilities, including outstanding insurance liabilities, owned by the predecessor series;
(B) any other type of incorporated protected cell entity, then the converting protected cell shall submit amended organizational documents to the secretary of state that comply with article 43 of chapter 40 and chapters 17 and 56A of the Kansas Statutes Annotated, and amendments thereto, as applicable; or
(C) neither a series of a limited liability company nor an incorporated protected cell, the cell shall file organizational documents with the secretary of state that comply with article 43 of chapter 40 and chapters 17 and 56A of the Kansas Statutes Annotated, and amendments thereto, as applicable, or any other applicable provision governing formation of that type of entity. The organizational documents shall include the date of formation as a cell. Upon conversion, the formation date of the cell shall be deemed as the formation date of the new entity. The new entity shall possess all assets and liabilities, including outstanding insurance liabilities, owned by the predecessor cell.
(b) A captive insurance company may apply to the commissioner for conversion to become a protected cell captive insurance company under any form permitted under this section. Upon compliance with this section, approval by the commissioner and the filing of amended organizational documents with the secretary of state, the captive insurance company shall be issued a revised certificate of authority. The effective date of the revised protected cell captive insurance company's certificate of authority shall remain the same as the effective date of the prior captive insurance company.
History: L. 2025, ch. 99, § 10; July 1.
History: L. 1992, ch. 168, §§ 1, 2; Repealed, L. 1994, ch. 32, § 2; July 1.
History: L. 1992, ch. 168, § 3; L. 1993, ch. 43, § 1; Repealed, L. 1994, ch. 32, § 2; July 1.
History: L. 1992, ch. 168, § 4; Repealed, L. 1994, ch. 32, § 2; July 1.
History: L. 1992, ch. 168, §§ 5, 6; L. 1993, ch. 43, §§ 2, 3; Repealed, L. 1994, ch. 32, § 2; July 1.
History: L. 1992, ch. 168, § 7; Repealed, L. 1994, ch. 32, § 2; July 1.
On the effective date of this act, the director of accounts and reports shall transfer all moneys in the healthy kids trust fund to the state general fund. On the effective date of this act, all liabilities of the healthy kids trust fund are hereby transferred to and imposed on the state general fund and the healthy kids trust fund is hereby abolished.
History: L. 1994, ch. 32, § 1; July 1.
This act may be cited as the reinsurance intermediary act.
History: L. 1992, ch. 15, § 1; December 31.
As used in this act:
(a) "Actuary" means a person who is a member in good standing of the American academy of actuaries.
(b) "Controlling person" means any person, firm, association or corporation who directly or indirectly has the power to direct or cause to be directed, the management, control or activities of the reinsurance intermediary.
(c) "Insurer" means any person, firm, association or corporation duly licensed in this state, pursuant to chapter 40 of the Kansas Statutes Annotated, as an insurer.
(d) "Licensed producer" means an agent or reinsurance intermediary licensed pursuant to the applicable provision of the Kansas Statutes Annotated.
(e) "Reinsurance intermediary" means a reinsurance intermediary-broker or a reinsurance intermediary-manager as these terms are defined in subsections (f) and (g).
(f) "Reinsurance intermediary-broker" or "reinsurance broker" means any person, other than an officer or employee of the ceding insurer, firm, association or corporation who solicits, negotiates or places reinsurance cessions or retrocessions on behalf of a ceding insurer without the authority or power to bind reinsurance on behalf of such insurer.
(g) "Reinsurance intermediary-manager" or "reinsurance manager" means any person, firm, association or corporation who has authority to bind or manages all or part of the assumed reinsurance business of a reinsurer, including the management of a separate division, department or underwriting office, and acts as an agent for such reinsurer whether known as a reinsurance manager, manager or other similar term. Notwithstanding the above, the following persons shall not be considered a reinsurance manager, with respect to such reinsurer, for the purposes of this act:
(1) An employee of the reinsurer;
(2) a U.S. manager of the United States branch of an alien reinsurer;
(3) an underwriting manager who, pursuant to contract, manages all the reinsurance operations of the reinsurer, is under common control with the reinsurer, subject to the holding company act, and whose compensation is not based on the volume of premiums written;
(4) the manager of a group, association, pool or organization of insurers which engage in joint underwriting or joint reinsurance and who are subject to examination by the chief insurance regulatory official of the state in which the manager's principal business office is located.
(h) "Reinsurer" means any person, firm, association or corporation duly licensed in this state pursuant to chapter 40 of the Kansas Statutes Annotated as an insurer with the authority to assume reinsurance.
(i) "To be in violation" means that the reinsurance intermediary, insurer or reinsurer for whom the reinsurance intermediary was acting failed to substantially comply with the provisions of this act.
(j) For purposes of this act, a "qualified United States financial institution" means an institution that:
(1) Is organized or, in the case of a United States office of a foreign banking organization licensed, under the laws of the United States or any state thereof;
(2) is regulated, supervised and examined by United States federal or state authorities having regulatory authority over banks and trust companies; and
(3) has been determined by either the commissioner, or the securities valuation office of the national association of insurance commissioners, to meet such standards of financial condition and standing as are considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit will be acceptable to the commissioner.
(k) "Commissioner" means the commissioner of insurance of this state.
History: L. 1992, ch. 15, § 2; L. 2005, ch. 163, § 8; July 1.
(a) No person, firm, association or corporation shall act as a reinsurance broker in this state if the reinsurance broker maintains an office either directly or as a member or employee of a firm or association, or as an officer, director or employee of a corporation:
(1) In this state, unless such reinsurance broker is a licensed producer in this state; or
(2) in another state, unless such reinsurance broker is a licensed producer in this state or another state having a law substantially similar to this act or such reinsurance broker is licensed in this state as a nonresident reinsurance intermediary.
(b) No person, firm, association or corporation shall act as a reinsurance manager:
(1) For a reinsurer domiciled in this state, unless such reinsurance manager is a licensed producer in this state;
(2) in this state, if the reinsurance manager maintains an office either directly or as a member or employee of a firm or association, or an officer, director or employee of a corporation in this state, unless such reinsurance manager is a licensed producer in this state;
(3) in another state for a nondomestic insurer, unless such reinsurance manager is a licensed producer in this state or another state having a law substantially similar to this act or such person is licensed in this state as a nonresident reinsurance intermediary.
(c) The commissioner may require a reinsurance manager subject to subsection (b) to file a bond in an amount from an insurer acceptable to the commissioner for the protection of each reinsurer represented.
(d) (1) The commissioner may issue a reinsurance intermediary license to any person, firm, association or corporation who has complied with the requirements of this act. Before any such license may be issued, the applicant shall submit proper application therefor on a form prescribed by the commissioner that shall be accompanied by an initial fee not to exceed $150. Any license so issued shall remain in effect until suspended, revoked, voluntarily surrendered or otherwise terminated by the commissioner or licensee subject to payment of an annual continuation fee not to exceed $100 on or before May 1 of each year. Any such license issued to a firm or association will authorize all the members of such firm or association and any designated employees to act as reinsurance intermediaries under the license, and all such persons shall be named in the application and any supplements thereto. Any such license issued to a corporation shall authorize all of the officers and any designated employees and directors thereof to act as reinsurance intermediaries on behalf of such corporation, and all such persons shall be named in the application and any supplements thereto.
(2) If the applicant for a reinsurance intermediary license is a nonresident, such applicant, as a condition precedent to receiving or holding a license, shall designate the commissioner as agent for service of process in the manner, and with the same legal effect, as is provided for by this act for designation of service of process upon insurers holding a Kansas certificate of authority. Such applicant shall furnish the commissioner with the name and address of a resident of this state upon whom notices or orders of the commissioner or process affecting such nonresident reinsurance intermediary may be served. Such licensee shall promptly notify the commissioner in writing of every change in its designated agent for service of process, and such change shall not become effective until acknowledged by the commissioner.
(3) Not later than December 1 of each year, the commissioner shall set and cause to be published in the Kansas register the fee required pursuant to this subsection for the next calendar year.
(e) The commissioner may, after a hearing conducted in accordance with the provisions of the Kansas administrative procedure act and held not less than 20 days' notice, refuse to issue a reinsurance intermediary license if, in the judgment of the commissioner: (1) The applicant, any one named on the application, or any member, principal, officer or director of the applicant, is not trustworthy; (2) any controlling person of such applicant is not trustworthy to act as a reinsurance intermediary; or (3) any of the foregoing has given cause for revocation or suspension of such license or has failed to comply with any prerequisite for the issuance of such license.
(f) Licensed attorneys at law in this state when acting in their professional capacity as such shall be exempt from this section.
History: L. 1992, ch. 15, § 3; L. 2004, ch. 159, § 4; L. 2025, ch. 87, § 33; July 1.
Transactions between a reinsurance broker and the insurer it represents in such capacity shall only be entered into pursuant to a written authorization, specifying the responsibilities of each party. The authorization shall, at a minimum, provide that:
(a) The insurer may terminate the reinsurance broker's authority at any time;
(b) the reinsurance broker shall render accounts to the insurer accurately detailing all material transactions, including information necessary to support all commissions, charges and other fees received by, or owing, to the reinsurance broker, and remit all funds due to the insurer within 30 days of receipt;
(c) all funds collected for the insurer's account shall be held by the reinsurance broker in a fiduciary capacity in a bank which is a qualified United States financial institution as defined herein;
(d) the reinsurance broker shall comply with K.S.A. 40-4505;
(e) the reinsurance broker shall comply with the written standards established by the insurer for the cession or retrocession of all risks; and
(f) the reinsurance broker shall disclose to the insurer any relationship with any reinsurer to which business will be ceded or retroceded.
History: L. 1992, ch. 15, § 4; December 31.
(a) For at least 10 years after expiration of each contract of reinsurance transacted by the reinsurance broker, the reinsurance broker shall keep a complete record for each transaction showing:
(1) The type of contract, limits, underwriting restrictions, classes or risks and territory;
(2) period of coverage, including effective and expiration dates, cancellation provisions and notice required of cancellation;
(3) reporting and settlement requirements of balances;
(4) rate used to compute the reinsurance premium;
(5) names and addresses of assuming reinsurers;
(6) rates of all reinsurance commissions, including the commissions on any retrocessions handled by the reinsurance broker;
(7) related correspondence and memoranda;
(8) proof of placement;
(9) details regarding retrocessions handled by the reinsurance broker including the identity of retrocessionaires and percentages of each contract assumed or ceded;
(10) financial records, including but not limited to, premium and loss accounts; and
(11) when the reinsurance broker procures a reinsurance contract on behalf of a licensed ceding insurer:
(A) Directly from any assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk; or
(B) if placed through a representative of the assuming reinsurer, other than an employee, written evidence that such reinsurer has delegated binding authority to the representative.
(b) The insurer shall have access and the right to copy and audit all accounts and records maintained by the reinsurance broker related to its business in a form usable by the insurer.
History: L. 1992, ch. 15, § 5; December 31.
(a) An insurer shall not engage the services of any person, firm, association or corporation to act as a reinsurance broker on its behalf unless such person is licensed as required by subsection (a) of K.S.A. 40-4503.
(b) An insurer may not employ an individual who is employed by a reinsurance broker with which it transacts business, unless such reinsurance broker is under common control with the insurer and subject to the holding company act.
(c) The insurer shall annually obtain a copy of statements of the financial condition of each reinsurance broker with which it transacts business.
History: L. 1992, ch. 15, § 6; December 31.
Transactions between a reinsurance manager and the reinsurer it represents in such capacity shall only be entered into pursuant to a written contract, specifying the responsibilities of each party, which shall be approved by the reinsurer's board of directors. At least 30 days before such reinsurer assumes or cedes business through such producer, a true copy of the approved contract shall be filed with the commissioner for approval. The contract shall, at a minimum, provide that:
(a) The reinsurer may terminate the contract for cause upon written notice to the reinsurance manager. The reinsurer may immediately suspend the authority of the reinsurance manager to assume or cede business during the pendency of any dispute regarding the cause for termination;
(b) the reinsurance manager will render accounts to the reinsurer accurately detailing all material transactions, including information necessary to support all commissions, charges and other fees received by, or owing to the reinsurance manager, and remit all funds due under the contract to the reinsurer on not less than a monthly basis;
(c) all funds collected for the reinsurer's account will be held by the reinsurance manager in a fiduciary capacity in a bank which is a qualified United States financial institution as defined herein. The reinsurance manager may retain no more than three months estimated claims payments and allocated loss adjustment expenses. The reinsurance manager shall maintain a separate bank account for each reinsurer that it represents;
(d) for at least 10 years after expiration of each contract of reinsurance transacted by the reinsurance manager, the reinsurance manager shall keep a complete record for each transaction showing:
(1) The type of contract, limits, underwriting restrictions, classes or risks and territory;
(2) period of coverage, including effective and expiration dates, cancellation provisions and notice required of cancellation, and disposition of outstanding reserves on covered risks;
(3) reporting and settlement requirements of balances;
(4) rate used to compute the reinsurance premium;
(5) names and addresses of reinsurers;
(6) rates of all reinsurance commissions, including the commissions on any retrocessions handled by the reinsurance manager;
(7) related correspondence and memoranda;
(8) proof of placement;
(9) details regarding retrocessions handled by the reinsurance manager, as permitted by subsection (d) of K.S.A. 40-4509, including the identity of retrocessionaires and percentage of each contract assumed or ceded;
(10) financial records, including but not limited to, premium and loss accounts; and
(11) when the reinsurance manager places a reinsurance contract on behalf of a ceding insurer:
(A) Directly from any assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk; or
(B) if placed through a representative of the assuming reinsurer, other than an employee, written evidence that such reinsurer has delegated binding authority to the representative.
(e) the reinsurer shall have access and the right to copy all accounts and records maintained by the reinsurance manager related to its business in a form usable by the reinsurer;
(f) the contract cannot be assigned in whole or in part by the reinsurance manager;
(g) the reinsurance manager shall comply with the written underwriting and rating standards established by the insurer for the acceptance, rejection or cession of all risks;
(h) sets forth the rates, terms and purposes of commissions, charges and other fees which the reinsurance manager may levy against the reinsurer;
(i) if the contract permits the reinsurance manager to settle claims on behalf of the reinsurer:
(1) All claims shall be reported to the reinsurer in a timely manner;
(2) a copy of the claim file shall be sent to the reinsurer at its request or as soon as it becomes known that the claim:
(A) Has the potential to exceed the lesser of an amount determined by the commissioner or the limit set by the reinsurer;
(B) involves a coverage dispute;
(C) may exceed the reinsurance manager's claims settlement authority;
(D) is open for more than six months; or
(E) is closed by payment of the lesser of an amount set by the commissioner or an amount set by the reinsurer;
(3) all claim files will be the joint property of the reinsurer and reinsurance manager. However, upon an order of liquidation of the reinsurer such files shall become the sole property of the reinsurer or its estate; the reinsurance manager shall have reasonable access to and the right to copy the files on a timely basis;
(4) any settlement authority granted to the reinsurance manager may be terminated for cause upon the reinsurer's written notice to the reinsurance manager or upon the termination of the contract. The reinsurer may suspend the settlement authority during the pendency of the dispute regarding the cause of termination.
(j) if the contract provides for a sharing of interim profits by the reinsurance manager, that such interim profits will not be paid until one year after the end of each underwriting period for property business and five years after the end of each underwriting period for casualty business and not until the adequacy of reserves on remaining claims has been verified pursuant to subsection (c) of K.S.A. 40-4509;
(k) the reinsurance manager shall annually provide the reinsurer with a statement of its financial condition prepared by an independent certified accountant;
(l) the reinsurer shall periodically but not less than semiannually, conduct an on-site review of the underwriting and claims processing operations of the reinsurance manager;
(m) the reinsurance manager shall disclose to the reinsurer any relationship it has with any insurer prior to ceding or assuming any business with such insurer pursuant to this contract;
(n) within the scope of its actual or apparent authority the acts of the reinsurance manager shall be deemed to be the acts of the reinsurer on whose behalf it is acting.
History: L. 1992, ch. 15, § 7; December 31.
The reinsurance manager shall not:
(a) Cede retrocessions on behalf of the reinsurer, except that the reinsurance manager may cede faculative retrocessions pursuant to obligatory faculative agreements if the contract with the reinsurer contains reinsurance underwriting guidelines for such retrocessions. Such guidelines shall include a list of reinsurers with which such automatic agreements are in effect, and for each such reinsurer, the coverages and amounts or percentages that may be reinsured, and commission schedules;
(b) commit the reinsurer to participate in reinsurance syndicates;
(c) appoint any producer without assuring that the producer is lawfully licensed to transact the type of reinsurance for which such producer is appointed;
(d) without prior approval of the reinsurer, pay or commit the reinsurer to pay a claim, net of retrocessions, that exceeds the lesser of an amount specified by the reinsurer or one percent of the reinsurer's policyholder's surplus as of December 31 of the last complete calendar year;
(e) collect any payment from a retrocessionaire or commit the reinsurer to any claim settlement with a retrocessionaire, without prior approval of the reinsurer. If prior approval is given, a report must be promptly forwarded to the reinsurer;
(f) jointly employ an individual who is employed by the reinsurer unless such reinsurance manager is under common control with the reinsurer subject to the holding company act;
(g) appoint a sub-reinsurance manager.
History: L. 1992, ch. 15, § 8; December 31.
(a) A reinsurer shall not engage the services of any person, firm, association or corporation to act as a reinsurance manager on its behalf unless such person is licensed as required by subsection (b) of K.S.A. 40-4503.
(b) The reinsurer shall annually obtain a copy of statements of the financial condition of each reinsurance manager which such reinsurer has engaged to be prepared by an independent certified accountant in a form acceptable to the commissioner.
(c) If a reinsurance manager establishes loss reserves, the reinsurer shall annually obtain the opinion of an actuary attesting to the adequacy of loss reserves established for losses incurred and outstanding on business produced by the reinsurance manager. This opinion shall be in addition to any other required loss reserve certification.
(d) Binding authority for all retrocessional contracts or participation in reinsurance syndicates shall rest with an officer of the reinsurer who shall not be affiliated with the reinsurance manager.
(e) Within 30 days of termination of a contract with a reinsurance manager, the reinsurer shall provide written notification of such termination to the commissioner.
(f) A reinsurer shall not appoint to its board of directors, any officer, director, employee, controlling shareholder or subproducer of its reinsurance manager. This subsection shall not apply to relationships governed by the holding company act or, if applicable, the broker controlled insurer act.
History: L. 1992, ch. 15, § 9; December 31.
(a) A reinsurance intermediary shall be subject to examination by the commissioner pursuant to K.S.A. 40-222 and 40-223 and amendments thereto. The commissioner shall have access to all books, bank accounts and records of the reinsurance intermediary in a form usable to the commissioner.
(b) A reinsurance manager may be examined as if it were the reinsurer.
History: L. 1992, ch. 15, § 10; December 31.
History: L. 1992, ch. 15, § 11; Repealed, L. 1997, ch. 24, § 7; July 1.
The commissioner may adopt rules and regulations for the implementation and administration of this act.
History: L. 1992, ch. 15, § 12; December 31.
Contracts between an insurer and a reinsurance broker or a reinsurer and a reinsurance manager which became effective on or before the effective date of this act may continue in full effect and force until June 30, 1993.
History: L. 1992, ch. 15, § 13; December 31.
K.S.A. 40-4601 to 40-4608 shall be known and may be cited as the patient protection act.
History: L. 1997, ch. 190, § 16; July 1.
As used in this act:
(a) "Emergency medical condition" means the sudden and, at the time, unexpected onset of a health condition that requires immediate medical attention, where failure to provide medical attention would result in serious impairment to bodily functions or serious dysfunction of a bodily organ or part, or would place the person's health in serious jeopardy.
(b) "Emergency services" means ambulance services and healthcare items and services furnished or required to evaluate and treat an emergency medical condition, as directed or ordered by a physician.
(c) "Health benefit plan" means any hospital or medical expense policy, health, hospital or medical service corporation contract, a plan provided by a municipal group-funded pool, a policy or agreement entered into by a health insurer or a health maintenance organization contract offered by an employer or any certificate issued under any such policies, contracts or plans. "Health benefit plan" does not include policies or certificates covering only accident, credit, dental, disability income, long-term care, hospital indemnity, medicare supplement, specified disease, vision care, coverage issued as a supplement to liability insurance, insurance arising out of a workers compensation or similar law, automobile medical-payment insurance, a self-funded health plan established or maintained for its employees by the state or a subdivision of the state, a school district, any public authority or by a county or city government or any political subdivision, agency or instrumentality thereof, a self-funded health plan established or maintained for its employees by a church or by a convention or association of churches that is exempt from tax under section 501 of the internal revenue code or insurance under which benefits are payable with or without regard to fault and that is statutorily required to be contained in any liability insurance policy or equivalent self-insurance.
(d) "Health insurer" means any insurance company, nonprofit medical and hospital service corporation, municipal group-funded pool, fraternal benefit society, health maintenance organization, or any other entity that offers a health benefit plan subject to the Kansas Statutes Annotated.
(e) "Insured" means a person who is covered by a health benefit plan.
(f) "Participating provider" means a provider who, under a contract with the health insurer or with its contractor or subcontractor, has agreed to provide one or more healthcare services to insureds with an expectation of receiving payment, other than coinsurance, copayments or deductibles, directly or indirectly from the health insurer.
(g) "Provider" means a physician, hospital or other person that is licensed, accredited or certified to perform specified healthcare services.
(h) "Provider network" means those participating providers who have entered into a contract or agreement with a health insurer to provide items or healthcare services to individuals covered by a health benefit plan offered by such health insurer.
(i) "Physician" means a person licensed by the state board of healing arts to practice medicine and surgery.
History: L. 1997, ch. 190, § 17; L. 2025, ch. 99, § 29; July 1.
(a) A health benefit plan shall not deny coverage for emergency services if the symptoms presented by an insured and recorded by the attending provider indicate that an emergency medical condition exists, or for emergency services necessary to provide an insured with a medical examination and stabilizing treatment, regardless of whether prior authorization was obtained to provide those services.
(b) If a participating provider or other authorized representative of a health insurer authorizes emergency services, the health insurer shall not subsequently rescind or modify that authorization after the provider renders the authorized care in good faith and pursuant to the authorization except for:
(1) Payments made as a result of misrepresentation, fraud, omission or clerical error; and
(2) copayment, coinsurance or deductible amounts that are the responsibility of the insured.
(c) Once an insured is stabilized pursuant to subsection (a), a health benefit plan may require as a condition of further coverage that a hospital emergency facility shall promptly contact the health insurer for prior authorization for continuing treatment, specialty consultations, transfer arrangements or other medically necessary and appropriate care for an insured.
(d) Coverage of emergency services shall be subject to applicable copayments, coinsurance and deductibles.
(e) For required post evaluation or post stabilization services immediately following treatment of an emergency medical condition, a health insurer shall provide access to an authorized representative 24 hours a day, seven days a week.
History: L. 1997, ch. 190, § 18; July 1.
No health insurer shall prohibit or restrict any participating provider from discussing with or disclosing to any insured or other individual any medically appropriate health care information that such provider deems appropriate regarding the nature of treatment options, the risks or alternatives thereto, the process used or the decision made by such insurer to approve or deny health care services, the availability of alternate therapies, consultations, or tests, or from advocating on behalf of the insured within the utilization review or grievance processes established by the health insurer.
History: L. 1997, ch. 190, § 19; July 1.
No health insurer shall offer or operate a compensation arrangement between such health insurer or its agents and a participating provider that may directly or indirectly serve as an inducement to reduce or limit the delivery of medically necessary services with respect to an insured in any health benefit plan offered by such health insurer. Compensation arrangements which involve capitation payments or other risk sharing provisions shall not be considered inducements.
History: L. 1997, ch. 190, § 20; July 1.
Every health insurer shall inform in writing current and prospective insureds that the following information shall be available upon request:
(a) A complete description of the health care services, items and other benefits to which the insured is entitled in the particular health benefit plan which is covering or being offered to such person;
(b) a description of any limitations, exceptions or exclusions to coverage in the health benefit plan, including prior authorization policies, restricted drug formularies or other provisions which restrict access to covered services or items by the insured;
(c) a listing of the health benefit plan's participating providers, their business addresses and telephone numbers, the availability of those providers, and any limitations on an insured's choice of provider;
(d) notification in advance of any changes in the health benefit plan which either reduces the coverage or benefits, or increases the cost, to such person; and
(e) a description of the grievance and appeal procedures available under the health benefit plan and an insured's rights regarding termination, disenrollment, nonrenewal or cancelation of coverage.
History: L. 1997, ch. 190, § 21; July 1.
(a) A health insurer providing a health benefit plan shall maintain a provider network that is sufficient in numbers and types of providers to assure that all covered services to an insured will be accessible without unreasonable delay. Sufficiency of the provider network shall be determined in accordance with the requirements of this section, and may be established by reference to any reasonable criteria used by the health insurer, including but not limited to: provider-insured ratios by specialty; primary care provider-insured ratios; geographic accessibility; waiting times for appointments with participating providers; hours of operation; and the availability of technological and specialty services to serve the needs of insureds requiring technologically advanced or specialty care.
(b) A health insurer shall have a plan by which an insured with a life-threatening, chronic, degenerative or disabling condition or disease, which requires specialized medical care over a prolonged period of time, may receive a referral to a specialist with expertise in treating such disease or condition who shall be responsible for and capable of providing and coordinating the insured's specialty care.
(c) Nothing in this section shall require a health insurer to provide benefits not otherwise covered by the terms of the health benefits plan.
(d) A provider network shall not be determined to be insufficient for failure to contract with any provider unwilling to contract under the same terms and conditions, including reimbursement levels, as such health insurer offers to other similarly situated health care providers.
History: L. 1997, ch. 190, § 22; July 1.
The commissioner of insurance may adopt rules and regulations as necessary to implement the provisions of the patient protection act.
History: L. 1997, ch. 190, § 23; July 1.
(a) Each health insurer and the state health care benefits program shall permit a woman insured by the health insurer or such program to visit an in-network obstetrician or gynecologist for routine gynecological care from an in-network obstetrician or gynecologist one time each calendar year without requiring such woman to first visit or receive a referral from a primary care provider, so long as the care is medically necessary, including, but not limited to, care that is routine.
(b) This section shall be part of and supplemental to the patient protection act, cited at K.S.A. 40-4601 et seq., and amendments thereto.
History: L. 2001, ch. 198, § 1; July 1.
This act shall be known and may be cited as the uniform prescription drug information card act.
History: L. 2003, ch. 89, § 1; July 1.
As used in this act:
(a) "Commissioner" means the Kansas commissioner of insurance;
(b) "department" means the Kansas department of insurance; and
(c) "health benefit plan" shall have the meaning ascribed to such term by subsection (1) of K.S.A. 40-2209d, and amendments thereto.
History: L. 2003, ch. 89, § 2; July 1.
(a) A health benefit plan that provides coverage for prescription drugs or devices and issues a card for claims processing and an administrator of any such plan, including, but not limited to, a pharmacy benefits manager and a third-party administrator shall issue a card containing uniform prescription drug information to each person entitled to such card under the health benefit plan. If required for claims adjudication, the uniform prescription drug information card shall specifically identify and display the following information:
(1) ANSI-BIN number;
(2) processor control number or group number or both;
(3) card issuer identifier;
(4) prescription claims processor, if different from card issuer;
(5) cardholder identification number;
(6) cardholder or insured name;
(7) claims submission names and addresses; and
(8) help desk telephone numbers.
(b) A uniform prescription drug information card shall be issued by a health benefit plan to each person entitled to such card under the health benefit plan upon enrollment and reissued upon any change in such person's coverage that affects one or more mandatory data elements contained on the card.
(c) Notwithstanding the foregoing provision, any health benefit plan or administrator of such plan may utilize, in lieu of such card, electronic technology which contains all of the information required for claims adjudication, as long as such electronic technology is provided by the health benefit plan or administrator of such plan to the pharmacies which will adjudicate the prescription drug claims.
(d) On and after July 1, 2006: (1) No cardholder's social security number shall be printed or encoded on or into any card issued under this section.
(2) Any cardholder identification number or other distinguishing identifier assigned to the card issued to a cardholder shall be a combination of numbers or letters or both, which is unique to the cardholder.
(3) A cardholder's identification number or other distinguishing identifier assigned to such insured's policy card shall not, in any way, be based on or depend on the cardholder's social security number.
History: L. 2003, ch. 89, § 3; L. 2004, ch. 157, § 6; July 1.
The uniform prescription drug information card may be used for any and all coverage under a health benefit plan. Nothing in this act shall be construed as requiring any person issuing a card for processing of claims under a health benefit plan to issue a separate card for prescription drug coverage, as long as the card is able to accommodate the information necessary to process a prescription drug claim, as required by K.S.A. 40-4623, and amendments thereto.
History: L. 2003, ch. 89, § 4; July 1.
(a) This act shall apply to any health benefit plan that is amended, delivered, issued or renewed on or after the effective date of this act.
(b) The commissioner may adopt rules and regulations that are necessary to implement the provisions of this act.
History: L. 2003, ch. 89, § 5; July 1.
This act shall be administered and enforced by the commissioner in the same manner as is provided for administering and enforcing the statutes regarding insurers' unfair methods of competition and unfair or deceptive acts or practices, as provided by K.S.A. 40-2405, 40-2406, 40-2407, 40-2408 and 40-2411, and amendments thereto, and the commissioner shall have and may exercise the powers granted by K.S.A. 40-2405, 40-2406, 40-2407, 40-2408 and 40-2411, and amendments thereto, in administering and enforcing the provisions of this act.
History: L. 2003, ch. 89, § 6; July 1.
As used in K.S.A. 40-4701 through 40-4707, and amendments thereto:
(a) "Carrier" means any insurance company, nonprofit medical and hospital service corporation, nonprofit optometric, dental, or pharmacy service corporation, municipal group-funded pool, fraternal benefit society or health maintenance organization, as these terms are defined by chapter 40 of the Kansas Statutes Annotated, and amendments thereto, that offers health benefit plans covering eligible employees of one or more small employers in the state.
(b) "Health committee" means the Kansas business health policy committee as specified in K.S.A. 40-4702, and amendments thereto.
(c) "Dependent" means the spouse or any child of an eligible employee.
(d) "Eligible employee" shall have the meaning ascribed to it in K.S.A. 40-2209d, and amendments thereto.
(e) "Health benefit plan" means any hospital or medical expense policy, health, hospital or medical services corporation contract, and a plan provided by a municipal group-funded pool, or a health maintenance organization contract offered by any employer or any certificate issued under any such policy, contract or plan.
(f) "Kansas business health partnership" or "health partnership" means a nonrisk bearing nonprofit corporation that has responded to a request for a proposal by the health committee and has been selected by the health committee to provide health insurance through multiple unaffiliated participating carriers to small employers and their eligible employees.
(g) "Low wage or modest wage employee" means any eligible employee whose family income does not exceed 200% of the poverty level.
(h) "Small employer" shall have the meaning ascribed to it in K.S.A. 40-2209d, and amendments thereto.
History: L. 2000, ch. 147, § 47; L. 2002, ch. 112, § 2; July 1.
(a) The governor of the state of Kansas shall appoint a committee that shall be known as the Kansas business health policy committee, whose purpose is to explore opportunities and encourage employer participation in health plans developed by the committee for low and modest wage employees of small employers.
(b) The Kansas business health policy committee, hereinafter referred to as the health committee, shall consist of:
(1) The secretary of the department of commerce or the secretary's designee;
(2) the secretary for children and families or the secretary's designee;
(3) the secretary for aging and disability services or the secretary's designee;
(4) the commissioner of insurance or the commissioner's designee;
(5) one member appointed by the president of the senate;
(6) one member appointed by the speaker of the house of representatives;
(7) one member appointed by the minority leader of the senate;
(8) one member appointed by the minority leader of the house of representatives; and
(9) three members at large from the private sector appointed by the governor.
The secretary of each state agency represented on this committee shall provide such staff and other resources as the health committee may require.
(c) (1) The initial meeting of the health committee shall be convened within 60 days after the effective date of this act by the governor at a time and place designated by the governor.
(2) Meetings of the health committee subsequent to its initial meeting shall be held and conducted in accordance with policies and procedures established by the health committee.
(3) Commencing at the time of the initial meeting of the health committee, the powers, authorities, duties and responsibilities conferred and imposed upon the health committee by this act shall be operative and effective.
(d) The health committee shall develop and approve a request for proposals for a qualified entity to serve as the Kansas business health partnership, hereinafter referred to as health partnership, that shall provide a mechanism to combine federal and state subsidies with contributions from small employers and eligible employees to purchase health insurance in accordance with guidelines developed by the health committee.
(e) The health committee shall evaluate responses to the request for proposals and select the qualified entity to serve as the health partnership.
(f) The health committee shall:
(1) Develop, approve and revise subsidy eligibility criteria provided that:
(A) Low wage and modest wage employees of small employers shall be eligible for subsidies if:
(i) The small employer has not previously offered health insurance coverage within the two years next preceding the date upon which health insurance is offered; or
(ii) the small employer has previously offered health insurance coverage and a majority of such small employer's employees are low wage or modest wage employees as defined in K.S.A. 40-4701, and amendments thereto;
(B) any small employer's eligible employee with a child who is eligible for coverage under the state childrens' health insurance program established by K.S.A. 38-2001 et seq., and amendments thereto, or in the state medical assistance program shall be eligible automatically for a subsidy and shall be included in the determination of eligibility for the small employer and its low and modest wage employees; and
(C) at least 70% of the small employer's eligible employees without group health insurance coverage from another source are insured through the partnership; and
(2) determine and arrange for eligibility determination for subsidies of low wage or modest wage employees; and
(3) develop subsidy schedules based upon eligible employee wage levels and family income; and
(4) be responsible for arranging for the provision of affordable health care coverage for eligible employees of small employers and evaluating and creating the opportunity to improve health care provided by plans in the small group health insurance program.
(g) The health committee shall oversee and monitor the ongoing operation of any subsidy program and the financial accountability of all subsidy funds. If, in the judgment of the health committee, the entity selected to serve as the health partnership fails to perform as intended, the health committee may terminate its selection and designation of that entity as the health partnership and may issue a new request for proposal and select a different qualified entity to serve as the health partnership.
(h) The health committee is hereby authorized to accept funds from the federal government, or its agencies, or any other source whatsoever for research studies, investigation, planning and other purposes related to implementation of the objectives of this act. Any funds so received shall be deposited in the state treasury and shall be credited to a special revenue fund that is hereby created and shall be known as the health committee insurance fund and used in accordance with or direction of the contributing federal agencies. Expenditures from such fund may be made for any purpose in keeping with the responsibilities, functions and authority of the department. Warrants on such fund shall be drawn in the same manner as required of other state agencies upon vouchers approved by the secretary of health and environment, or the secretary's designee, upon receiving prior approval of the health committee.
(i) The health committee is authorized to develop policies for the administration of the subsidy program and for the use of additional federal or private funds to subsidize health insurance coverage for low and modest wage employees of predominantly low-wage small employers. The health committee shall be responsible for setting benefit levels and establishing performance measures for health plans providing health care coverage for this program that include quality, preventative health and other supplementary measures. The health committee shall limit access to the program subsidy to the projected annualized expenditure.
(j) The health committee is hereby authorized to organize, or cause to be organized, one or more advisory committees. No member of any advisory committee established under this subsection shall have previously received or currently receive any payment or other compensation from the health partnership. The membership of each advisory committee established under this subsection shall contain at least one representative who is a small employer and one representative who is an eligible employee as defined in K.S.A. 40-4701, and amendments thereto, and one representative of the insurance industry.
(k) The health committee shall report on an annual basis on the following subjects:
(1) Quality assurance measures;
(2) disease prevention activities;
(3) disease management activities; and
(4) other activities or programs the committee decides to include.
History: L. 2000, ch. 147, § 48; L. 2002, ch. 112, § 3; L. 2003, ch. 154, § 14; L. 2004, ch. 159, § 15; L. 2005, ch. 187, § 38; L. 2012, ch. 102, § 20; L. 2018, ch. 71, § 37; July 1.
(a) The health partnership selected by the health committee shall:
(1) Be a domestic not-for-profit corporation; and
(2) have a board of directors which includes among its members at least one director who is a small employer and at least one director who is an employee.
(3) No director shall have any interest in any business which sells health insurance or which provides or delivers any health care services.
(b) Operate the Kansas business health partnership.
History: L. 2000, ch. 147, § 49; July 1.
The health partnership shall develop and offer two or more health benefit plans to small employers. In any health benefit plan developed under this act, any carrier may contract for coverage within the scope of this act notwithstanding any mandated coverages otherwise required by state law. Except for preventative and health screening services, the provisions of K.S.A. 40-2,100 to 40-2,105, inclusive, 40-2114 and subsection (i) of 40-2209 and 40-2229 and 40-2230, and 40-2,163, 40-2,164, 40-2,165 and 40-2,166, and amendments thereto, shall not be mandatory with respect to any health benefit plan developed under this act. In performing these duties, the health partnership shall:
(a) Develop and offer two or more lower-cost benefit plans such that:
(1) Each health benefit plan is consistent with any criteria established by the health partnership;
(2) each health benefit plan shall be offered by all participating carriers except that no participating carrier shall be required to offer any health benefit plan, or portion thereof, which such participating carrier is not licensed or authorized to offer in this state;
(3) no participating carrier shall offer any health benefit plan developed under this act to any small employer unless such small employer is covered through the health partnership.
(b) Develop and make available one or more supplemental health benefit plans or one or more other benefit options so that the total package of health benefits available to all children eligible for the state children's health insurance program established pursuant to K.S.A. 68-2001 et seq., and amendments thereto, meets, at a minimum, standards established by the federal health insurance program.
(c) Offer coverage to any qualifying small employer.
(d) Offer eligible employees of participating small employers a choice of participating carriers where feasible.
(e) (1) Include centralized and consolidated enrollment, billing and customer service functions;
(2) use one standard enrollment form for all participating carriers; and
(3) submit one consolidated bill to the small employer.
(f) Issue or cause to be issued a request for proposals and contract with a qualified vendor for any administrative or other service not performed by the health committee or provided to the health committee under subsection (b) of K.S.A. 40-4702, and amendments thereto.
(g) Issue a request for proposals and selectively contract with carriers.
(h) Establish conditions of participation for small employers that conform with K.S.A. 40-2209b et seq., and amendments thereto, and the health insurance portability and accountability act of 1996 (Public Law 104-191).
(i) Enroll small employers and their eligible employees and dependents in health benefit plans developed under this act.
(j) Bill and collect premiums from participating small employers including any share of the premium paid by such small employer's enrolled employees.
(k) Remit funds collected under subsection (h) to the appropriate contracted carriers.
(l) Provide that each low-or-modest wage employee shall be permitted to enroll in such employee's choice of participating carrier where available.
(m) Develop premium rating policies for small employers.
(1) In consultation with the health committee, the health partnership shall ensure, to the maximum extent possible, that the combined effect of the premium rating and subsidy policies is that subsidized eligible employees and the dependents of such subsidized eligible employees can afford coverage.
(2) Any rating policy developed under this subsection may vary with respect to subsidy status of eligible employees and the dependents of such eligible employees.
(n) Be authorized to contract for additional group vision, dental and life insurance plans, and other limited insurance products.
(o) Take whatever action is necessary to assure that any eligible employee or dependent of such eligible employee who receives health benefit coverage through the health partnership and who is eligible for the state medical assistance program shall remain eligible to participate in the state health insurance premium payment program.
(p) Coordinate with the Kansas department for aging and disability services to assure that any funds available for the coverage of infants and pregnant women under the state medical assistance program are also available for the benefit of eligible infants and pregnant women who receive health benefit coverage through the health partnership as an eligible employee or dependent of such eligible employee.
(q) Work with the Kansas department for aging and disability services office of medical policy and medicaid to develop a single employee application that may be used by the health plan and the medicaid and state children's health insurance program to determine eligibility.
(r) Screen employee applications for subsidy eligibility and dependent children for medicaid and state children's health insurance program premium support eligibility.
History: L. 2000, ch. 147, § 50; L. 2002, ch. 112, § 4; L. 2004, ch. 159, § 16; L. 2014, ch. 115, § 191; July 1.
The health committee may provide a mechanism for direct subsidies to low and modest wage employees of employers acquiring coverage through a direct contract with a carrier rather than through the health partnership, and for provision to such employees of a supplemental benefit plan as described in subsection (a) of K.S.A. 40-4704.
History: L. 2000, ch. 147, § 51; July 1.
The division of health care finance of the department of health and environment shall investigate and pursue all possible policy options to bring into this partnership title XIX and the title XXI eligible families of any eligible employees employed by a small employer. The division of health care finance of the department of health and environment shall develop and seek federal approval of any appropriate variance or state plan amendment for the state children's health insurance program established by K.S.A. 38-2001 et seq., and amendments thereto, and the state medical assistance program required to accomplish the purposes of this act. The division of health care finance of the department of health and environment shall work with the health partnership to develop a single employee application that may be used by the health plan and the medicaid and state children's health insurance program to determine eligibility.
History: L. 2000, ch. 147, § 52; L. 2002, ch. 112, § 5; L. 2004, ch. 159, § 17; L. 2005, ch. 187, § 39; L. 2012, ch. 102, § 21; July 1.
K.S.A. 40-4701 through 40-4707, and amendments thereto, shall be known as the Kansas business health partnership act.
History: L. 2000, ch. 147, § 53; L. 2002, ch. 112, § 1; July 1.
As used in K.S.A. 40-4802 and 40-4803, and amendments thereto, the terms "amusement ride," "antique amusement ride," "limited-use amusement ride," "operator," "owner" and "registered agritourism activity" shall have the same meanings as those terms are defined in K.S.A. 44-1601, and amendments thereto.
History: L. 2000, ch. 147, § 54; L. 2017, ch. 103, § 4; L. 2018, ch. 84, § 2; May 17.
No amusement ride, antique amusement ride, limited-use amusement ride or registered agritourism activity shall be operated in this state unless at the time of operation the owner has in effect an insurance policy insuring the owner and operator against liability for bodily injury to persons arising out of the operation of the amusement ride, antique amusement ride, limited-use amusement ride or registered agritourism activity. The insurance policy shall be written by an insurance company doing business in Kansas, or by a surplus lines insurer. Such insurance policy shall:
(a) (1) For an owner or operator of an amusement ride, provide for coverage in an amount not less than $1,000,000 per occurrence with a $2,000,000 annual aggregate, except that this requirement shall be satisfied if the owner of such amusement ride is the state or any subdivision of the state and such owner self-insures, or participates in a public entity self-insurance pool in accordance with K.S.A. 75-6111, and amendments thereto; or
(2) for an owner or operator of an antique amusement ride, limited-use amusement ride or registered agritourism activity, provide for coverage in an amount not less than $750,000 per occurrence with a $1,000,000 annual aggregate; and
(b) name as an additional insured any person contracting with the owner for the operation of the amusement ride, antique amusement ride, limited-use amusement ride or registered agritourism activity.
History: L. 2000, ch. 147, § 55; L. 2005, ch. 77, § 1; L. 2017, ch. 103, § 5; L. 2018, ch. 84, § 3; May 17.
The governing body of any city or county may establish and enforce safety standards for amusement rides and may require insurance in an amount which exceeds the amount required by K.S.A. 40-4802, and amendments thereto. The governing body of any city or county may allow, in lieu of an insurance policy, an owner or operator to be self-insured.
History: L. 2000, ch. 147, § 56; July 1.
(a) K.S.A. 40-4801 through 40-4804 and amendments thereto shall be known as the amusement ride insurance act.
(b) The amusement ride insurance act shall take effect and be in force on and after January 1, 2001.
History: L. 2000, ch. 147, § 57; July 1.
(a) K.S.A. 40-4901 through 40-4918, and amendments thereto, shall constitute and be known as the uniform insurance agents licensing act.
(b) Except as provided in K.S.A. 40-4906 and subsection (b) of K.S.A. 40-4914, and amendments thereto, this act shall not apply to any excess and surplus lines agents and brokers licensed pursuant to K.S.A. 40-246b, and amendments thereto.
History: L. 2001, ch. 91, § 1; July 1.
As used in this act:
(a) "Approved subject" or "approved course" means any educational presentation involving insurance fundamentals, insurance law, insurance policies and coverage, insurance needs, insurance risk management, insurance agency management or other areas, which is offered in a class, seminar, computer based training, interactive internet training or other similar form of instruction, and that has been approved by the commissioner under this act as expanding skills and knowledge obtained prior to initial licensure under this act or developing new and relevant skills and knowledge in preparation for such licensure.
(b) "Biennial due date" means the last day of the birth month of any licensed insurance agent who is required to complete C.E.C.'s and report the completion of such C.E.C.'s to the commissioner pursuant to this act, except that such due date shall not be earlier than two years from the date of the insurance agent's initial licensure under this act. The biennial due date for a registered business entity shall be the last day of the month of the date of initial licensure under this act.
(c) "Biennium" means the period starting with the insurance agent's biennial due date in 2001 and each two-year period thereafter for any insurance agent who was born in an odd-numbered year. For any insurance agent who was born in an even-numbered year, the term shall mean the period starting with the insurance agent's biennial due date in 2002 and each two-year period thereafter. The biennium for a registered business entity shall be the two-year period following such business entity's initial licensure or renewal of such license.
(d) "Broker" means any individual who acts or aids in any manner in negotiating contracts of insurance, or in placing risks or in soliciting or effecting contracts of insurance as an agent for an insured other than such individual and not as an agent of an insurance company or any other type of insurance carrier. The term "broker" does not include: A person working as an officer for an insurance carrier, or in a clerical, administrative or service capacity for an insurance carrier, licensed agent or broker, provided that such person does not solicit contracts of insurance, or an attorney-at-law in the performance of such attorney's duties, an insured who places or negotiates the placement of such insured's own insurance, or any employee of an insured engaged in placing or negotiating for placement of insurance for such employee's employer.
(e) "Business entity" means any corporation, association, partnership, limited liability company, limited liability partnership or other legal entity.
(f) "C.E.C." means continuing education credit containing at least 50 minutes of instruction in each clock hour. The term C.E.C. also includes any value, expressed in a whole number of units, assigned by the commissioner to an approved subject.
(g) "Commissioner" means the commissioner of insurance as defined in K.S.A. 40-102, and amendments thereto. The term "commissioner" also includes any authorized representative or designee of the commissioner.
(h) "Department" means the insurance department established by K.S.A. 40-102, and amendments thereto.
(i) "Home state" means the District of Columbia and any state or territory of the United States in which an insurance agent maintains such agent's principal place of residence or principal place of business and is licensed to act as an insurance agent.
(j) "Inactive agent" means any licensed agent who presents evidence satisfactory to the commissioner that demonstrates that such agent will not do any act toward transacting the business of insurance for not more than four years from the date such evidence is received by the commissioner.
(k) "Insurance agent" and "agent" means any person required to be licensed under the provisions of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, to sell, solicit or negotiate insurance. For the purposes of the uniform agents licensing act, whenever the terms "agent" or "broker" appear in chapter 40 of the Kansas Statutes Annotated, and amendments thereto, each term means insurance agent unless the context requires otherwise. "Insurance agent" also includes the terms "insurance producer" or "producer."
(l) "Insurance" means any of the lines of authority specified in K.S.A. 40-4903(a), and amendments thereto.
(m) "Insurance producer" or "producer" means any person licensed under the laws of another state to sell, solicit, or negotiate insurance. For the purposes of this act, the terms "insurance agent" and "agent" include an "insurance producer" or "producer" when the context so requires. In the context of a producer database maintained by this state, another state or the NAIC, the term "producer" includes "agent."
(n) "Insurer" and "insurance company" means the same as "insurance company" as defined by K.S.A. 40-222c, and amendments thereto.
(o) "License" means a document issued by the commissioner authorizing a person to act as an insurance agent for the lines of authority specified in such document.
(p) "Limited line credit insurance" includes credit life, credit disability, credit property, credit unemployment, involuntary unemployment, mortgage life, mortgage guaranty, mortgage disability, automobile dealer gap insurance and any other form of insurance offered in connection with an extension of credit that is limited to partially or wholly extinguishing that credit obligation that the insurance commissioner determines should be designated a form of limited line credit insurance.
(q) "Limited line credit insurance agent" means a person who sells, solicits or negotiates one or more forms of limited line credit insurance coverage to individuals through a master, corporate, group or individual policy.
(r) "NAIC" means the national association of insurance commissioners.
(s) "Negotiate" means the act of conferring directly with or offering advice directly to any purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits, terms or conditions of such contract, provided that the person engaged in such act either sells insurance or obtains insurance from insurers for purchasers.
(t) "Person" means an individual or a business entity.
(u) "Sell" means to exchange a contract of insurance by any means, for money or its equivalent, on behalf of an insurance company.
(v) "Solicit" includes any attempt to sell insurance or asking or urging a person to apply for any particular kind of insurance from any particular insurance company.
History: L. 2001, ch. 91, § 2; L. 2021, ch. 23, § 2; July 1.
(a) Unless denied licensure pursuant to K.S.A. 40-4909, and amendments thereto, any person who meets the requirements of K.S.A. 40-4905, and amendments thereto, shall be issued an insurance agent license. An insurance agent may receive qualifications for a license in one or more of the following lines of authority:
(1) Life: Insurance coverage on human lives including benefits of endowment and annuities, and may include benefits in the event of death or dismemberment by accident and benefits for disability income.
(2) Accident and health or sickness: Insurance coverage for sickness, bodily injury or accidental death, and may include benefits for disability income.
(3) Property: Insurance coverage for the direct or consequential loss or damage to property of every kind.
(4) Casualty: Insurance coverage against legal liability, including that for death, injury or disability or damage to real or personal property.
(5) Variable life and variable annuity products: Insurance coverage provided under variable life insurance contracts, variable annuities or any other life insurance or annuity product that reflects the investment experience of a separate account.
(6) Personal lines: Property and casualty insurance coverage sold primarily to an individual or family for noncommercial purposes.
(7) Credit: Limited line credit insurance.
(8) Crop insurance: Limited line insurance for damage to crops from unfavorable weather conditions, fire, lightning, flood, hail, insect infestation, disease or other yield-reducing conditions or any other peril subsidized by the federal crop insurance corporation, including multi-peril crop insurance.
(9) Title insurance: Limited line insurance that insures titles to property against loss by reason of defective titles or encumbrances.
(10) (A) Travel insurance: Limited line insurance for personal risks incidental to planned travel, including, but not limited to:
(i) Interruption or cancellation of trip or event;
(ii) loss of baggage or personal effects;
(iii) damages to accommodations or rental vehicles;
(iv) sickness, accident, disability or death occurring during travel;
(v) emergency evacuation;
(vi) repatriation of remains; or
(vii) any other contractual obligations to indemnify or pay a specified amount to the traveler upon determinable contingencies related to travel as approved by the commissioner.
(B) Travel insurance does not include major medical plans that provide comprehensive medical protection for travelers with trips lasting six months or longer, for example, persons working overseas, including military personnel deployed overseas.
(11) Pre-need funeral insurance: Limited line insurance that allows for the purchase of a life insurance or annuity contract by or on behalf of the insured solely to fund a pre-need contract or arrangement with a funeral home for specific services.
(12) Bail bond insurance: Limited line insurance that provides surety for a monetary guarantee that an individual released from jail will be present in court at an appointed time.
(13) Self-service storage unit insurance: Limited line insurance relating to the rental of self-service storage units, including:
(A) Personal effects insurance that provides coverage to renters of storage units at the same facility for the loss of, or damage to, personal effects that occurs at the same facility during the rental period; and
(B) any other coverage that the commissioner may approve as meaningful and appropriate in connection with the rental of storage units. Such insurance may only be issued in accordance with K.S.A. 40-241, and amendments thereto.
(14) Any other line of insurance permitted under the provisions of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, and any rules and regulations promulgated thereunder.
(b) Unless suspended, revoked or refused renewal pursuant to K.S.A. 40-4909, and amendments thereto, an insurance agent license shall remain in effect as long as:
(1) Education requirements for resident individual agents are met by such insurance agent's biennial due date;
(2) such insurance agent submits an application for renewal on a form prescribed by the commissioner; and
(3) such insurance agent pays a biennial renewal application fee not to exceed $4.
(c) Except as provided in paragraphs (1) through (4), each licensed insurance agent shall biennially obtain a minimum of 18 C.E.C.s that include at least three hours of instruction in insurance ethics that also may include regulatory compliance.
(1) Each licensed insurance agent who is an individual and holds only a crop qualification shall biennially obtain a minimum of two C.E.C.s in courses certified as crop C.E.C.s under the property and casualty category.
(2) Each licensed insurance agent who is an individual and is licensed only for title insurance shall biennially obtain a minimum of four C.E.C.s in courses certified by the board of abstract examiners as title C.E.C.s under the property and casualty category.
(3) Each licensed insurance agent who is an individual and holds a life insurance license solely for the purpose of selling pre-need funeral insurance or annuity products shall file a report on or before such agent's biennial due date affirming that such agent transacted no other insurance business during the period covered by the report and shall provide certification from an officer of each insurance company that has appointed such agent that the agent transacted no other insurance business during the period covered by the report. Agents who have offered to sell or sold only pre-need funeral insurance are exempt from the requirement to obtain C.E.C.s.
(4) Each licensed insurance agent who is an individual and holds only a bail bond, self-service storage unit or travel insurance qualification is exempt from the requirement to obtain C.E.C.s.
(5) (A) A licensed insurance agent who is a member of the national guard or any reserve component of the armed services of the United States who serves on active duty for at least 90 consecutive days shall be exempt from the requirement to obtain C.E.C.s during the time that such insurance agent is on active duty.
(B) The commissioner shall grant an extension to any licensed insurance agent described in subparagraph (A) until the biennial due date that occurs in the year next succeeding the year in which such active duty ceases.
(d) An instructor of an approved subject shall be entitled to the same C.E.C. as a student completing the study.
(e) (1) An individual insurance agent who has been licensed for more than one year, on or before such insurance agent's biennial due date, shall file a report with the commissioner certifying that such insurance agent has met the continuing education requirements for the previous biennium ending on such insurance agent's biennial due date. Each individual insurance agent shall maintain a record of all courses attended together with a certificate of attendance for the remainder of the biennium in which the courses were attended and the entire next succeeding biennium.
(2) If the required report showing proof of continuing education completion is not received by the commissioner by the individual insurance agent's biennial due date, such individual insurance agent's qualification and each and every corresponding license shall be suspended automatically for a period of 90 calendar days or until such time as the producer satisfactorily demonstrates completion of the continuing education requirement, whichever is sooner. In addition, the commissioner shall assess a penalty of $100 for each license suspended. If such insurance agent fails to furnish to the commissioner the required proof of continuing education completion and the monetary penalty within 90 calendar days of such insurance agent's biennial due date, such individual insurance agent's qualification and each and every corresponding license shall expire on such insurance agent's biennial due date. If after more than three but less than 12 months from the date the license expired, the insurance agent wants to reinstate such insurance agent's license, such individual shall provide the required proof of continuing education completion and pay a reinstatement fee in the amount of $100 for each license suspended. If after more than 12 months from the date an insurance agent's license has expired, such insurance agent wants to reinstate such insurance agent's license, such individual shall apply for an insurance agent's license, provide the required proof of continuing education completion and pay a reinstatement fee in the amount of $100 for each license suspended. Upon receipt of a written application from such insurance agent claiming extreme hardship, the commissioner may waive any penalty imposed under this subsection.
(3) On and after the effective date of this act, any applicant for an individual insurance agent's license who previously held a license that expires on or after June 30, 2001, because of failure to meet continuing education requirements and who seeks to be relicensed shall provide evidence that appropriate C.E.C.s have been completed for the prior biennium.
(4) Upon receipt of a written application from an individual insurance agent, the commissioner, in cases involving medical hardship or military service, may extend the time within which to fulfill the minimum continuing educational requirements for a period of not to exceed 180 days.
(5) This section shall not apply to any inactive insurance agent during the period of such inactivity. For the purposes of this paragraph, "inactive period" or "period of inactivity" means a continuous period of time of not more than four years starting from the date inactive status is granted by the commissioner. Before returning to active status, such inactive insurance agent shall:
(A) File a report with the commissioner certifying that such agent has met the continuing education requirement; and
(B) pay the renewal fee. If the required proof of continuing education completion and the renewal fee is not furnished at the end of the inactive period, such individual insurance agent's qualification and each and every corresponding license shall expire at the end of the period of inactivity. For issuance of a new license, the individual shall apply for a license and pass the required examination.
(6) Any individual who allows such individual's insurance agent license in this state and in all other states where such individual is licensed as an insurance agent to expire for a period of four or more consecutive years shall apply for a new insurance agent license and pass the required examination.
(f) (1) Each course, program of study or subject shall be submitted to and certified by the commissioner in order to qualify for purposes of continuing education.
(2) Each request for certification of any course, program of study or subject shall contain the following information:
(A) The name of the provider or provider organization;
(B) the title of such course, program of study or subject;
(C) the date the course, program of study or subject will be offered;
(D) the location where the course, program of study or subject will be offered;
(E) an outline of each course, program of study or subject, including a schedule of times when such material will be presented;
(F) the names and qualifications of instructors;
(G) the number of C.E.C.s requested;
(H) a nonrefundable C.E.C. qualification fee not to exceed $50 per course, program of study or subject or not to exceed $250 per year for all courses, programs of study or subjects submitted by a specific provider or provider organization; and
(I) a nonrefundable annual provider fee not to exceed $100.
(3) Upon receipt of such information, the commissioner shall grant or deny certification of any submitted course, program of study or subject as an approved subject, program of study or course and indicate the number of C.E.C.s that will be recognized for each approved course, program of study or subject. Each approved course, program of study or subject shall be assigned by the commissioner to one or both of the following classes:
(A) Property and casualty; or
(B) life insurance, including annuity and variable contracts, and accident and health insurance.
(4) Each course, program of study or subject shall have a value of at least one C.E.C.
(5) (A) Each provider seeking approval of a course, program of study or subject for continuing education credit shall issue or cause to be issued to each person who attends a course, program of study or subject offered by such provider a certificate of attendance. The certificate shall be signed by either the instructor who presents the course, program of study or course or such provider's authorized representative. Each provider shall maintain a list of all individuals who attend courses offered by such provider for continuing education credit for the remainder of the biennium in which the courses are offered and the entire next succeeding biennium.
(B) The commissioner shall accept, without substantive review, any course, program of study or subject submitted by a provider that has been approved by the insurance supervisory authority of any other state or territory accredited by the NAIC. The commissioner may disapprove any individual instructor or provider who has been the subject of disciplinary proceedings or who has otherwise failed to comply with any other state's or territory's laws or regulations.
(6) The commissioner may grant or approve any specific course, program of study or course that has appropriate merit, such as any course, programs of study or course with broad national or regional recognition, without receiving any request for certification. The fee prescribed by subsection (f)(2) shall not apply to any approval granted pursuant to this provision.
(7) The C.E.C. value assigned to any course, program of study or subject, other than a correspondence course, computer based training, interactive internet study training or other course pursued by independent study, shall in no way be contingent upon passage or satisfactory completion of any examination given in connection with such course, program of study or subject. The commissioner shall establish, by rules and regulations, the criteria for determining acceptability of any method used for verification of the completion of each stage of any computer based or interactive internet study training. Completion of any computer based training or interactive internet study training shall be verified in accordance with a method approved by the commissioner.
(g) Upon request, the commissioner shall provide a list of all approved continuing education courses currently available to the public.
(h) An individual insurance agent who independently studies an insurance course, program of study or subject that is not an agent's examination approved by the commissioner shall receive credit for the C.E.C.s assigned by the commissioner as recognition for the approved subject. No other credit shall be given for independent study.
(i) Any licensed individual insurance agent who is unable to comply with license renewal procedures due to military service or some other extenuating circumstances may request a waiver of those procedures from the commissioner. Such agent may also request from the commissioner a waiver of any examination requirement or any other fine or sanction imposed for failure to comply with renewal procedures.
(j) Not later than December 1 of each year, the commissioner shall set and cause to be published in the Kansas register the fees required pursuant to this section for the next calendar year.
History: L. 2001, ch. 91, § 3; L. 2013, ch. 109, § 4; L. 2017, ch. 69, § 2; L. 2021, ch. 23, § 3; L. 2023, ch. 42, § 11; L. 2025, ch. 87, § 34; July 1.
(a) No provision of this act shall be construed to require an insurer to obtain an insurance agent license. For the purposes of this section, the term "insurer" shall not include any officer, director, employee, subsidiary or affiliate of an insurer.
(b) The provisions of this act shall not apply to:
(1) Any officer, director or employee of an insurer or an insurance agent who does not receive any commission on any policy written or sold to insure any risk residing, located or to be performed in this state and:
(A) Such officer's, director's or employee's activities are executive, administrative, managerial, clerical, or any combination thereof, and not directly related to the sale, solicitation or negotiation of insurance;
(B) such officer's, director's or employee's assigned duty relates to underwriting, loss control, inspection or the processing, adjusting, investigating or settling of any claim on a contract of insurance; or
(C) such officer, director or employee:
(i) Acts as a special agent or agency supervisor assisting insurance agents;
(ii) limits such person's activities to providing technical advice and assistance to licensed insurance agents; and
(iii) does not sell, solicit or negotiate insurance.
(2) Any person who performs one or more of the services listed below but who receives no commission for the performance of such service:
(A) Secures and furnishes information for the purpose of group life insurance, group property and casualty insurance, group annuities, group or blanket accident and health insurance;
(B) secures and furnishes information for the purpose of enrolling individuals under such insurance plan; issuing certificates under such insurance plan or otherwise assisting in administering such insurance plan; or
(C) performs administrative services related to mass marketed property and casualty insurance where no commission is paid to such person for such service.
(3) Any employer or business entity, any officer, director, employee of such business entity, or the trustee of an employee trust plan, engaged in the administration or operation of a program of employee benefits for the employees of such employer or business entity, which involves the use of insurance issued by an insurer, so long as any person involved with such program of employee benefits is not compensated in any manner, directly or indirectly, by the company issuing the insurance contract.
(4) Any employee of an insurer, or any organization employed by an insurer, who does not participate individually in the sale, solicitation or negotiation of insurance that:
(A) Engages in the inspection, rating or classification of risks; or
(B) engages in the supervision of the training of insurance agents.
(5) Any person who does not sell, solicit or negotiate insurance that would insure any risk residing, located or to be performed in this state and who limits such person's activities in this state to advertising through any communication in any printed publication or any form of electronic mass media.
(6) Any person who is not a resident of this state who sells, solicits or negotiates a contract of insurance for commercial property and casualty risks to an insured having risks insured under that contract located in more than one state, whenever:
(A) Such person is licensed as an insurance agent to sell, solicit or negotiate such insurance in the state where the insured maintains such insured's principal place of business; and
(B) the contract of insurance insures risks located in that state.
(7) Any salaried full-time employee who:
(A) Advises such employee's employer regarding the insurance interests of such employer or such employer's subsidiaries or business affiliates; and
(B) does not sell or solicit insurance or receive a commission from the sale or solicitation of such insurance.
(8) Any person who arranges for the inclusion of insurance in a credit transaction under the applicable provisions of the uniform consumer credit code, K.S.A. 16a-1-101 et seq., and amendments thereto.
(9) Any bank or officer or employee thereof who collects and remits a premium by charging such premium against the account of a depositor on the order of such depositor.
(10) Any agent selling credit life, health and accident insurance issued exclusively in connection with a commercial loan.
(11) Any person who arranges for the inclusion of insurance in consumer credit transactions as defined in the uniform consumer credit code, K.S.A. 16a-1-101 et seq., and amendments thereto.
(12) Any person who arranges for the inclusion of insurance in any real estate mortgage transaction.
(13) Any full-time student who is enrolled in an accredited high school in this state while such student participates in an insurance project sponsored by a bona fide junior achievement program.
History: L. 2001, ch. 91, § 4; July 1.
(a) Subject to the provisions of K.S.A. 40-4904, and amendments thereto, it shall be unlawful for any person to sell, solicit or negotiate any insurance within this state unless such person has been issued a license as an insurance agent in accordance with this act.
(b) Any person applying for a resident insurance agent license shall make application on a form prescribed by the commissioner. The applicant shall declare under penalty of perjury that the statements made in the application are true, correct and complete to the best of the applicant's knowledge and belief. Before approving the application, the commissioner shall determine that the applicant:
(1) Is at least 18 years of age;
(2) has not committed any act that is grounds for denial pursuant to this section or suspension or revocation pursuant to K.S.A. 40-4909, and amendments thereto;
(3) has paid a nonrefundable fee set by the commissioner in an amount not to exceed $30; and
(4) has successfully passed the examination for each line of authority for which the applicant has applied.
(c) If the applicant is a business entity, then, in addition to the requirements of subsection (a), the commissioner shall also determine the name and address of a licensed agent who shall be responsible for the business entity's compliance with the insurance laws of this state and the rules and regulations promulgated thereunder.
(d) The commissioner may require the applicant to furnish any document or other material reasonably necessary to verify the information contained in an application.
(e) Each insurer that sells, solicits or negotiates any form of limited line credit insurance shall provide a program of instruction that may be approved by the commissioner to each individual employed by or acting on behalf of such insurer to sell, solicit or negotiate limited line credit insurance.
(f) (1) Each person or entity licensed in this state as an insurance agent shall report the following to the commissioner within 30 calendar days of occurrence:
(A) Each disciplinary action on the agent's license or licenses by the insurance regulatory agency of any other state or territory of the United States;
(B) each disciplinary action on an occupational license held by the licensee, other than an insurance agent's license, by the appropriate regulatory authority of this or any other jurisdiction;
(C) each judgment or injunction entered against the licensee on the basis of a violation of any insurance law or conduct involving fraud, deceit or misrepresentation;
(D) all details of any conviction of a misdemeanor or felony other than minor traffic violations. The details shall include the name of the arresting agency, the location and date of the arrest, the nature of the charge or charges, the court in which the case was tried and the disposition rendered by the court;
(E) each change of name. If the change of name is effected by court order, a copy of the court order shall be furnished to the commissioner;
(F) each change in residence or mailing address, email address or telephone number;
(G) each change in the name or address of the agency with which the agent is associated; and
(H) each termination of a business relationship with an insurer if the termination is for cause, including the reason for the termination of the business relationship with such insurer.
(2) Each person or entity licensed in this state as an insurance agent shall provide to the commissioner, upon request, a current listing of company affiliations and affiliated insurance agents.
(3) Each business entity licensed in this state as an insurance agent shall report each change in legal or mailing address, email address and telephone number to the commissioner within 30 days of occurrence.
(4) Each business entity licensed in this state as an insurance agent shall report each change in the name and address of the licensed agent who shall be responsible for the business entity's compliance with the insurance laws of this state to the commissioner within 30 days of occurrence.
(g) Any applicant whose application for a license is denied shall be given an opportunity for a hearing in accordance with the provisions of the Kansas administrative procedure act.
(h) (1) The commissioner may require a person applying for a resident insurance agent license to be fingerprinted and submit to a state and national criminal history record check in accordance with K.S.A. 2025 Supp. 22-4714, and amendments thereto.
(2) Whenever the commissioner requires fingerprinting, a background check, or both, any associated costs shall be paid by the applicant.
(3) A person applying for a resident insurance agent license who has been fingerprinted and has submitted to a state and national criminal history record check within the past 12 months in connection with the successful issuance or renewal of any other state-issued license may submit proof of such good standing to the commissioner in lieu of submitting to the fingerprinting and criminal history record checks described in this subsection.
(i) Not later than December 1 of each year, the commissioner shall set and publish in the Kansas register the application fee required pursuant to subsection (b) for the next calendar year.
History: L. 2001, ch. 91, § 5; L. 2017, ch. 69, § 3; L. 2021, ch. 23, § 4; L. 2023, ch. 49, § 3; L. 2024, ch. 15, § 28; July 1.
(a) Unless denied licensure pursuant to K.S.A. 40-4909, and amendments thereto, a nonresident person shall receive a nonresident agent license if:
(1) Such person is currently licensed as a resident and in good standing in such person's home state;
(2) such person has submitted the proper request for licensure and has paid to the commissioner a nonrefundable application fee not to exceed $30 and a biennial fee not to exceed $50;
(3) such person has submitted or transmitted to the commissioner of insurance a copy of the application for licensure that such person submitted to such person's home state, or in lieu of the same, a completed application on a form prescribed by the commissioner; and
(4) such person's home state awards a nonresident agent license to residents of this state on the same basis.
(b) The commissioner may verify the insurance agent's licensing status through the producer database maintained by the NAIC, its affiliates or subsidiaries.
(c) (1) Any nonresident agent who is licensed in this state and who moves from one state to another state or a resident agent who moves from this state to another state shall file with the commissioner within 30 days a change of address and provide certification from the new resident state.
(2) Any insurance agent who resides in this state and who moves from this state to another state shall file with the commissioner within 30 days a change of address and provide certification from the new resident state.
(3) No fee or license application shall be required for any filing required by this subsection.
(d) Subject to the provisions of subsection (a), any person licensed as a surplus lines agent in such person's home state shall receive a nonresident surplus lines agent license. Except as provided in subsection (a), nothing in this section shall be construed to amend or supersede any provision of K.S.A. 40-246b, and amendments thereto.
(e) Subject to the provisions of subsection (a), any person licensed as a limited line credit insurance or other type of limited lines agent in such person's home state shall receive a nonresident limited lines agent license in this state granting the same scope of authority as granted under the license issued by such insurance agent's home state.
(f) Not later than December 1 of each year, the commissioner shall set and publish in the Kansas register the application fee required pursuant to subsection (a) for the next calendar year.
History: L. 2001, ch. 91, § 6; L. 2023, ch. 49, § 4; July 1.
(a) Except as provided in subsection (c), the commissioner may issue a temporary insurance agent license for a period not to exceed 180 days without requiring the applicant to pass a written examination. A temporary insurance agent license may be issued to:
(1) The surviving spouse or court-appointed personal representative of a licensed insurance agent who dies or becomes mentally or physically disabled to allow adequate time:
(A) For the sale of the insurance business owned by such insurance agent;
(B) for the recovery or return of such insurance agent to the business; or
(C) to provide for the training and licensing of new personnel to operate such insurance agent's business.
Any insurance agent license issued to a surviving spouse shall lapse upon issuance of an insurance agent license or a temporary insurance agent license to a court-appointed personal representative of such deceased person.
(2) Any member or employee of a business entity licensed as an insurance agent, upon the death or disability of an individual designated in such business entity's application or the insurance agent's license.
(3) The designee of an individual licensed as an insurance agent who is entering active service in the armed forces of the United States of America.
(4) Any other person under such other circumstance where the commissioner deems that the public interest will be best served by the issuance of such license.
(b) The commissioner may issue any order deemed necessary by the commissioner to limit the authority of any temporary licensee to protect insureds and the public. The commissioner may require the temporary licensee to have a suitable sponsor. Such sponsor shall:
(1) Be a licensed insurance agent or insurer; and
(2) assume responsibility for all acts of the temporary licensee.
The commissioner may impose other similar requirements designed to protect insureds and the public. If the interests of the insureds or the public are endangered, the commissioner may by order revoke a temporary license. No temporary license shall continue after the owner or the personal representative disposes of the business.
(c) (1) Except as provided in paragraph (2) the commissioner may extend a temporary insurance agent license for one additional period of up to 180 days.
(2) Any temporary insurance agent license issued pursuant to paragraph (3) of subsection (a) may be renewed for such period of time as in the commissioner's opinion may be necessary for the continuation of the business of such licensed individual.
History: L. 2001, ch. 91, § 7; July 1.
(a) The commissioner shall waive examinations for an individual who applies for an insurance agent license in this state who was previously licensed for the same lines of authority in another state when the applicant establishes that:
(1) (A) The applicant is currently licensed in such other state; or
(B) if the application is received within 90 days of the cancellation of the applicant's previous license issued by such other state and if such other state certifies that, at the time of cancellation, the applicant was in good standing in such other state. In lieu of issuance of a certification by such other state that the applicant was in good standing, the commissioner may accept evidence from such other state's producer database records, maintained by the NAIC, its affiliates or subsidiaries, which indicate that the applicant is or was licensed in good standing for the line of authority requested.
(2) The applicant seeks a license as travel insurance agent to persons selling transportation tickets of common carriers, who shall act as such agent only as to transportation ticket policies, or health or accident insurance, or baggage insurance on personal effects in connection with such transportation tickets of common carriers.
(3) The applicant has been licensed in Kansas for the class of insurance the applicant is applying for and where the license has been voluntarily surrendered for not more than two years prior to the date of the application with all educational requirements satisfied for the current licensing period and where the commissioner is satisfied that the applicant is trustworthy and competent.
(4) The applicant is an applicant for a license to write insurance on growing crops in this state and has been continuously licensed to write such coverage in this state on and after April 30, 1986.
(5) The applicant has qualified by examination, but due to clerical error by an insurance company, the applicant was not certified pursuant to K.S.A. 40-4912, and amendments thereto. Such insurance company shall pay all appointment fees that would have been paid had the applicant been properly appointed plus the penalty prescribed by K.S.A. 40-4912, and amendments thereto, for each violation.
(b) Any person licensed as an insurance agent pursuant to K.S.A. 40-4906, and amendments thereto, in another state who moves to this state shall make application to become a resident licensee within 90 days after such person establishes legal residence in this state. Except as required by the commissioner by rule and regulation, no person who has been previously authorized for any line of authority shall be required to be examined in this state for the same line of authority.
History: L. 2001, ch. 91, § 8; July 1.
(a) The commissioner may deny, suspend, revoke or refuse renewal of any license issued under this act if the commissioner finds that the applicant or license holder has:
(1) Provided incorrect, misleading, incomplete or untrue information in the license application.
(2) Violated:
(A) Any provision of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, or any rules and regulations promulgated thereunder;
(B) any subpoena or order of the commissioner;
(C) any insurance law or regulation of another state; or
(D) any subpoena or order issued by the regulatory official for insurance in another state.
(3) Obtained or attempted to obtain a license under this act through misrepresentation or fraud.
(4) Improperly withheld, misappropriated or converted any moneys or properties received in the course of doing insurance business.
(5) Intentionally misrepresented the provisions, terms and conditions of an actual or proposed insurance contract or application for insurance.
(6) Been convicted of a misdemeanor or felony.
(7) Admitted to or been found to have committed any insurance unfair trade practice or fraud in violation of K.S.A. 40-2404, and amendments thereto.
(8) Used any fraudulent, coercive, or dishonest practice, or demonstrated any incompetence, untrustworthiness or financial irresponsibility in the conduct of business in this state or elsewhere.
(9) Had an insurance agent license, public adjuster license, securities registration, or their equivalent, denied, suspended or revoked in any state, district or territory.
(10) Forged another person's name to an application for insurance or to any document related to an insurance transaction.
(11) Improperly used notes or any other reference material to complete an examination for an insurance license issued under this act.
(12) Knowingly accepted insurance business from an individual who is not licensed.
(13) Failed to comply with any administrative or court order imposing a child support obligation upon the applicant or license holder.
(14) Failed to pay any state income tax or comply with any administrative or court order directing payment of state income tax.
(15) Except as otherwise permitted by law, rebated the whole or any part of any insurance premium or offered in connection with the presentation of any contract of insurance any other inducement not contained in the contract of insurance.
(16) Made any misleading representation or incomplete comparison of policies to any person for the purposes of inducing or tending to induce such person to lapse, forfeit or surrender such person's insurance then in force.
(17) Failed to respond to an inquiry from the commissioner within 15 business days.
(b) In addition, the commissioner may deny, suspend, revoke or refuse renewal of any license issued under this act if the commissioner finds that the interests of the insurer or the insurable interests of the public are not properly served under such license.
(c) (1) When considering whether to deny, suspend, revoke or refuse to renew the application of an individual who has been convicted of a misdemeanor or felony, the commissioner shall consider the:
(A) Applicant's age at the time of the conduct;
(B) recency of the conduct;
(C) reliability of the information concerning the conduct;
(D) seriousness of the conduct;
(E) factors underlying the conduct;
(F) cumulative effect of the conduct or information;
(G) evidence of rehabilitation;
(H) applicant's social contributions since the conduct;
(I) applicant's candor in the application process; and
(J) materiality of any omissions or misrepresentations.
(2) In determining whether to reinstate or grant to an applicant a license that has been revoked, the commissioner shall consider the:
(A) Present moral fitness of the applicant;
(B) demonstrated consciousness by the applicant of the wrongful conduct and disrepute that the conduct has brought to the insurance profession;
(C) extent of the applicant's rehabilitation;
(D) seriousness of the original conduct;
(E) applicant's conduct subsequent to discipline;
(F) amount of time that has elapsed since the original discipline;
(G) applicant's character, maturity and experience at the time of revocation; and
(H) applicant's present competence and skills in the insurance industry.
(d) Any action taken under this section that affects any license or imposes any administrative penalty shall be taken only after notice and an opportunity for a hearing conducted in accordance with the provisions of the Kansas administrative procedure act.
(e) The license of any business entity may be suspended, revoked or refused renewal if the insurance commissioner finds that any violation committed by an individual licensee employed by or acting on behalf of such business entity was known by or should have been known by one or more of the partners, officers or managers acting on behalf of the business entity and:
(1) Such violation was not reported to the insurance commissioner by such business entity; or
(2) such business entity failed to take any corrective action.
(f) None of the following actions shall deprive the commissioner of any jurisdiction or right to institute or proceed with any disciplinary proceeding against such license, to render a decision suspending, revoking or refusing to renew such license, or to establish and make a record of the facts of any violation of law for any lawful purpose:
(1) The imposition of an administrative penalty under this section;
(2) the lapse or suspension of any license issued under this act by operation of law;
(3) the licensee's failure to renew any license issued under this act; or
(4) the licensee's voluntary surrender of any license issued under this act. No such disciplinary proceeding shall be instituted against any licensee after the expiration of two years from the termination of the license.
(g) Whenever the commissioner imposes any administrative penalty or denies, suspends, revokes or refuses renewal of any license pursuant to subsection (a), any costs incurred as a result of conducting an administrative hearing authorized under the provisions of this section shall be assessed against the person who is the subject of the hearing or any business entity represented by such person who is the party to the matters giving rise to the hearing. As used in this subsection, "costs" includes witness fees, mileage allowances, any costs associated with the reproduction of documents that become a part of the hearing record and the expense of making a record of the hearing.
(h) No person whose license as an agent or broker had been suspended or revoked shall be employed by any insurance company doing business in this state either directly, indirectly, as an independent contractor or otherwise to negotiate or effect contracts of insurance, suretyship or indemnity or perform any act toward the solicitation or transaction of any business of insurance during the period of such suspension or revocation.
(i) In lieu of taking any action under subsection (a), the commissioner may:
(1) Censure the person; or
(2) issue an order imposing an administrative penalty up to a maximum of $500 for each violation but not to exceed $2,500 for the same violation occurring within any six consecutive calendar months from the date of the original violation unless such person knew or should have known that the violative act could give rise to disciplinary action under subsection (a). If such person knew or reasonably should have known the violative act could give rise to any disciplinary proceeding authorized by subsection (a), the commissioner may impose a penalty up to a maximum of $1,000 for each violation but not to exceed $5,000 for the same violation occurring within any six consecutive calendar months from the date of the imposition of the original administrative penalty.
(j) (1) An applicant to whom a license has been denied after a hearing shall not apply again for a license until after the expiration of a period of one year from the date of the commissioner's order.
(2) A licensee whose license was revoked shall not apply again for a license until after the expiration of a period of two years from the date of the commissioner's order.
History: L. 2001, ch. 91, § 9; L. 2002, ch. 158, § 21; L. 2021, ch. 23, § 5; L. 2022, ch. 21, § 3; L. 2025, ch. 99, § 30; July 1.
(a) No insurance company or insurance agent shall pay a commission, service fee, brokerage or other valuable consideration to a person for selling, soliciting or negotiating insurance in this state if that person is required to be licensed under this act and is not so licensed.
(b) No person shall accept a commission, service fee, brokerage or other valuable consideration for selling, soliciting or negotiating insurance in this state if that person is required to be licensed under this act and is not so licensed.
(c) Renewal or other deferred commissions may be paid to a person for selling, soliciting or negotiating insurance in this state if:
(1) Such person was required to be licensed under this act at the time the sale, solicitation or negotiation of insurance occurred; and
(2) such person was licensed as required by this act when the sale, solicitation or negotiation of insurance occurred.
(d) An insurance agent may place a kind or kinds of business, for which such insurance agent is licensed pursuant to this act, with an insurer for which such insurance agent is not an agent, by placing such business through an agent of such insurer.
(e) An insurance agent may divide or share in commissions with other agents licensed to write the same kind or kinds of insurance provided the solicitation of such business shall be subject to subsection (d).
(f) Any insurance agent may pay or assign a commission, service fee, brokerage or any other valuable consideration to an insurance agency or any financial holding company which does not sell, solicit or negotiate insurance in this state unless such payment or assignment violates any provision of K.S.A. 40-2404, and amendments thereto.
History: L. 2001, ch. 91, § 10; July 1.
A licensed insurance agent may receive compensation for or on account of negotiating contracts of insurance or placing or soliciting or effecting contracts of insurance. Nothing in this chapter shall abridge or restrict freedom of contract of insurance carriers or agents or brokers with reference to the amount of commissions or fees to be paid to such insurance agents and such payments are expressly authorized. Insurance agents shall have the right to compensation other than commissions from any insured or prospective insured on account of negotiation or procurement of or other services in connection with contracts of insurance policies including adjustment of claims if such compensation is based upon a written agreement between the insurance agent and insured specifying the amount of such compensation. Nothing herein contained shall affect the right of any insurance agent to recover from the insured the amount of any premium or premiums for insurance placed by or through the insurance agent.
History: L. 2001, ch. 91, § 11; July 1.
(a) Any company authorized to transact business in this state may, upon determining that the insurance agent is of good business reputation and, if an individual, has had experience in insurance or will immediately receive a course of instruction in insurance and on the policies and policy forms of such company, appoint such insurance agent as the insurance agent of the company under the license in effect for the insurance agent. The appointment shall be made on a form prescribed by the commissioner. Such form shall be sent to the commissioner within 30 days of the date the company appoints such insurance agent. A nonrefundable appointment or certification fee set forth in K.S.A. 40-252, and amendments thereto, shall be paid in accordance with the billing procedures established by the commissioner. Such procedures shall require payment of the fees annually, based on the number of insurance agents appointed during the calendar year preceding the return. The certification fees required by K.S.A. 40-252, and amendments thereto, shall be due for all insurance agents appointed by the company during the preceding calendar year, irrespective of the number of months the insurance agent was appointed for that year. The certification fee shall not be returned for any reason, and failure of the company to certify an insurance agent within 30 working days of such insurance agent's appointment shall subject the company to a penalty of not more than $25 per calendar day from the date the appropriate return was required from the date of appointment to the date proper certification is recorded by the insurance department.
(b) With respect to insurance on growing crops, evidence satisfactory to the commissioner that the insurance agent is qualified to transact insurance in accordance with standards or procedures established by any branch of the federal government shall be deemed to be the equivalent of certification by a company.
(c) Duly licensed insurance agents transacting business in accordance with the provisions of article 41 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, shall be deemed to be certified by a company for the kinds of insurance permitted under the license in effect for the insurance agent.
History: L. 2001, ch. 91, § 12; L. 2021, ch. 23, § 6; January 1, 2022.
(a) (1) Each insurer shall notify the commissioner whenever such insurer terminates a business relationship with an insurance agent if:
(A) The termination is for cause;
(B) such insurance agent has committed any act that would be in violation of any provision of K.S.A. 40-4909(a), and amendments thereto; or
(C) such insurer has knowledge that such insurance agent is engaged in any activity that would be in violation of any provision of K.S.A. 40-4909(a), and amendments thereto.
(2) The notification shall:
(A) Be made in a format prescribed by the commissioner;
(B) be submitted to the commissioner within 30 days of the date of the termination of the business relationship; and
(C) contain:
(i) The name of the insurance agent; and
(ii) the reason for the termination of the business relationship with such insurer.
(3) Upon receipt of a written request from the commissioner, each insurer shall provide to the commissioner any additional data, documents, records or other information concerning the termination of the insurer's business relationship with such agent.
(4) Whenever an insurer discovers or obtains additional information that would have been reportable under paragraph (1), the insurer shall forward such additional information to the commissioner within 30 days of its discovery.
(b) (1) Each insurer shall notify the commissioner whenever such insurer terminates a business relationship with an insurance agent for any reason not listed in subsection (a).
(2) The notification shall:
(A) Be made in a format prescribed by the commissioner;
(B) be submitted to the commissioner within 30 days of the date of the termination of the business relationship.
(3) Upon receipt of a written request from the commissioner, each insurer shall provide to the commissioner any additional data, documents, records or other information concerning the termination of the insurer's business relationship with such agent.
(4) Whenever an insurer discovers or obtains additional information that would have been reportable under paragraph (1), the insurer shall forward such additional information to the commissioner within 30 days of its discovery.
(c) For the purposes of this section, the term "business relationship" includes any appointment, employment, contract or other relationship under which such insurance agent represents the insurer.
(d) (1) No insurance entity, or any agent or employee thereof acting on behalf of such insurance entity, regulatory official, law enforcement official or the insurance regulatory official of another state who provides information to the commissioner in good faith pursuant to this section shall be subject to a civil action for damages as a result of reporting such information to the commissioner. For the purposes of this section, "insurance entity" means any insurer, insurance agent or organization to which the commissioner belongs by virtue of the commissioner's office.
(2) Any document, material or other information in the control or possession of the department that is furnished by an insurance entity or an employee or agent thereof acting on behalf of such insurance entity, or obtained by the insurance commissioner in an investigation pursuant to this section shall be kept confidential by the commissioner. Such information shall not be made public or subject to subpoena, other than by the commissioner and then only for the purpose of enforcement actions taken by the commissioner pursuant to this act or any other provision of the insurance laws of this state.
(3) Neither the commissioner nor any person who received documents, materials or other information while acting under the authority of the commissioner shall be required to testify in any private civil action concerning any confidential documents, materials or information subject to paragraph (2).
(4) The commissioner may share or exchange any documents, materials or other information, including confidential and privileged documents referred to in subsection (d)(2), received in the performance of the commissioner's duties under this act, with:
(A) The NAIC;
(B) other state, federal or international regulatory agencies; and
(C) other state, federal or international law enforcement authorities.
(5) (A) The sharing or exchanging of documents, materials or other information under this subsection shall be conditioned upon the recipient's authority and agreement to maintain the confidential and privileged status, if any, of the documents, materials or other information being shared or exchanged.
(B) No waiver of an existing privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the commissioner under this section or as a result of sharing as authorized by subsection (d)(1).
(6) The commissioner of insurance is hereby authorized to adopt such rules and regulations establishing protocols governing the exchange of information as may be necessary to implement and carry out the provisions of this act.
(e) For the purposes of this section, "insurance entity" means any insurer, insurance agent or organization to which the commissioner belongs by virtue of the commissioner's office.
(f) Any insurance entity, including any authorized representative of such insurance entity, that fails to report to the commissioner as required under the provisions of this section or that is found by a court of competent jurisdiction to have failed to report in good faith, after notice and hearing, may have its license or certificate of authority suspended or revoked and may be fined in accordance with K.S.A. 40-4909, and amendments thereto.
History: L. 2001, ch. 91, § 13; L. 2011, ch. 11, § 7; L. 2016, ch. 82, § 9; L. 2021, ch. 82, § 9; July 1.
(a) Subject to the provisions of K.S.A. 40-4908, and amendments thereto, the commissioner shall waive any license application requirements for a nonresident insurance agent license if:
(1) The applicant has a valid current license issued by such applicant's home state; and
(2) the applicant's home state awards nonresident licenses to residents of this state on the same basis.
(b) A nonresident agent's satisfaction of such insurance agent's home state's continuing education requirements for licensed insurance agents shall constitute satisfaction of this state's continuing education requirements if the nonresident agent's home state accepts satisfaction of its continuing education requirements imposed upon agents from this state as satisfying the continuing education requirements imposed by the nonresident insurance agent's home state on the same basis.
History: L. 2001, ch. 91, § 14; July 1.
(a) Notwithstanding the provisions of K.S.A. 40-4903 and 40-4906, and amendments thereto, any person who is currently licensed as an insurance agent on the day before the effective date of this act and whose biennial due date occurred during the 24 calendar months immediately preceding the effective date of this act shall be deemed to be licensed as an insurance agent under this act unless such person's license has been suspended, revoked or refused renewal prior to the effective date of this act.
(b) Any person licensed as an insurance agent under the provisions of subsection (a) shall renew such license in accordance with the provisions of this act on or before the first occurrence of such person's biennial due date after the effective date of this act.
(c) If the required renewal application is not received by the commissioner by the individual insurance agent's biennial due date, such individual insurance agent's qualification and each corresponding license shall be suspended automatically for a period of 90 calendar days or until such time as the agent satisfactorily submits a completed application, whichever occurs first. In addition, the commissioner shall assess a penalty of $100 for each license suspended. If such insurance agent fails to furnish to the commissioner the required renewal application and the monetary penalty within 90 calendar days of such insurance agent's biennial due date, such individual insurance agent's qualification and each corresponding license shall expire on such insurance agent's biennial due date. If, after more than three but less than 12 months from the date the license expired, the insurance agent desires to reinstate such insurance agent's license, such individual shall provide the required renewal application and pay a reinstatement fee in the amount of $100 for each license suspended. If, after more than 12 months from the date an insurance agent's license has expired, such insurance agent desires to reinstate such insurance agent's license, such individual shall apply for an insurance agent's license, provide the required proof of continuing education completion and pay a reinstatement fee in the amount of $100 for each license suspended. Upon receipt of a written application from such insurance agent claiming extreme hardship, the commissioner may waive any penalty imposed under this subsection.
History: L. 2001, ch. 91, § 15; L. 2021, ch. 23, § 7; July 1.
In accordance with the provisions of the rules and regulations filing act, K.S.A. 77-415 et seq., and amendments thereto, the commissioner may adopt, amend and revoke rules and regulations governing the administration and enforcement of this act, including but not limited to:
(a) Criteria for approval of continuing education materials and assigning C.E.C. values for such materials;
(b) any form required to implement this act, subject to the condition that any application form shall substantially comply with any requirements imposed by the NAIC;
(c) any application for examination or licensure under this act;
(d) any examination for licensing under this act;
(e) any report which may be required by this act; and
(f) such other rules and regulations as the commissioner may deem necessary to carry out the provisions of this act.
History: L. 2001, ch. 91, § 16; July 1.
The commissioner shall remit all moneys received by or for the commissioner under the provisions of this act to the state treasurer at least monthly. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount thereof in the state treasury and such amount shall be credited to the insurance department service regulation fund.
History: L. 2001, ch. 91, § 17; July 1.
The commissioner may enter into any contracts or purchase any services necessary to implement the provisions of this act.
History: L. 2001, ch. 91, § 18; July 1.
K.S.A. 40-5001 through 40-5016 inclusive, and K.S.A. 40-5007a, 40-5009a and 40-5012a, and amendments thereto, may be cited as the viatical settlements act of 2002.
History: L. 2002, ch. 158, § 1; L. 2008, ch. 96, § 4; July 1.
As used in this act, the following words and phrases shall have the meanings ascribed to them in this section:
(a) "Advertising" means any written, electronic or printed communication or any communication by means of recorded telephone messages or transmitted on radio, television, the internet or similar communications media, including film strips, motion pictures and videos, published, disseminated, circulated or placed before the public, directly or indirectly, for the purpose of creating an interest in or inducing a person to sell a life insurance policy pursuant to a viatical settlement contract.
(b) "Business of viatical settlements" means an activity involved in, but not limited to, offering, soliciting, negotiating, procuring, effectuation, purchasing, investing, financing, monitoring, tracking, underwriting, selling, transferring, assigning, pledging or hypothecating any viatical settlement contract.
(c) "Chronically ill" means:
(1) Being unable to perform at least two activities of daily living including eating, toileting, transferring, bathing, dressing, continence or such other activity as determined by rules and regulations adopted by the commissioner; or
(2) requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment.
(d) "Commissioner" means the commissioner of insurance.
(e) "Financing entity" means any underwriter, placement agent, lender, purchaser of securities, purchaser of a policy or certificate from a viatical settlement provider, credit enhancer or any entity that has a direct ownership in a policy or certificate which is the subject of a viatical settlement contract, but:
(1) Whose principal activity related to the transaction is providing funds to effect the viatical settlement or purchase of one or more viaticated policies; and
(2) who has an agreement in writing with one or more licensed viatical settlement providers to finance the acquisition of viatical settlement contracts.
Financing entity shall not include any nonaccredited investor or viatical settlement purchaser.
(f) "Fraudulent viatical settlement act" means and includes:
(1) Any act or omission committed by any person who, knowingly or with intent to defraud, for the purpose of depriving another of property or for pecuniary gain, commits, or permits such person's employees or agents to engage in acts including:
(A) Presenting, causing to be presented or preparing with knowledge or belief that it will be presented to or by a viatical settlement provider, viatical settlement broker, viatical settlement purchaser, financing entity, insurer, insurance producer or any other person, false material information, or concealing material information, as part of, in support of or concerning a fact material to one or more of the following:
(i) An application for the issuance of a viatical settlement contract or insurance policy;
(ii) the underwriting of a viatical settlement contract or insurance policy;
(iii) a claim for payment or benefit pursuant to a viatical settlement contract or insurance policy;
(iv) premiums paid on an insurance policy;
(v) payments and changes in ownership or beneficiary made in accordance with the terms of a viatical settlement contract or insurance policy;
(vi) the reinstatement or conversion of an insurance policy;
(vii) in the solicitation, offer, effectuation or sale of a viatical settlement contract or insurance policy;
(viii) the issuance of written evidence of viatical settlement contract or insurance; or
(ix) a financing transaction.
(B) Employing any device, scheme or artifice to defraud related to viaticated policies;
(2) any act done or committed in the furtherance of a fraud or to prevent the detection of a fraud any person commits or permits its employees or its agents to:
(A) Remove, conceal, alter, destroy or sequester from the commissioner the assets or records of a licensee or other person engaged in the business of viatical settlements;
(B) misrepresent or conceal the financial condition of a licensee, financing entity, insurer or other person;
(C) transact the business of viatical settlements in violation of laws requiring a license, certificate of authority or other legal authority for the transaction of the business of viatical settlements; or
(D) file with the commissioner or the chief insurance regulatory official of another jurisdiction a document containing false information or otherwise conceals information about a material fact from the commissioner;
(3) commit embezzlement, theft, misappropriation or conversion of moneys, funds, premiums, credits or other property of a viatical settlement provider, insurer, insured, viator, insurance policy owner or any other person engaged in the business of viatical settlements or insurance; or
(4) recklessly enter into, broker or otherwise deal in a viatical settlement contract, the subject of which is a life insurance policy that was obtained by presenting false information concerning any fact material to the policy or by concealing, for the purpose of misleading another, information concerning any fact material to the policy, where the viator or the viator's agent intended to defraud the policy's issuer. "Recklessly" means engaging in the conduct in conscious and clearly unjustifiable disregard of a substantial likelihood of the existence of the relevant facts or risks, such disregard involving a gross deviation from acceptable standards of conduct;
(5) stranger-originated life insurance; or
(6) attempt to commit, assist, aid or abet in the commission of, or conspiracy to commit any act or omission specified in this subsection; or
(7) fail to disclose to the insurer when requested by the insurer that the prospective insured has undergone a life expectancy evaluation by any person or entity other than the insurer or any authorized representative of such insurer in connection with the issuance of the policy.
(g) "NAIC" means the national association of insurance commissioners.
(h) "Person" means a natural person or a legal entity, including, but not limited to, an individual, partnership, limited liability company, association, trust or corporation.
(i) "Policy" means an individual or group policy, group certificate, contract or arrangement of life insurance affecting the rights of a resident of this state or bearing a reasonable relation to this state, regardless of whether delivered or issued for delivery in this state.
(j) "Related provider trust" means a titling trust or other trust established by a licensed viatical settlement provider or a financing entity for the sole purpose of holding the ownership or beneficial interest in purchased policies in connection with a financing transaction. The trust shall have a written agreement with the licensed viatical settlement provider under which the licensed viatical settlement provider is responsible for ensuring compliance with all statutory and regulatory requirements and under which the trust agrees to make all records and files related to viatical settlement transactions available to the commissioner as if those records and files were maintained directly by the licensed viatical settlement provider.
(k) "Special purpose entity" means any corporation, partnership, trust, limited liability company or other similar entity formed solely to provide, either directly or indirectly, access to institutional capital markets for a financing entity or licensed viatical settlement provider.
(l) "Stranger-originated life insurance" means an act, practice or arrangement to initiate a life insurance policy for the benefit of a third party investor who, at the time of policy origination, has no insurable interest in the insured under K.S.A. 40-450, and amendments thereto. Stranger-originated life insurance practices include, but are not limited to, cases in which life insurance is purchased with resources or guarantees from or through a person or entity who, at the time of policy inception, could not lawfully initiate the policy, and where, at the time of policy inception, there is an arrangement or agreement to directly or indirectly transfer the ownership of the policy or the policy benefits, or both, to a third party. Any trust that is created to give the appearance of insurable interest, and is used to initiate one or more policies for investors, violates K.S.A. 40-450, and amendments thereto, and the prohibition against wagering on human life. Stranger-originated life insurance arrangements do not include those practices set forth in paragraph (3) of subsection (o).
(m) "Terminally ill" means having an illness or sickness that can reasonably be expected to result in death in 24 months or less.
(n) "Viatical settlement broker" means a person that on behalf of a viator and for a fee, commission or other valuable consideration offers or attempts to negotiate viatical settlement contracts between a viator and one or more viatical settlement providers. Notwithstanding the manner in which the viatical settlement broker is compensated, a viatical settlement broker is deemed to represent only the viator and owes a fiduciary duty to the viator to act according to the viator's instructions and in the best interest of the viator. The term does not include an attorney, certified public accountant or a financial planner accredited by a nationally recognized accreditation agency, who is retained to represent the viator and whose compensation is not paid directly or indirectly by the viatical settlement provider or purchaser.
(o) (1) "Viatical settlement contract" means a written agreement between a viator and a viatical settlement provider establishing the terms under which compensation or anything of value is or will be paid, which compensation or value is less than the expected death benefits of the policy, in return for the viator's present or future assignment, transfer, sale, devise or bequest of the death benefit or ownership of any portion of the insurance policy or certificate of insurance, except that the minimum value for a viatical settlement contract shall be greater than the cash surrender value or accelerated death benefit available at the time of an application for a viatical settlement contract.
(2) Viatical settlement contract also includes:
(A) The transfer for compensation or value of ownership or beneficial interest in a trust or other entity that owns such policy if the trust or other entity was formed or availed of for the principal purpose of acquiring one or more life insurance contracts, which life insurance contract insures the life of a person residing in this state.
(B) A written agreement for a loan or other lending transaction, secured primarily by an individual or group life insurance policy, or a premium finance loan made for a policy on or before the date of issuance of the policy, where:
(i) The viator receives on the date of the premium finance loan a guarantee of a future viatical settlement value of the policy; or
(ii) the viator agrees on the date of the premium finance loan to sell the policy or any portion of its death benefit on any date following the issuance of the policy.
(3) Viatical settlement contract does not include:
(A) A policy loan by a life insurance company pursuant to the terms of the life insurance policy or accelerated death provisions contained in the life insurance policy, whether issued with the original policy or as a rider.
(B) Loan proceeds that are used solely to pay:
(i) Premiums for the policy; and
(ii) any costs or expenses incurred by the lender or the borrower in connection with the financing.
(C) A premium finance loan or any loan made by a bank or other licensed financial institution, provided that neither default on such loan nor the transfer of the policy in connection with such default is pursuant to an agreement or understanding with any other person for the purpose of evading regulation under this act.
(D) A collateral assignment of a life insurance policy by a viator.
(E) A loan made by a lender that does not violate the Kansas insurance premium finance company act, K.S.A. 40-2601 et seq., and acts amendatory thereof or supplemental thereto, unless the premium finance loan is described in subparagraph (B) of paragraph (2).
(F) An agreement where all the parties:
(i) Are closely related to the insured by blood or law; or
(ii) have a lawful substantial economic interest in the continued life, health and bodily safety of the person insured, or are trusts established primarily for the benefit of such parties;
(G) any designation, consent or agreement by an insured who is an employee of an employer in connection with the purchase by the employer, or trust established by the employer, of life insurance on the life of the employee;
(H) a bona fide business succession planning arrangement between one or more:
(i) Shareholders in a corporation or between a corporation and one or more of its shareholders or one or more trusts established by its shareholders;
(ii) partners in a partnership or between a partnership and one or more of its partners or one or more trusts established by its partners; or
(iii) members in a limited liability company or between a limited liability company and one or more of its members or one or more trusts established by its members;
(I) an agreement entered into by a service recipient, or a trust established by the service recipient, and a service provider, or a trust established by the service provider, who performs significant services for the service recipient's trade or business; or
(J) any other contract, transaction or arrangement exempted from the definition of viatical settlement contract by the commissioner based on a determination that the contract, transaction or arrangement is not of the type intended to be regulated by this act.
(p) "Viatical settlement provider" means a person, other than a viator, who enters into or effectuates a viatical settlement contract. Viatical settlement provider does not include:
(1) A bank, savings bank, savings and loan association, credit union or other licensed lending institution that takes an assignment of a life insurance policy as collateral for a loan;
(2) the issuer of a life insurance policy providing accelerated benefits under K.S.A. 40-401, and amendments thereto, and pursuant to the contract;
(3) an authorized or eligible insurer that provides stop loss coverage to a viatical settlement provider, purchaser, financing entity, special purpose entity or related provider trust;
(4) a natural person who enters into or effectuates no more than one agreement in a calendar year for the transfer of life insurance policies for any value less than the expected death benefit;
(5) a financing entity;
(6) a special purpose entity;
(7) a related provider trust;
(8) a viatical settlement purchaser; or
(9) an accredited investor or qualified institutional buyer as such term is defined respectively in regulation D, rule 501 or rule 144A of the federal securities act of 1933, as in effect upon the effective date of this act, and who purchases a viaticated policy from a viatical settlement provider.
(q) "Viator" means the owner of a life insurance policy or a certificate holder under a group policy who enters or seeks to enter into a viatical settlement contract. For the purposes of this act, a viator shall not be limited to an owner of a life insurance policy or a certificate holder under a group policy insuring the life of an individual with a terminal or chronic illness or condition except where specifically addressed. Viator shall not include:
(1) A licensee under this act;
(2) a qualified institutional buyer as such term is defined in rule 144A of the federal securities act of 1933, as in effect upon the effective date of this act;
(3) a financing entity;
(4) a special purpose entity; or
(5) a related provider trust.
(r) "Viaticated policy" means a life insurance policy or certificate that has been acquired by a viatical settlement provider pursuant to a viatical settlement contract.
(s) "Viatical settlement purchaser" means a person who gives a sum of money as consideration for a life insurance policy or an interest in the death benefits of a life insurance policy, or a person who owns or acquires or is entitled to a beneficial interest in a trust that owns a viatical settlement contract or is the beneficiary of a life insurance policy that has been or will be the subject of a viatical settlement contract, for the purpose of deriving an economic benefit. Viatical settlement purchaser shall not include:
(1) A licensee under this act;
(2) an accredited investor or qualified institutional buyer as such term is defined respectively in regulation D, rule 501 or rule 144A of the federal securities act of 1933, as in effect upon the effective date of this act;
(3) a financing entity;
(4) a special purpose entity; or
(5) a related provider trust.
History: L. 2002, ch. 158, § 2; L. 2008, ch. 96, § 5; July 1.
(a) No person shall operate as a viatical settlement provider or viatical settlement broker without first obtaining a license from the commissioner or the insurance regulatory official of the state of residence of the viator. If there is more than one viator on a single policy and the viators are residents of different states, the viatical settlement shall be governed by the law of the state in which the viator having the largest percentage ownership resides or, if the viators hold equal ownership, the state of residence of one viator agreed upon in writing by all viators.
(b) Application for a viatical settlement provider license shall be made to the commissioner by the applicant on a form prescribed by the commissioner, and these applications shall be accompanied by a nonrefundable fee not to exceed $1,000.
(c) Licenses for viatical settlement providers may be renewed from year to year on the anniversary date upon payment of the annual renewal fee not to exceed $500. Failure to pay the fees by the renewal date results in expiration of the license.
(d) Application for a viatical settlement broker license shall be made to the commissioner by the applicant on a form prescribed by the commissioner. Each application shall be accompanied by a nonrefundable application fee not to exceed $100.
(e) Licenses for a viatical settlement broker license may be renewed from year to year on the anniversary date upon payment of the annual renewal fee not to exceed $50. Failure to pay the fees by the renewal date results in expiration of such license.
(f) The applicant shall provide information on forms required by the commissioner. The commissioner shall have authority, at any time, to require the applicant to fully disclose the identity of all stockholders, partners, officers, members and employees, and the commissioner, in the exercise of the commissioner's discretion, may refuse to issue a license in the name of a legal entity if not satisfied that any officer, employee, stockholder, partner or member thereof who may materially influence the applicant's conduct meets the standards of this act.
(g) A license issued to a legal entity authorizes all partners, officers, members and designated employees to act as viatical settlement providers or viatical settlement brokers, as applicable, under the license, and all those persons shall be named in the application and any supplements to the application.
(h) Upon the filing of an application and the payment of the license fee, the commissioner shall make an investigation of each applicant and issue a license if the commissioner finds that the applicant:
(1) If a viatical settlement provider, has provided a detailed plan of operation;
(2) is competent and trustworthy and intends to act in good faith in the capacity involved by the license applied for;
(3) has a good business reputation and has had experience, training or education so as to be qualified in the business for which the license is applied for;
(4) if a legal entity, provides a certificate of good standing from the state of its domicile; and
(5) if a viatical settlement provider or viatical settlement broker, has provided an anti-fraud plan that meets the requirements of K.S.A. 40-5012(g), and amendments thereto.
(i) The commissioner shall not issue a license to a nonresident applicant, unless a written designation of an agent for service of process is filed and maintained with the commissioner or the applicant has filed with the commissioner, the applicant's written irrevocable consent that any action against the applicant may be commenced against the applicant by service of process on the commissioner.
(j) A viatical settlement provider or viatical settlement broker shall provide to the commissioner new or revised information about officers, 10% or more stockholders, partners, directors, members or designated employees within 30 days of the change.
(k) Not later than December 1 of each year, the commissioner shall set and cause to be published in the Kansas register the fees required pursuant to this section for the next calendar year.
History: L. 2002, ch. 158, § 3; L. 2025, ch. 87, § 35; July 1.
(a) The commissioner may refuse to issue, suspend, revoke or refuse to renew the license of a viatical settlement provider or viatical settlement broker in the event that investigation by the commissioner discloses that:
(1) There was any material misrepresentation in the application for the license;
(2) the licensee or any officer, partner, member or key management personnel has been convicted of fraudulent or dishonest practices, is subject to a final administrative action in this state or another state or is otherwise shown to be untrustworthy or incompetent;
(3) the viatical settlement provider demonstrates a pattern of unreasonable payments to viators;
(4) the licensee or any officer, partner, member or key management personnel has been found guilty of, or has pleaded guilty or nolo contendere to, any felony, or to a misdemeanor involving fraud or moral turpitude, regardless of whether a judgment of conviction has been entered by the court;
(5) the viatical settlement provider has entered into any viatical settlement contract that has not been approved pursuant to this act;
(6) the viatical settlement provider has failed to honor contractual obligations set out in a viatical settlement contract;
(7) the licensee no longer meets the requirements for initial licensure;
(8) the viatical settlement provider has assigned, transferred or pledged a viaticated policy to a person other than a viatical settlement provider licensed in this state, viatical settlement purchaser, an accredited investor or qualified institutional buyer as defined respectively in regulation D, rule 501 or rule 144A of the federal securities act of 1933, as in effect on the effective date of this act, financing entity, special purpose entity or related provider trust; or
(9) the licensee or any officer, partner, member or key management personnel has violated any provision of this act.
(b) If the commissioner denies a license application or suspends, revokes or refuses to renew the license of a viatical settlement provider or viatical settlement broker, the commissioner shall conduct a hearing in accordance with the Kansas administrative procedure act.
History: L. 2002, ch. 158, § 4; May 23.
No person shall use a viatical settlement contract or provide to a viator a disclosure statement form in this state unless filed with and approved by the commissioner. The commissioner shall disapprove a viatical settlement contract form or disclosure statement form if, in the commissioner's opinion, the contract or provisions contained therein are unreasonable, contrary to the interests of the public or otherwise misleading or unfair to the viator. At the commissioner's discretion, the commissioner may require the submission of advertising material to the commissioner.
History: L. 2002, ch. 158, § 5; May 23.
(a) (1) Each licensee shall file with the commissioner on or before March 1 of each year an annual statement containing such information as the commissioner may prescribe by rule and regulation.
(2) In addition to any other requirements, for any policy settled within five years of such policy's date of issuance, the annual statement shall specify the total number, aggregate face amount and life settlement proceeds of policies settled during the immediately preceding calendar year, together with a break down of the information by policy issue year. Such information shall be limited to only those transactions where the insured is a resident of this state and shall not include individual transaction data regarding the business of viatical settlements or information that there is a reasonable basis to believe could be used to identify the policy owner or the insured.
(b) Except as otherwise allowed or required by law, a viatical settlement provider, viatical settlement broker, insurance company, insurance producer, information bureau, rating agency or company, or any other person with actual knowledge of an insured's identity, shall not disclose that identity as an insured, or the insured's financial or medical information to any other person unless the disclosure is:
(1) Necessary to effect a viatical settlement between the viator and a viatical settlement provider and the viator and insured have provided prior written consent to the disclosure;
(2) provided in response to an investigation or examination by the commissioner or any other governmental officer or agency or pursuant to the requirements of paragraph (c) of K.S.A. 40-5012a, and amendments thereto;
(3) a term of or condition to the transfer of a policy by one viatical settlement provider to another viatical settlement provider;
(4) necessary to permit a financing entity, related provider trust or special purpose entity to finance the purchase of policies by a viatical settlement provider and the viator and insured have provided prior written consent to the disclosure;
(5) necessary to allow the viatical settlement provider or viatical settlement broker or their authorized representatives to make contacts for the purpose of determining health status; or
(6) required to purchase stop loss coverage.
History: L. 2002, ch. 158, § 6; L. 2008, ch. 96, § 6; July 1.
History: L. 2002, ch. 158, § 7; Repealed, L. 2008, ch. 96, § 9; July 1.
(a) (1) The commissioner may conduct an examination under this act of a licensee as often as the commissioner in such commissioner's sole discretion deems appropriate.
(2) For purposes of completing an examination of a licensee under this act, the commissioner may examine or investigate any person, or the business of any person, insofar as the examination or investigation, in the sole discretion of the commissioner, is necessary or material to the examination of the licensee.
(3) In lieu of an examination under this act of any foreign or alien licensee licensed in this state, the commissioner, at the commissioner's discretion, may accept an examination report on the licensee as prepared by the commissioner for the licensee's state of domicile or port-of-entry state.
(b) (1) Any person required to be licensed by this act shall for five years retain copies of all:
(A) Proposed, offered or executed contracts, underwriting documents, policy forms, and applications from the date of the proposal, offer or execution of the contract, whichever is later;
(B) all checks, drafts or other evidence and documentation related to the payment, transfer, deposit or release of funds from the date of the transaction; and
(C) all other records and documents related to the requirements of this act.
(2) This section shall not relieve any person licensed under this act of the obligation to produce these documents and provide copies thereof to the commissioner after the retention period has expired if the person has retained such documents.
(3) Records required to be retained by this section must be legible and complete and may be retained in paper, photograph, microprocess, magnetic, mechanical, electronic media or by any process that accurately reproduces or forms a durable medium for the reproduction of a record.
(c) (1) Upon determining that an examination should be conducted, the commissioner shall issue an examination warrant appointing one or more examiners to perform the examination and instructing them as to the scope of the examination. The commissioner may also employ such other guidelines or procedures as the commissioner may deem appropriate.
(2) Every licensee or person from whom information is sought, its officers, directors and agents shall provide to the examiners timely, convenient and free access at all reasonable hours at its offices to all books, records, accounts, papers, documents, assets and computer or other recordings relating to the property, assets, business and affairs of the licensee being examined. The officers, directors, employees and agents of the licensee or person shall facilitate the examination and aid in the examination so far as it is in their power to do so. The refusal of a licensee, by its officers, directors, employees or agents, to submit to examination or to comply with any reasonable written request of the commissioner shall be grounds for suspension or refusal of, or nonrenewal of any license or authority held by the licensee to engage in the viatical settlement business or other business subject to the commissioner's jurisdiction. Any proceedings for suspension, revocation or refusal of any license or authority shall be conducted pursuant to the Kansas administrative procedure act.
(3) The commissioner shall have the power to issue subpoenas, to administer oaths and to examine under oath any person as to any matter pertinent to the examination. Upon the failure or refusal of a person to obey a subpoena, the commissioner may petition a court of competent jurisdiction, and upon proper showing, the court may enter an order compelling the witness to appear and testify or produce documentary evidence. Failure to obey the court order shall be punishable as contempt of court.
(4) When making an examination under this act, the commissioner may retain attorneys, appraisers, independent actuaries, independent certified public accountants or other professionals and specialists as examiners, the reasonable cost of which shall be borne by the licensee that is the subject of the examination.
(5) Nothing contained in this act shall be construed to limit the commissioner's authority to terminate or suspend an examination in order to pursue other legal or regulatory action pursuant to the insurance laws of this state. Findings of fact and conclusions made pursuant to any examination shall be prima facie evidence in any legal or regulatory action.
(6) Nothing contained in this act shall be construed to limit the commissioner's authority to use and, if appropriate, to make public any final or preliminary examination report, any examiner or licensee work papers or other documents, or any other information discovered or developed during the course of any examination in the furtherance of any legal or regulatory action that the commissioner, in such commissioner's sole discretion, may deem appropriate.
(d) (1) Examination reports shall be comprised of only facts appearing upon the books, records or other documents of the licensee, its agents or other persons examined, or as ascertained from the testimony of its officers or agents or other persons examined concerning its affairs, and such conclusions and recommendations as the examiners find reasonably warranted from the facts.
(2) Not later than 60 days following completion of the examination, the examiner in charge shall file with the commissioner a verified written report of examination under oath. Upon receipt of the verified report, the commissioner shall transmit the report to the licensee examined, together with a notice that shall afford the licensee examined a reasonable opportunity of not more than 30 days to make a written submission or rebuttal with respect to any matters contained in the examination report.
(3) In the event the commissioner determines that regulatory action is appropriate as a result of an examination, the commissioner may initiate any proceedings or actions provided by law.
(e) (1) Names and individual identification data for all viators shall be considered private and confidential information and shall not be disclosed by the commissioner, unless required by law.
(2) Except as otherwise provided in this act, all examination reports, working papers, recorded information, documents and copies thereof produced by, obtained by or disclosed to the commissioner or any other person in the course of an examination made under this act, or in the course of analysis or investigation by the commissioner of the financial condition or market conduct of a licensee shall be confidential by law and privileged, shall not be subject to the provisions of the Kansas open records act, K.S.A. 45-215 et seq., and amendments thereto, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. The commissioner is authorized to use the documents, materials or other information in the furtherance of any regulatory or legal action brought as part of the commissioner's official duties.
(3) Documents, materials or other information, including, but not limited to, all working papers, and copies thereof, in the possession or control of the NAIC and its affiliates and subsidiaries shall be confidential by law and privileged, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action if they are:
(A) Created, produced or obtained by or disclosed to the NAIC and its affiliates and subsidiaries in the course of assisting an examination made under this act, or assisting a commissioner in the analysis or investigation of the financial condition or market conduct of a licensee; or
(B) disclosed to the NAIC and its affiliates and subsidiaries under subsection (e)(4) by the commissioner.
For the purposes of subsection (e)(2), the term "act" includes the law of another state or jurisdiction that is substantially similar to this act.
(4) Neither the commissioner nor any person that received the documents, material or other information while acting under the authority of the commissioner, including the NAIC and its affiliates and subsidiaries, shall be permitted to testify in any private civil action concerning any confidential documents, materials or information subject to subsection (e)(1).
(5) In order to assist in the performance of the commissioner's duties, the commissioner may:
(A) Share documents, materials or other information, including the confidential and privileged documents, materials or information subject to subsection (e)(1), with other state, federal and international regulatory agencies, with the NAIC and its affiliates and subsidiaries, and with state, federal and international law enforcement authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material, communication or other information;
(B) receive documents, materials, communications or information, including otherwise confidential and privileged documents, materials or information, from the NAIC and its affiliates and subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information; and
(C) enter into agreements governing sharing and use of information consistent with this subsection.
(6) No waiver of any applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in subsection (e)(4).
(7) A privilege established under the law of any state or jurisdiction that is substantially similar to the privilege established under this subsection shall be available and enforced in any proceeding in, and in any court of, this state.
(8) Nothing contained in this act shall prevent or be construed as prohibiting the commissioner from disclosing the content of an examination report, preliminary examination report or results, or any matter relating thereto, to the commissioner of any other state or country, or to law enforcement officials of this or any other state or agency of the federal government at any time or to the NAIC, so long as such agency or office receiving the report or matters relating thereto agrees in writing to hold it confidential and in a manner consistent with this act.
(f) (1) An examiner may not be appointed by the commissioner if the examiner, either directly or indirectly, has a conflict of interest or is affiliated with the management of or owns a pecuniary interest in any person subject to examination under this act. This section shall not be construed to automatically preclude an examiner from being:
(A) A viator;
(B) an insured in a viaticated insurance policy; or
(C) a beneficiary in an insurance policy that is proposed to be viaticated.
(2) Notwithstanding the requirements of this clause, the commissioner may retain from time to time, on an individual basis, qualified actuaries, certified public accountants or other similar individuals who are independently practicing their professions, even though these persons may from time to time be similarly employed or retained by persons subject to examination under this act.
(g) Unless provided otherwise, all fees and procedures for examinations under this act shall be in accordance with K.S.A. 40-223, and amendments thereto.
(h) (1) No cause of action shall arise nor shall any liability be imposed against the commissioner, the commissioner's authorized representatives or any examiner appointed by the commissioner for any statements made or conduct performed in good faith while carrying out the provisions of this act.
(2) No cause of action shall arise, nor shall any liability be imposed against any person for the act of communicating or delivering information or data to the commissioner or the commissioner's authorized representative or examiner pursuant to an examination made under this act, if the act of communication or delivery was performed in good faith and without fraudulent intent or the intent to deceive. This paragraph does not abrogate or modify in any way any common law or statutory privilege or immunity heretofore enjoyed by any person identified in paragraph (1).
(3) A person identified in paragraph (1) or (2) shall be entitled to an award of attorney fees and costs if such person is the prevailing party in a civil cause of action for libel, slander or any other relevant tort arising out of activities in carrying out the provisions of this act and the party bringing the action was not substantially justified in doing so. For purposes of this section a proceeding is "substantially justified" if it had a reasonable basis in law or fact at the time that it was initiated.
(i) The commissioner may investigate suspected fraudulent viatical settlement acts and persons engaged in the business of viatical settlements.
History: L. 2008, ch. 96, § 1; L. 2018, ch. 87, § 4; July 1.
(a) With each application for a viatical settlement, a viatical settlement provider or viatical settlement broker shall provide the viator with at least the following disclosures no later than the time the application for the viatical settlement contract is signed by all parties. The disclosures shall be provided in a separate document that is signed by the viator and the viatical settlement provider or viatical settlement broker, and shall provide the following information:
(1) There are possible alternatives to viatical settlement contracts including any accelerated death benefits or policy loans offered under the viator's life insurance policy.
(2) That a viatical settlement broker represents exclusively the viator and not the insurer or the viatical settlement provider. Furthermore the viatical settlement broker owes a fiduciary duty to the viator including the duty to act according to the viator's instructions and in the best interest of the viator.
(3) Some or all of the proceeds of the viatical settlement may be taxable under federal income tax and state franchise and income taxes, and assistance should be sought from a professional tax advisor.
(4) Proceeds of the viatical settlement could be subject to the claims of creditors.
(5) Receipt of the proceeds of a viatical settlement may adversely affect the viator's eligibility for medicaid or other government benefits or entitlements, and advice should be obtained from the appropriate government agencies.
(6) The viator has the right to rescind a viatical settlement contract for 15 calendar days after the receipt of the viatical settlement proceeds by the viator, as provided in subsection (c) of K.S.A. 40-5009a, and amendments thereto. If the insured dies during the rescission period, the settlement contract shall be deemed to have been rescinded, subject to repayment of all viatical settlement proceeds and any premiums, loans and loan interest to the viatical settlement provider or purchaser.
(7) Funds will be sent to the viator within three business days after the viatical settlement provider has received the insurer or group administrator's acknowledgment that ownership of the policy or interest in the certificate has been transferred and the beneficiary has been designated.
(8) Entering into a viatical settlement contract may cause other rights or benefits, including conversion rights and waiver of premium benefits that may exist under the policy or certificate, to be forfeited by the viator. Assistance should be sought from a financial adviser.
(9) Disclosure to a viator shall include distribution of a brochure describing the process of viatical settlements. The form for the brochure shall be developed by the commissioner.
(10) The disclosure document shall contain the following language: "All medical, financial or personal information solicited or obtained by a viatical settlement provider or viatical settlement broker about an insured, including the insured's identity or the identity of family members, a spouse or a significant other may be disclosed as necessary to effect the viatical settlement between the viator and the viatical settlement provider. If you are asked to provide this information, you will be asked to consent to the disclosure. The information may be provided to someone who buys the policy or provides funds for the purchase. You may be asked to renew your permission to share information every two years."
(11) The insured may be contacted by either the viatical settlement provider or viatical settlement broker or such viatical settlement provider's or viatical settlement broker's authorized representative for the purpose of determining the insured's health status. This contact is limited to once every three months if the insured has a life expectancy of more than one year, and no more than once per month if the insured has a life expectancy of one year or less.
(b) A viatical settlement provider shall provide the viator with at least the following disclosures no later than the date the viatical settlement contract is signed by all parties. The disclosures shall be conspicuously displayed in the viatical settlement contract or in a separate document signed by the viator and the viatical settlement provider or viatical settlement broker, and contain the following information:
(1) The affiliation, if any, between the viatical settlement provider and the issuer of the insurance policy to be viaticated.
(2) The name, address and telephone number of the viatical settlement provider.
(3) A viatical settlement broker shall disclose to a prospective viator the amount and method of calculating the broker's compensation. The term "compensation" includes anything of value paid or given to a viatical settlement broker for the placement of a policy.
(4) If an insurance policy to be viaticated has been issued as a joint policy or involves family riders or any coverage of a life other than the insured under the policy to be viaticated, the viator shall be informed of the possible loss of coverage on the other lives under the policy and shall be advised to consult with such viator's insurance producer or the insurer issuing the policy for advice on the proposed viatical settlement.
(5) State the dollar amount of the current death benefit payable to the viatical settlement provider under the policy or certificate. If known, the viatical settlement provider shall also disclose the availability of any additional guaranteed insurance benefits, the dollar amount of any accidental death and dismemberment benefits under the policy or certificate and the viatical settlement provider's interest in those benefits.
(6) State the name, business address and telephone number of the independent third party escrow agent, and the fact that the viator or owner may inspect or receive copies of the relevant escrow or trust agreements or documents.
(c) Without limiting the ability of an insurer from assessing the insurability of a policy applicant and determining whether or not to issue the policy, and in addition to other questions an insurance carrier may lawfully pose to a life insurance applicant, insurance carriers may inquire in the application for insurance whether the proposed owner intends to pay premiums with the assistance of financing from a lender that will use the policy as collateral to support the financing.
(1) If, as described in paragraph (3) of subsection (o) of K.S.A. 40-5002, and amendments thereto, the loan provides funds which can be used for a purpose other than paying for the premiums, costs, and expenses associated with obtaining and maintaining the life insurance policy and loan, the application shall be rejected as a violation of this act.
(2) If the financing does not violate this section in this manner, the insurance carrier:
(A) May make disclosures, including, but not limited to, such as the following, to the applicant and the insured, either on the application or an amendment to the application to be completed no later than the delivery of the policy:
"If you have entered into a loan arrangement where the policy is used as collateral, and the policy does change ownership at some point in the future in satisfaction of the loan, the following may be true:
(i) A change of ownership could lead to a stranger owning an interest in the insured's life;
(ii) a change of ownership could in the future limit your ability to purchase future insurance on the insured's life because there is a limit to how much coverage insurers will issue on one life;
(iii) should there be a change of ownership and you wish to obtain more insurance coverage on the insured's life in the future, the insured's higher issue age, a change in health status, or other factors, or both, may reduce the ability to obtain coverage or may result in significantly higher premiums or both;
(iv) you should consult a professional advisor, since a change in ownership in satisfaction of the loan may result in tax consequences to the owner, depending on the structure of the loan;" and
(B) may require certifications, such as the following, from the applicant or the insured or both:
"(i) I have not entered into any agreement or arrangement providing for the future sale of this life insurance policy;
(ii) my loan arrangement for this policy provides funds sufficient to pay for some or all of the premiums, costs, and expenses associated with obtaining and maintaining my life insurance policy, but I have not entered into any agreement by which I am to receive consideration in exchange for procuring this policy; and
(iii) the borrower has an insurable interest in the insured."
History: L. 2002, ch. 158, § 8; L. 2008, ch. 96, § 7; July 1.
History: L. 2002, ch. 158, § 9; Repealed, L. 2008, ch. 96, § 9; July 1.
(a) (1) A viatical settlement provider entering into a viatical settlement contract shall first obtain:
(A) If the viator is the insured, a written statement from a licensed attending physician that the viator is of sound mind and under no constraint or undue influence to enter into a viatical settlement contract; and
(B) a document in which the insured consents to the release of such insured's medical records to a viatical settlement provider, viatical settlement broker and the insurance company that issued the life insurance policy covering the life of the insured.
(2) Within 20 days after a viator executes documents necessary to transfer any rights under an insurance policy or within 20 days of entering any agreement, option, promise or any other form of understanding, expressed or implied, to viaticate the policy, the viatical settlement provider shall give written notice to the insurer that issued that insurance policy that the policy has or will become a viaticated policy. The notice shall be accompanied by the documents required by paragraph (3).
(3) The viatical settlement provider shall deliver a copy of the medical release required under paragraph (1)(B), a copy of the viator's application for the viatical settlement contract, the notice required under paragraph (2) and a request for verification of coverage to the insurer that issued the life policy that is the subject of the viatical transaction. The form for verification shall be developed by the commissioner.
(4) The insurer shall respond to a request for verification of coverage submitted on an approved form by a viatical settlement provider within 30 calendar days of the date the request is received and shall indicate whether, based on the medical evidence and documents provided, the insurer intends to pursue an investigation at this time regarding the validity of the insurance contract.
(5) Prior to or at the time of execution of the viatical settlement contract, the viatical settlement provider shall obtain a witnessed document in which the viator consents to the viatical settlement contract, represents that the viator has a full and complete understanding of the viatical settlement contract, that such viator has a full and complete understanding of the benefits of the life insurance policy, acknowledges that such viator is entering into the viatical settlement contract freely and voluntarily and, for persons with a terminal or chronic illness or condition, acknowledges that the insured has a terminal or chronic illness and that the terminal or chronic illness or condition was diagnosed after the life insurance policy was issued.
(6) If a viatical settlement broker performs any of these activities required of the viatical settlement provider, the viatical settlement provider is deemed to have fulfilled the requirements of this section.
(b) All medical information solicited or obtained by any licensee shall be subject to the applicable provisions of state law relating to confidentiality of medical information.
(c) All viatical settlement contracts entered into in this state shall provide the viator with an unconditional right to rescind the contract for at least 15 calendar days from the receipt of the viatical settlement proceeds. If the insured dies during the rescission period, the viatical settlement contract shall be deemed to have been rescinded, subject to repayment to the viatical settlement provider or purchaser of all viatical settlement proceeds, and any premiums, loans and loan interest that have been paid by the viatical settlement provider or purchaser.
(d) The viatical settlement provider shall instruct the viator to send the executed documents required to effect the change in ownership, assignment or change in beneficiary directly to the independent escrow agent. Within three business days after the date the escrow agent receives the document, or from the date the viatical settlement provider receives the documents, if the viator erroneously provides the documents directly to the provider, the provider shall pay or transfer the proceeds of the viatical settlement into an escrow or trust account maintained in a state or federally-chartered financial institution whose deposits are insured by the federal deposit insurance corporation. Upon payment of the settlement proceeds into the escrow account, the escrow agent shall deliver the original change in ownership, assignment or change in beneficiary forms to the viatical settlement provider or related provider trust. Upon the escrow agent's receipt of the acknowledgment of the properly completed transfer of ownership, assignment or designation of beneficiary from the insurance company, the escrow agent shall pay the settlement proceeds to the viator.
(e) Failure to tender consideration to the viator for the viatical settlement contract within the time disclosed pursuant to K.S.A. 40-5008(a)(6), and amendments thereto, renders the viatical settlement contract voidable by the viator for lack of consideration until the time consideration is tendered to and accepted by the viator.
(f) Contacts with the insured for the purpose of determining the health status of the insured by the viatical settlement provider or viatical settlement broker after the viatical settlement has occurred shall only be made by the viatical settlement provider or viatical settlement broker licensed in this state or its authorized representatives and shall be limited to once every three months for insureds with a life expectancy of more than one year, and to no more than once per month for insureds with a life expectancy of one year or less. The viatical settlement provider or viatical settlement broker shall explain the procedure for these contacts at the time the viatical settlement contract is entered into. The limitations set forth in this subsection shall not apply to any contacts with an insured for reasons other than determining the insured's health status. Viatical settlement providers and viatical settlement brokers shall be responsible for the actions of their authorized representatives.
History: L. 2008, ch. 96, § 2; L. 2018, ch. 87, § 5; July 1.
No person at any time prior to, or at the time of, the application for or issuance of a policy, or during a two-year period commencing with the date of issuance of the policy, shall enter into a viatical settlement* regardless of the date the compensation is to be provided and regardless of the date the assignment, transfer, sale, devise, bequest or surrender of the policy is to occur. This prohibition shall not apply if the viator certifies to the viatical settlement provider that:
(a) The policy was issued upon the viator's exercise of conversion rights arising out of a group or individual policy, provided the total of the time covered under the conversion policy plus the time covered under the prior policy is at least 24 months. The time covered under a group policy shall be calculated without regard to any change in insurance carriers, provided the coverage has been continuous and under the same group sponsorship;
(b) The viator submits independent evidence to the viatical settlement provider that one or more of the following conditions have been met within the two-year period:
(1) The viator or insured is terminally or chronically ill;
(2) the viator's spouse dies;
(3) the viator divorces such viator's spouse;
(4) the viator retires from full-time employment;
(5) the viator becomes physically or mentally disabled and a physician determines that the disability prevents the viator from maintaining full-time employment;
(6) a final order, judgment or decree is entered by a court of competent jurisdiction, on the application of a creditor of the viator, adjudicating the viator bankrupt or insolvent, or approving a petition seeking reorganization of the viator or appointing a receiver, trustee or liquidator to all or a substantial part of the viator's assets; or
(7) the beneficiary of the policy is a family member of the viator and the beneficiary dies.
(c) Copies of the independent evidence described in subsection (b) and documents required by subsection (a) of K.S.A.
40-5009a, and amendments thereto, shall be submitted to the insurer when the viatical settlement provider submits a request to the insurer for verification of coverage. The copies shall be accompanied by a letter of attestation from the viatical settlement provider that the copies are true and correct copies of the documents received by the viatical settlement provider. No provision in this section shall prohibit an insurer from exercising its right to contest the validity of any policy.
(d) If the viatical settlement provider submits to the insurer a copy of the owner or insured's certification described in subsection (b) when provider submits a request to the insurer to effect the transfer of the policy or certificate to the viatical settlement provider, the copy shall be deemed to conclusively establish that the viatical settlement contract satisfies the requirements of this section and the insurer shall timely respond to the request.
History: L. 2002, ch. 158, § 10; L. 2008, ch. 96, § 8; July 1.
The purpose of this section is to provide prospective viators with clear and unambiguous statements in the advertisement of viatical settlements and to assure the clear, truthful and adequate disclosure of the benefits, risks, limitations and exclusions of any viatical settlement contract. This purpose is intended to be accomplished by the establishment of guidelines and standards of permissible and impermissible conduct in the advertising of viatical settlements to assure that product descriptions are presented in a manner that prevents unfair, deceptive or misleading advertising and is conducive to accurate presentation and description of viatical settlements through the advertising media and material used by viatical settlement licensees.
(a) This section shall apply to any advertising of viatical settlement contracts or related products or services intended for dissemination in this state, including internet advertising viewed by persons located in this state. Where disclosure requirements are established pursuant to federal regulation, this section shall be interpreted so as to minimize or eliminate conflict with federal regulation wherever possible.
(b) Every viatical settlement licensee shall establish and at all times maintain a system of control over the content, form and method of dissemination of all advertisements of its contracts, products and services. All advertisements, regardless of by whom written, created, designed or presented, shall be the responsibility of the viatical settlement licensee, as well as the individual who created or presented the advertisement. A system of control shall include regular routine notification, at least once a year, to agents and others authorized by the viatical settlement licensee who disseminate advertisements of the requirements and procedures for approval prior to the use of any advertisements not furnished by the viatical settlement licensee.
(c) Advertisements shall be truthful and not misleading in fact or by implication. The form and content of an advertisement of a viatical settlement contract, product or service shall be sufficiently complete and clear so as to avoid deception. It shall not have the capacity or tendency to mislead or deceive. Whether an advertisement has the capacity or tendency to mislead or deceive shall be determined by the commissioner from the overall impression that the advertisement may be reasonably expected to create upon a person of average education or intelligence within the segment of the public to which it is directed.
(d) The information required to be disclosed under this section shall not be minimized, rendered obscure, or presented in an ambiguous fashion or intermingled with the text of the advertisement so as to be confusing or misleading.
(1) An advertisement shall not omit material information or use words, phrases, statements, references or illustrations if the omission or use has the capacity, tendency or effect of misleading or deceiving viators as to the nature or extent of any benefit, loss covered, premium payable or state or federal tax consequence. The fact that the viatical settlement contract offered is made available for inspection prior to consummation of the sale, an offer is made to refund the payment if the viator is not satisfied or that the viatical settlement contract includes a "free look" period that satisfies or exceeds legal requirements, shall not remedy misleading statements.
(2) No advertisement shall use the name or title of a life insurance company or a life insurance policy unless the advertisement has been approved by the insurer.
(3) No advertisement shall state or imply that interest charged on an accelerated death benefit or a policy loan is unfair, inequitable or in any manner an incorrect or improper practice.
(4) The words "free," "no cost," "without cost," "no additional cost," "at no extra cost" or words of similar import shall not be used with respect to any benefit or service unless true. An advertisement may specify the charge for a benefit or a service or may state that a charge is included in the payment or use other appropriate language.
(5) Testimonials, appraisals or analysis used in advertisements must be genuine; represent the current opinion of the author; be applicable to the viatical settlement contract, product or service advertised, if any; and be accurately reproduced with sufficient completeness to avoid misleading or deceiving prospective viators as to the nature or scope of the testimonials, appraisal, analysis or endorsement. In using testimonials, appraisals or analysis, the viatical settlement licensee makes as its own all the statements contained therein, and the statements are subject to all the provisions of this section.
(A) If the individual making a testimonial, appraisal, analysis or an endorsement has a financial interest in the viatical settlement provider or related entity as a stockholder, director, officer, employee or otherwise, or receives any benefit directly or indirectly other than required union scale wages, that fact shall be prominently disclosed in the advertisement.
(B) An advertisement shall not state or imply that a viatical settlement contract, benefit or service has been approved or endorsed by a group of individuals, society, association or other organization unless that is the fact and unless any relationship between an organization and the viatical settlement licensee is disclosed. If the entity making the endorsement or testimonial is owned, controlled or managed by the viatical settlement licensee, or receives any payment or other consideration from the viatical settlement licensee for making an endorsement or testimonial, that fact shall be disclosed in the advertisement.
(C) When an endorsement refers to benefits received under a viatical settlement contract, all pertinent information shall be retained for a period of five years after its use.
(e) No advertisement shall contain statistical information unless it accurately reflects recent and relevant facts. The source of all statistics used in an advertisement shall be identified.
(f) No advertisement shall disparage insurers, viatical settlement providers, viatical settlement brokers, insurance producers, policies, services or methods of marketing.
(g) The name of the viatical settlement licensee shall be clearly identified in all advertisements about the licensee or its viatical settlement contract, products or services, and if any specific viatical settlement contract is advertised, the viatical settlement contract shall be identified either by form number or some other appropriate description. If an application is part of the advertisement, the name of the viatical settlement provider shall be shown on the application.
(h) No advertisement shall use a trade name, group designation, name of the parent company of a viatical settlement licensee, name of a particular division of the viatical settlement licensee, service mark, slogan, symbol or other device or reference without disclosing the name of the viatical settlement licensee, if the advertisement would have the capacity or tendency to mislead or deceive as to the true identity of the viatical settlement licensee, or to create the impression that a company other than the viatical settlement licensee would have any responsibility for the financial obligation under a viatical settlement contract.
(i) No advertisement shall use any combination of words, symbols or physical materials that by their content, phraseology, shape, color or other characteristics are so similar to a combination of words, symbols or physical materials used by a government program or agency or otherwise appear to be of such a nature that they tend to mislead prospective viators into believing that the solicitation is in some manner connected with a government program or agency.
(j) An advertisement may state that a viatical settlement licensee is licensed in the state where the advertisement appears, provided it does not exaggerate that fact or suggest or imply that competing viatical settlement licensee may not be so licensed. The advertisement may ask the audience to consult the licensee's web site or contact the department of insurance to find out if the state requires licensing and, if so, whether the viatical settlement provider or viatical settlement broker is licensed.
(k) No advertisement shall create the impression that the viatical settlement provider, its financial condition or status, the payment of its claims or the merits, desirability or advisability of its viatical settlement contracts are recommended or endorsed by any government entity.
(l) The name of the actual licensee shall be stated in all of its advertisements. No advertisement shall use a trade name, any group designation, name of any affiliate or controlling entity of the licensee, service mark, slogan, symbol or other device in a manner that would have the capacity or tendency to mislead or deceive as to the true identity of the actual licensee or create the false impression that an affiliate or controlling entity would have any responsibility for the financial obligation of the licensee.
(m) No advertisement shall, directly or indirectly, create the impression that any division or agency of the state or of the United States government endorses, approves or favors:
(1) Any viatical settlement licensee or its business practices or methods of operation;
(2) the merits, desirability or advisability of any viatical settlement contract;
(3) any viatical settlement contract; or
(4) any life insurance policy or life insurance company.
(n) If the advertiser emphasizes the speed with which the viatication will occur, the advertising shall disclose the average time frame from completed application to the date of offer and from acceptance of the offer to receipt of the funds by the viator.
(o) If the advertising emphasizes the dollar amounts available to viators, the advertising shall disclose the average purchase price as a percent of face value obtained by viators contracting with the licensee during the past six months.
History: L. 2002, ch. 158, § 11; May 23.
History: L. 2002, ch. 158, § 12; Repealed, L. 2008, ch. 96, § 9; July 1.
(a) No person shall:
(1) Commit a fraudulent viatical settlement act.
(2) Knowingly or intentionally interfere with the enforcement of any provision of this act or any investigation of suspected or actual violations of this act.
(3) Knowingly or intentionally permit any person, employed by a person in the business of viatical settlements, convicted of a felony involving dishonesty or breach of trust to participate in the business of viatical settlements. No person in the business of viatical settlements shall knowingly or intentionally permit any person convicted of a felony involving dishonesty or breach of trust to participate in the business of viatical settlements.
(4) Issue, solicit, market or otherwise promote the purchase of an insurance policy for the sole purpose of or with the primary emphasis on settling the policy.
(5) Employ any device, scheme or artifice in violation of K.S.A. 40-450, and amendments thereto, in the solicitation, application or issuance of a life insurance policy.
(6) Receive, when providing premium financing, any proceeds, fees or other consideration from the policy or owner of the policy that are in addition to the amounts required to pay the principal, interest and costs or expenses incurred by the lender or borrower related to policy premiums paid under the premium financing agreement, except for the event of a default unless either the default on such loan or the transfer of the policy in connection with such default occurs pursuant to an agreement or understanding with any other person for the purpose of evading regulation under this act.
(b) (1) Viatical settlements, contracts and applications for viatical settlements, regardless of the form of transmission, shall contain the following statement or a substantially similar statement:
"Any person who knowingly presents false information in an application for insurance or viatical settlement contract is guilty of a crime and may be subject to fines and confinement in prison."
(2) The lack of a statement as required in paragraph (1) shall not constitute a defense in any prosecution for a fraudulent viatical settlement act.
(c) (1) Any person engaged in the business of viatical settlements having knowledge or a reasonable belief that a fraudulent viatical settlement act is being, will be or has been committed shall provide to the commissioner the information required by, and in a manner prescribed by, the commissioner.
(2) Any other person having knowledge or a reasonable belief that a fraudulent viatical settlement act is being, will be or has been committed may provide to the commissioner the information required by, and in a manner prescribed by, the commissioner.
(d) (1) No civil liability shall be imposed on and no cause of action shall arise from a person's furnishing information concerning suspected, anticipated or completed fraudulent viatical settlement acts or suspected or completed fraudulent insurance acts, if the information is provided to or received from:
(A) The commissioner or the commissioner's employees, agents or representatives;
(B) federal, state or local law enforcement or regulatory officials or their employees, agents or representatives;
(C) any person involved in the prevention and detection of fraudulent viatical settlement acts or that person's agents, employees or representatives;
(D) the NAIC, national association of securities dealers, the North American securities administrators association, or their employees, agents or representatives, or other regulatory body overseeing life insurance, viatical settlements, securities or investment fraud; or
(E) the life insurer that issued the life insurance policy covering the life of the insured.
(2) Paragraph (1) shall not apply to statements made with actual malice. In an action brought against a person for filing a report or furnishing other information concerning a fraudulent viatical settlement act or a fraudulent insurance act, the party bringing the action shall plead specifically any allegation that paragraph (1) does not apply because the person filing the report or furnishing the information did so with actual malice.
(3) A person identified in paragraph (1) shall be entitled to an award of attorney fees and costs if such person is the prevailing party in a civil cause of action for libel, slander or any other relevant tort arising out of activities in carrying out the provisions of this act and the party bringing the action was not substantially justified in doing so. For purposes of this section a proceeding is substantially justified if it had a reasonable basis in law or fact at the time that it was initiated.
(4) This section does not abrogate or modify common law or statutory privileges or immunities enjoyed by a person described in paragraph (1).
(e) (1) The documents and evidence provided pursuant to subsection (d) or obtained by the commissioner in an investigation of suspected or actual fraudulent viatical settlement acts shall be privileged and confidential and shall not be a public record and shall not be subject to discovery or subpoena in a civil or criminal action.
(2) Paragraph (1) of this subsection shall not prohibit release by the commissioner of documents and evidence obtained in an investigation of suspected or actual fraudulent viatical settlement acts:
(A) In administrative or judicial proceedings to enforce laws administered by the commissioner;
(B) to federal, state or local law enforcement or regulatory agencies, to an organization established for the purpose of detecting and preventing fraudulent viatical settlement acts or to the NAIC;
(C) at the discretion of the commissioner or pursuant to a court order, to a person in the business of viatical settlements that is aggrieved by a fraudulent viatical settlement act; or
(D) at the discretion of the commissioner or pursuant to a court order, to a person that is aggrieved by a fraudulent viatical settlement act.
(3) Release of documents and evidence under paragraphs (2)(A) and (B) of this subsection does not abrogate or modify the privilege granted in paragraph (1).
(f) This act shall not:
(1) Preempt the authority or relieve the duty of other law enforcement or regulatory agencies to investigate, examine and prosecute suspected violations of law;
(2) preempt, supersede or limit any provision of any state securities law or any rule, order or notice issued thereunder;
(3) prevent or prohibit a person from disclosing voluntarily information concerning viatical settlement fraud to a law enforcement or regulatory agency other than the insurance department; or
(4) limit the powers granted elsewhere by the laws of this state to the commissioner or an insurance fraud unit to investigate and examine possible violations of law and to take appropriate action against wrongdoers.
(g) Viatical settlement providers and viatical settlement brokers shall have in place antifraud initiatives reasonably calculated to detect, prosecute and prevent fraudulent viatical settlement acts. At the discretion of the commissioner, the commissioner may order, or a licensee may request and the commissioner may grant, such modifications of the following required initiatives as necessary to ensure an effective antifraud program. The modifications may be more or less restrictive than the required initiatives so long as the modifications reasonably may be expected to accomplish the purpose of this section. Antifraud initiatives shall include:
(1) Fraud investigators, who may be viatical settlement providers or viatical settlement broker employees or independent contractors; and
(2) an antifraud plan that shall be submitted to the commissioner. The antifraud plan shall include, but not be limited to:
(A) A description of the procedures for detecting and investigating possible fraudulent viatical settlement acts and procedures for resolving material inconsistencies between medical records and insurance applications;
(B) a description of the procedures for reporting possible fraudulent viatical settlement acts to the commissioner;
(C) a description of the plan for antifraud education and training of underwriters and other personnel; and
(D) a description or chart outlining the organizational arrangement of the antifraud personnel who are responsible for the investigation and reporting of possible fraudulent viatical settlement acts and investigating unresolved material inconsistencies between medical records and insurance applications; and
(3) antifraud plans submitted to the commissioner shall be privileged and confidential and shall not be a public record and shall not be subject to discovery or subpoena in a civil or criminal action.
History: L. 2008, ch. 96, § 3; L. 2009, ch. 21, § 1; L. 2018, ch. 87, § 6; July 1.
(a) If the commissioner determines after notice and opportunity for a hearing that any person has engaged or is engaging in any act or practice constituting a violation of any provision of this act, the Kansas insurance statutes or any rule and regulation or order thereunder, the commissioner may in the exercise of discretion, order any one or more of the following:
(1) Payment of a monetary penalty of not more than $1,000 for each and every act or violation, unless the person knew or reasonably should have known such person was in violation of this act, the Kansas insurance statutes or any rule and regulation or order thereunder, in which case the penalty shall be not more than $2,000 for each and every act or violation;
(2) suspension or revocation of the person's license or certificate if such person knew or reasonably should have known that such person was in violation of this act, the Kansas insurance statutes or any rule and regulation or order thereunder; or
(3) that such person cease and desist from the unlawful act or practice and take such affirmative action as in the judgment of the commissioner will carry out the purposes of the violated or potentially violated provision.
(b) If any person fails to file any report or other information with the commissioner as required by statute or fails to respond to any proper inquiry of the commissioner, the commissioner, after notice and opportunity for hearing, may impose a penalty of up to $500 for each violation or act, along with an additional penalty of up to $100 for each week thereafter that such report or other information is not provided to the commissioner.
(c) If the commissioner makes written findings of fact that there is a situation involving an immediate danger to the public health, safety or welfare or the public interest will be irreparably harmed by delay in issuing an order under paragraph (3) of subsection (a), the commissioner may issue an emergency temporary cease and desist order. Such order, even when not an order within the meaning of K.S.A. 77-502, and amendments thereto, shall be subject to the same procedures as an emergency order issued under K.S.A. 77-536, and amendments thereto. Upon the entry of such an order, the commissioner shall promptly notify the person subject to the order that: (1) It has been entered; (2) the reasons therefor; and (3) that upon written request within 15 days after service of the order the matter will be set for a hearing which shall be conducted in accordance with the provisions of the Kansas administrative procedure act. If no hearing is requested and none is ordered by the commissioner, the order will remain in effect until it is modified or vacated by the commissioner. If a hearing is requested or ordered, the commissioner, after notice of and opportunity for hearing to the person subject to the order, by written findings of fact and conclusions of law, shall vacate, modify or make permanent the order.
(d) (1) Any person who violates the provisions of this act shall be guilty of a:
(A) Severity level 7, nonperson felony if the value of the viatical settlement contract is $25,000 or more;
(B) severity level 9, nonperson felony if the value of the viatical settlement contract is at least $1,000 but less than $25,000; or
(C) class A nonperson misdemeanor if the value of the viatical settlement contract is less than $1,000.
(2) If the value of the insurance premium is less than $1,000 and such agent or broker has, within five years immediately preceding commission of the crime, been convicted of violating this section two or more times shall be guilty of a severity level 9, nonperson felony.
(e) Restitution may be ordered in addition to, but not in lieu of, any other penalty imposed under this act.
History: L. 2002, ch. 158, § 13; L. 2006, ch. 194, § 30; May 25.
Any violation of this act shall also be considered an unfair or deceptive act or practice under K.S.A. 40-2404, and amendments thereto, and subject to the penalties contained in K.S.A. 40-2401 et seq., and amendments thereto.
History: L. 2002, ch. 158, § 14; May 23.
The commissioner shall have the authority to:
(a) Promulgate rules and regulations necessary to implement the provisions of this act;
(b) establish standards for evaluating reasonableness of payments under viatical settlement contracts for persons who are terminally or chronically ill. Such authority includes, but is not limited to, regulation of discount rates used to determine the amount paid in exchange for assignment, transfer, sale, devise or bequest of a benefit under a life insurance policy;
(c) establish appropriate licensing requirements, fees and standards for continued licensure for viatical settlement providers or viatical settlement brokers;
(d) require a bond or other mechanism for financial accountability for viatical settlement providers and viatical settlement brokers; and
(e) adopt rules and regulations governing the relationship and responsibilities of both insurers and viatical settlement providers or viatical settlement brokers during the viatication of a life insurance policy or certificate.
History: L. 2002, ch. 158, § 15; May 23.
A viatical settlement provider or viatical settlement broker transacting business in this state may continue to do so pending approval or disapproval of the viatical settlement provider or viatical settlement broker's application for a license as long as the application is filed with the commissioner by July 1, 2002.
History: L. 2002, ch. 158, § 16; May 23.
K.S.A. 40-5101 through 40-5114, and amendments thereto, shall be known as the Kansas insurance score act.
History: L. 2003, ch. 88, § 2; July 1.
(a) This act shall apply only to personal insurance and not to commercial insurance. A personal insurance policy must be individually underwritten for personal, family or household use. No other type of insurance shall be included as personal insurance for the purpose of this act.
(b) This act shall apply to all personal insurance policies either written to be effective or renewed on or after January 1, 2004.
History: L. 2003, ch. 88, § 3; July 1.
As used in this act:
(a) "Adverse action" means any of the following in connection with the underwriting of personal insurance:
(1) A denial or cancellation of coverage; or
(2) a reduction or other adverse or unfavorable change in the terms of coverage of any insurance regardless of whether such insurance is in existence or has been applied for.
(b) "Affiliate" means any company that controls, is controlled by, or is under common control with another company.
(c) "Agent" shall have the meaning ascribed to it in subsection (k) of K.S.A. 40-4902, and amendments thereto, unless the context requires otherwise.
(d) "Applicant" means an individual who has applied to an insurer to be covered by a personal insurance policy.
(e) "Commissioner" means the commissioner of insurance and any authorized designee of the commissioner.
(f) "Consumer" means an insured whose credit information is used or whose insurance score is calculated in the underwriting or rating of a personal insurance policy. "Consumer" also includes an applicant for a personal insurance policy.
(g) "Consumer reporting agency" means any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages, in whole or in part, in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties.
(h) "Credit information" means any credit related information derived from a credit report, found on a credit report itself, or provided on an application for personal insurance. Credit information shall not include any information which is not credit related, regardless of whether such information is contained in a credit report or in an application or is used to calculate an insurance score.
(i) "Credit report" means any written, oral, or other communication of information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing or credit capacity which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor to determine personal insurance premiums, eligibility for coverage, or tier placement.
(j) "Department" means the insurance department established by K.S.A. 40-102, and amendments thereto.
(k) "Insurance score" means a number or rating that is derived from an algorithm, computer application, model, or other process that is based, in whole or in part, on credit information for the purposes of predicting the future insurance loss exposure of an individual applicant or insured.
(l) "Personal insurance" means private passenger automobile, homeowners, motorcycle, mobile homeowners and non-commercial dwelling fire insurance policies and boat, personal water craft, snowmobile and recreational vehicle policies. For the strict purposes of this act, personal insurance shall also include individually underwritten policies of farmowners.
History: L. 2003, ch. 88, § 4; L. 2010, ch. 108, § 6; July 1.
No insurer authorized to do business in the state of Kansas which uses credit information to underwrite or rate risks, shall:
(a) Use an insurance score that is calculated using income, address, zip code, race, religion, color, sex, disability, national origin, ancestry or marital status of the consumer as a factor.
(b) Without consideration of any other applicable underwriting factor independent of credit information and not expressly prohibited by subsection (a), refuse to quote, deny, cancel or refuse to renew any policy of personal insurance solely on the basis of credit information.
(c) Without consideration of any other applicable factor independent of credit information, base an insured's renewal rates for personal insurance solely upon credit information.
(d) Without consideration of any other applicable factor independent of credit information, take an adverse action against a consumer solely because such consumer does not have a credit card account.
(e) Consider an absence of credit information or an inability to calculate an insurance score in underwriting or rating personal insurance, unless the insurer does one of the following:
(1) Treat the consumer as if the applicant or insured had neutral credit information, as defined by the insurer; or
(2) exclude the use of credit information as a factor and use only other underwriting criteria.
(f) Take an adverse action against a consumer based on credit information, unless an insurer obtains and uses a credit report issued or an insurance score calculated within 90 days from the date the personal insurance policy is first written or notice of renewal is issued.
(g) (1) The insurer shall:
(A) Re-underwrite and re-rate the consumer's personal insurance policy, at the annual renewal of such policy, based upon a current credit report or insurance score for such consumer, if requested by the consumer. Such consumer's current credit report or insurance score shall be used if the result of the re-underwrite and re-rate reduces the consumer's rate. Such consumer's current credit report or insurance score shall not be used to increase the consumer's rate. The insurer shall not be found to be in violation of rate filings by adjusting an insured's rate in accordance with this subparagraph. Nothing in this subparagraph shall require an insurer to recalculate a consumer's insurance score or obtain the updated credit report of a consumer more frequently than once in a twelve-month period.
(B) Have the discretion to obtain current credit information upon any renewal before the 36 months, if consistent with such insurer's underwriting guidelines.
(2) No insurer shall be required to obtain current credit information for an insured, if:
(A) The insured is in the most favorably-priced tier of the insurer, within a group of affiliated insurers. However, the insurer shall have the discretion to order such report, if consistent with such insurer's underwriting guidelines;
(B) credit was not used for underwriting or rating such insured when the policy was initially written. However, the insurer shall have the discretion to use credit for underwriting or rating such insured upon renewal, if consistent with such insurer's underwriting guidelines; or
(C) The insurer re-evaluates the insured beginning no later than 36 months after inception and thereafter based upon other underwriting or rating factors, excluding credit information.
(h) Use any of the following as a negative factor against a consumer in any insurance scoring methodology or in reviewing credit information for the purpose of underwriting or rating a policy of personal insurance:
(1) Any credit inquiry not initiated by the consumer or any inquiry requested by the consumer for such consumer's own credit information;
(2) any inquiry relating to insurance coverage, if so identified on a consumer's credit report;
(3) any collection account with a medical industry code, if so identified on the consumer's credit report; or
(4) any additional lender inquiry beyond the first such inquiry related to the same loan purpose, if coded by the consumer reporting agency on the consumer's credit report as being from the given loan industry and made within 30 days of one another.
History: L. 2003, ch. 88, § 5; L. 2010, ch. 108, § 7; July 1.
(a) If it is determined through the dispute resolution process set forth in the federal fair credit reporting act, 15 U.S.C. § 1681i(a)(5), that the credit information of a current insured was incorrect or incomplete and if the insurer receives notice of such determination from either the consumer reporting agency or from the insured, the insurer shall re-underwrite and re-rate the consumer within 30 days of receiving the notice. After re-underwriting or re-rating the insured, the insurer shall make any adjustments necessary, consistent with such insurer's underwriting and rating guidelines.
(b) If an insurer determines that the insured has overpaid the premium, the insurer shall refund to the insured the amount of overpayment calculated back to the shorter of either the last 12 months of coverage or the actual policy period.
History: L. 2003, ch. 88, § 6; July 1.
If an insurer writing personal insurance uses credit information in underwriting or rating a consumer, the insurer or its agent shall disclose that it may obtain credit information in connection with such application. The insurer shall further notify such consumer that an internal appeal process exists as provided by paragraph (b) of K.S.A. 40-5107, and amendments thereto. The disclosure shall be made either on the insurance application or at the time the insurance application is taken. Such disclosure shall be either written or provided to an applicant in the same medium as the application for insurance. The insurer need not provide the disclosure statement required under this section to any insured on a renewal policy if such consumer has previously been provided a disclosure statement.
History: L. 2003, ch. 88, § 7; July 1.
(a) If an insurer takes an adverse action based upon credit information, the insurer shall provide written notification to the consumer a notice that:
(1) An adverse action has been taken, in accordance with the requirements of the federal fair credit reporting act as set forth in, 15 U.S.C. § 1681m(a); and
(2) explains the reason for such adverse action.
(b) Each reason must be provided in sufficiently clear and specific language so that a person can identify the basis for the insurer's decision to take such adverse action. An insurer shall provide a procedure whereby a consumer may review an adverse action based on credit information. Such procedure shall be consistent with the provisions of K.S.A. 40-2,112, and amendments thereto. The insurer and the insurer's agent shall be immune from any action arising from information provided to the insured through such process. The insurer shall not be found in violation of rate filings by adjusting an insured's rate in such a manner.
(c) The use of generalized terms such as "poor credit history," "poor credit rating," or "poor insurance score" shall be deemed not to comply with requirements of this section.
History: L. 2003, ch. 88, § 8; July 1.
(a) Each insurer that uses insurance scores to underwrite and rate risks shall file the procedure required by paragraph (b) of K.S.A. 40-5107, and amendments thereto, and such insurer's insurance scoring models or other insurance scoring processes with the insurance department. A third party may file with the insurance department such third party's scoring models or other scoring processes used on behalf of an insurer. Any filing that includes insurance scoring may include loss experience justifying the use of credit information.
(b) Except for the procedure required by paragraph (b) of K.S.A. 40-5107, and amendments thereto, any filing relating to insurance scoring models or other insurance scoring processes shall be considered to be a trade secret and confidential under the open records act.
History: L. 2003, ch. 88, § 9; July 1.
(a) The commissioner of insurance shall gather data, hold public hearings, make inquiries and publish studies relating to the purpose of this act.
(b) The commissioner shall report to the president and minority leader of the senate and the speaker and minority leader of the house of representatives by January 26, 2005, on issues relating to the use of credit history in the underwriting and rating of personal insurance and the implementation of this act.
History: L. 2003, ch. 88, § 10; July 1.
(a) An insurer shall indemnify, defend, and hold agents harmless from and against all liability, fees, and costs arising out of or relating to the actions, errors, or omissions of an agent who obtains or uses credit information or insurance scores, or both, for an insurer.
(b) The provisions of subsection (a) shall not be available whenever the agent fails to:
(1) Follow the instructions of or procedures established by the insurer; and
(2) comply with any applicable law or regulation.
(c) Nothing in this section shall be construed to provide a consumer or other insured with a cause of action that does not exist in the absence of this section.
History: L. 2003, ch. 88, § 11; July 1.
(a) No consumer reporting agency shall provide or sell data or lists that include any information, in whole or in part, which was submitted in conjunction with an insurance inquiry about a consumer's credit information or a request for a credit report or insurance score. Such information includes, but is not limited to:
(1) The expiration date of an insurance policy or any other information that may identify any time period during which a consumer's insurance may expire; and
(2) the terms and conditions of the consumer's insurance coverage.
(b) The restrictions provided in subsection (a) of this section do not apply to:
(1) Any data or list the consumer reporting agency supplies to the insurance agent from whom information was received;
(2) the insurer for whom such agent acted; or
(3) such insurer's affiliates or holding companies.
(c) Nothing in this section shall be construed to prohibit or restrict any insurer from obtaining a claims history report or a motor vehicle report.
History: L. 2003, ch. 88, § 12; July 1.
Whenever an insurer is found to be in violation of any provision of this act, the commissioner shall proceed under K.S.A. 40-2,125, and amendments thereto.
History: L. 2003, ch. 88, § 13; July 1.
The commissioner of insurance is hereby authorized to adopt such rules and regulations as may be necessary to carry out the provisions of this act.
History: L. 2003, ch. 88, § 14; July 1.
(a) If any provision of this act is declared invalid due to an interpretation of or a future change in the federal fair credit reporting act, the remaining portions of the act shall be deemed to be severable and shall remain in full force and effect.
(b) If any provision of this act or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the act which can be given effect without the invalid provision or application, and to this end the provisions of this act are severable.
History: L. 2003, ch. 88, § 15; July 1.
(a) (1) Notwithstanding any other law, rule or regulation, an insurer that uses credit information shall, upon written request from an applicant for insurance coverage or an insured, provide reasonable exceptions to the insurer's rates, rating classifications, company or tier placement, or underwriting rules or guidelines for a consumer who has experienced and whose credit information has been directly influenced by an extraordinary life circumstance.
(2) As used in this section "extraordinary life circumstance" means:
(A) Catastrophic event, as declared by the federal or any state government;
(B) serious illness or injury to the consumer or such consumer's immediate family member;
(C) the death of a spouse, child or parent of the insured;
(D) divorce or involuntary interruption of legally-owed alimony or support payments;
(E) identity theft;
(F) temporary loss of employment for a period of three months or more, if it results from involuntary termination;
(G) overseas military deployment; or
(H) other events as determined by the insurer.
(b) If a consumer submits a request for an exception under subsection (a), an insurer may, in its sole discretion:
(1) Require the consumer to provide reasonable written and independently verifiable documentation of the event;
(2) require the consumer to demonstrate that the event had a direct and meaningful impact on the consumer's credit information; and
(3) require such request be made no more than 60 days from the date of the application for insurance or the policy renewal.
(c) An insurer shall not be deemed to be out of compliance with any law, rule or regulation relating to underwriting, rating or rate filing as a result of granting an exception under this section. Nothing in this section shall be construed to provide a consumer or other insured with a cause of action that does not exist in the absence of this section.
(d) The insurer shall provide notice to consumers that reasonable exceptions are available and information about how the consumer may inquire further.
(e) (1) Within 30 days of the insurer's receipt of sufficient documentation of an extraordinary life circumstance as the insurer may request under subsection (b), the insurer shall inform the consumer of the outcome of their request for a reasonable exception.
(2) The insurer may grant an exception despite the consumer not providing the initial request for an exception in writing or grant an exception where the consumer asks for consideration of repeated circumstances or the insurer has considered this circumstance previously.
(3) The insurer shall inform the consumer of the outcome of their request in writing.
(f) This section shall be part of and supplemental to the Kansas insurance score act.
History: L. 2010, ch. 108, § 5; July 1.
(a) (1) This act applies to any insurer authorized in this state which either assumes or transfers the obligations or risks, or both, on contracts of insurance pursuant to an assumption reinsurance agreement.
(2) At the commissioner's discretion, the commissioner may waive any requirement of this act when the transfer of obligations or risks, or both, results from the discontinuance of business pursuant to K.S.A. 40-248, and amendments thereto, by the transferring insurer.
(b) This act does not apply to: (1) Any reinsurance agreement or transaction in which the ceding insurer continues to remain directly liable for its insurance obligations or risks, or both, under the contracts of insurance subject to the reinsurance agreement;
(2) the substitution of one insurer for another upon the expiration of insurance coverage pursuant to statutory or contractual requirements and the issuance of a new contract of insurance by another insurer;
(3) the transfer of contracts of insurance pursuant to mergers or consolidations of two or more insurers to the extent that those transactions are regulated by statute;
(4) any insurer subject to a judicial order of liquidation or rehabilitation;
(5) any reinsurance agreement or transaction to which a state insurance guaranty association is a party, provided that policyholders do not lose any rights or claims afforded under their original policies pursuant to K.S.A. 40-2901 et seq., and amendments thereto, or K.S.A. 40-3001 et seq., and amendments thereto; or
(6) the transfer of liabilities from one insurer to another under a single group policy upon the request of the group policyholder.
History: L. 2004, ch. 128, § 6; L. 2008, ch. 83, § 1; July 1.
For the purposes of this act:
(a) "Assuming insurer" means the insurer that acquires an insurance obligation or risk, or both, from the transferring insurer pursuant to an assumption reinsurance agreement.
(b) "Assumption reinsurance agreement" means any contract that both:
(1) Transfers insurance obligations or risks, or both, of existing or in-force contracts of insurance from a transferring insurer to an assuming insurer; and
(2) is intended to effect a novation of the transferred contract of insurance with the result that the assuming insurer becomes directly liable to the policyholders of the transferring insurer and the transferring insurer's insurance obligations or risks, or both, under the contracts are extinguished.
(c) "Commissioner" means the commissioner of insurance as defined by K.S.A. 40-102, and amendments thereto, unless the context requires otherwise.
(d) "Contract of insurance" means any written agreement between an insurer and policyholder pursuant to which the insurer, in exchange for premium or other consideration, agrees to assume an obligation or risk, or both, of the policyholder or to make payments on behalf of, or to, the policyholder or its beneficiaries. Contract of insurance includes all property, casualty, life, health, accident, surety, title and annuity business authorized to be written pursuant to the insurance laws of this state.
(e) "Home service business" means insurance business on which premiums are collected on a weekly or monthly basis by an agent of the insurer.
(f) "Notice of transfer" means the written notice to policyholders required by K.S.A. 40-5203, and amendments thereto.
(g) "Policyholder" means any individual or entity which has the right to terminate or otherwise alter the terms of a contract of insurance.
Policyholder includes any certificateholder whose certificate is in force on the proposed effective date of the assumption, if the certificateholder has the right to keep the certificate in force without change in benefit following termination of the group policy.
The right to keep the certificate in force shall not include the right to elect individual coverage under the consolidated omnibus budget reconciliation act ("COBRA") section 601 et seq., of the employee retirement income security act of 1974, as amended, 29 U.S.C. §§ 1161 et seq.
(h) "Transferring insurer" means the insurer which transfers an insurance obligation or risk, or both, to an assuming insurer pursuant to an assumption reinsurance agreement.
(i) This section shall take effect on and after July 1, 2004.
History: L. 2004, ch. 128, § 7; May 20.
(a) The transferring insurer shall provide or cause to be provided to each policyholder a notice of transfer by first-class mail, addressed to the policyholder's last known address or to the address to which premium notices or other policy documents are sent or, with respect to home service business, by personal delivery with acknowledged receipt. A notice of transfer shall also be sent to the transferring insurer's agents or brokers of record on the affected policies.
(b) The notice of transfer shall state or provide:
(1) The date the transfer and novation of the policyholder's contract of insurance is proposed to take place;
(2) the name, address and telephone number of the assuming and transferring insurer;
(3) that the policyholder has the right to either consent to or reject the transfer and novation;
(4) the procedures and time limit for consenting to or rejecting the transfer and novation;
(5) a summary of any effect that consenting to or rejecting the transfer and novation will have on the policyholder's rights;
(6) a statement that the assuming insurer is licensed to write the type of business being assumed in the state where the policyholder resides, or is otherwise authorized, as provided herein, to assume such business;
(7) the name and address of the person at the transferring insurer to whom the policyholder should send its written statement of acceptance or rejection of the transfer and novation;
(8) the address and phone number of the insurance department where the policyholder resides so that the policyholder may write or call the insurance department for further information regarding the financial condition of the assuming insurer;
(9) the following financial data for both companies:
(A) Ratings for the last five years if available or for such lesser period as is available from two nationally recognized insurance rating services acceptable to the commissioner including the rating service's explanation of the meaning of the ratings. If ratings are unavailable for any year of the five-year period, this shall also be disclosed;
(B) a balance sheet as of December 31 for the previous three years, if available, or for such lesser period as is available and as of the date of the most recent quarterly statement;
(C) a copy of the management's discussion and analysis that was filed as a supplement to the previous year's annual statement; and
(D) an explanation of the reason for the transfer.
(c) Notice in a form identical or substantially similar to the form set forth in this act shall be deemed to comply with the requirements of subsection (b) of this section and amendments thereto.
(d) The notice of transfer shall include a pre-addressed, postage-paid response card which a policyholder may return as such policyholder's written statement of acceptance or rejection of the transfer and novation.
(e) The notice of transfer shall be filed as part of the prior approval requirement.
(f) This section shall take effect on and after July 1, 2004.
History: L. 2004, ch. 128, § 8; May 20.
(a) Prior approval by the commissioner is required for any transaction where an insurer domiciled in this state assumes or transfers obligations or risks, or both, on contracts of insurance under an assumption reinsurance agreement. No insurer licensed in this state shall transfer obligations and/or risks on contracts of insurance issued to or owned by residents of this state to any insurer that is not licensed in this state. An insurer domiciled in this state shall not assume obligations or risks, or both, on contracts of insurance issued to or owned by policyholders residing in any other state unless it is licensed in the other state, or the insurance regulatory official of that state has approved the assumption.
(b) Any licensed foreign insurer that enters into an assumption reinsurance agreement which transfers the obligations or risks, or both, on contracts of insurance issued to or owned by residents of this state, shall file or cause to be filed with the commissioner of insurance of this state the assumption certificate, a copy of the notice of transfer and an affidavit that the transaction is subject to substantially similar requirements in the state of domicile of both the transferring and assuming insurer. If no such requirements exist in the domicile of either the transferring or assuming insurers, then the requirements of this act shall apply.
(c) Any licensed foreign insurer that enters into an assumption reinsurance agreement which transfers the obligations or risks, or both, on contracts of insurance issued to or owned by residents of this state, shall obtain prior approval of the commissioner of insurance of this state and be subject to all other requirements of this act with respect to residents of this state, unless the transferring and assuming insurers are subject to assumption reinsurance requirements adopted by statute or regulation in the jurisdiction of their domicile which are substantially similar to those contained herein.
(d) The following factors, along with such other factors as the commissioner deems appropriate under the circumstances, shall be considered by the commissioner in reviewing a request for approval:
(1) The financial condition of the transferring and assuming insurers and the effect the transaction will have on the financial condition of each company;
(2) the competence, experience and integrity of those persons who control the operation of the assuming insurer;
(3) the plans or proposals the assuming party has with respect to the administration of the policies subject to the proposed transfer;
(4) whether the transfer is fair and reasonable to the policyholders of both companies; and
(5) whether the notice of transfer to be provided by the insurer is fair, adequate and not misleading.
(e) This section shall take effect on and after July 1, 2004.
History: L. 2004, ch. 128, § 9; May 20.
(a) Policyholders shall have the right to reject the transfer and novation of their contracts of insurance. Policyholders electing to reject the assumption transaction shall return to the transferring insurer the pre-addressed, postage-paid response card or other written notice and indicate thereon that the assumption is rejected (collectively referred to as the "response card").
(b) Payment of any premium to the assuming company during the 24-month period after notice is received shall be deemed to indicate the policyholder's acceptance of the transfer to the assuming insurer and a novation shall be deemed to have been effected, provided that the premium notice clearly states that payment of the premium to the assuming insurer shall constitute acceptance of the transfer. However, the premium notice shall also provide a method for the policyholder to pay the premium while reserving the right to reject the transfer. With respect to any home service business or any other business not using premium notices, the disclosures and procedural requirements of this subsection are to be set forth in the notice of transfer required by K.S.A. 40-5202, and amendments thereto, and in the assumption certificate.
(c) After no fewer than 24 months from the mailing of the initial notice of transfer required under K.S.A. 40-5202, and amendments thereto, if positive consent to, or rejection of, the transfer and assumption has not been received or consent has not been deemed to have occurred under subsection (b) of this section, the transferring company shall send to the policyholder a second and final notice of transfer as specified in K.S.A. 40-5202, and amendments thereto. If the policyholder does not accept or reject the transfer during the one-month period immediately following the date on which the transferring insurer mails the second and final notice of transfer, the policyholder's consent will be deemed to have occurred and novation of the contract will be effected. With respect to the home service business, or any other business not using premium notices, the 24-month and one-month periods shall be measured from the date of delivery of the notice of transfer pursuant to subsection (a) of K.S.A. 40-5203, and amendments thereto.
(d) The transferring insurer will be deemed to have received the response card on the date it is postmarked. A policyholder may also send its response card by facsimile or other electronic transmission or by registered mail, express delivery or courier service, in which case the response card shall be deemed to have been received by the assuming insurer on the date of actual receipt by the transferring insurer.
(e) This section shall take effect on and after July 1, 2004.
History: L. 2004, ch. 128, § 10; May 20.
If a policyholder consents to the transfer pursuant to K.S.A. 40-5205, and amendments thereto, or if the transfer is effected under K.S.A. 40-5207, and amendments thereto, there shall be a novation of the contract of insurance subject to the assumption reinsurance agreement with the result that the transferring insurer shall thereby be relieved of all insurance obligations or risks, or both, transferred under the assumption reinsurance agreement and the assuming insurer shall become directly and solely liable to the policyholder for those insurance obligations or risks, or both.
This section shall take effect on and after July 1, 2004.
History: L. 2004, ch. 128, § 11; May 20.
If an insurer domiciled in this state or in a jurisdiction having a substantially similar law is deemed by the domiciliary commissioner to be in hazardous financial condition or an administrative proceeding has been instituted against it for the purpose of reorganizing or conserving the insurer, and the transfer of the contracts of insurance is in the best interest of the policyholders, as determined by the domiciliary commissioner, a transfer and novation may be effected notwithstanding the provisions of this act. This may include a form of implied consent and adequate notification to the policyholder of the circumstances requiring the transfer as approved by the commissioner.
This section shall take effect on and after July 1, 2004.
History: L. 2004, ch. 128, § 12; May 20.
Residents of this state whose policies were previously subject to the protections set forth in K.S.A. 40-2901 et seq., and amendments thereto, or K.S.A. 40-3001 et seq., and amendments thereto, and whose policies are transferred to an unlicensed insurer pursuant to this section are entitled to continued protection thereunder.
This section shall take effect on and after July 1, 2004.
History: L. 2004, ch. 128, § 13; May 20.
A notice of transfer and form for response by an insured to such a notice shall be deemed to be sufficient for the purposes of this act if it substantially conforms with the following form:
NOTICE OF TRANSFER
IMPORTANT: THIS NOTICE AFFECTS YOUR CONTRACT RIGHTS. PLEASE READ IT CAREFULLY.
Transfer of Policy
The [ABC Insurance Company] has agreed to replace us as your insurer under [insert policy/certificate name and number] effective [insert date]. The [ABC Insurance Company's] principal place of business is [insert address] and certain financial information concerning both companies is attached, including (1) ratings for the last five years, if available, or for such lesser period as is available from two nationally recognized insurance rating services; (2) balance sheets for the previous three years, if available, or for such lesser period as is available and as of the date of the most recent quarterly statement; (3) a copy of the Management's Discussion and Analysis that was filed as a supplement to the previous year's annual statement; and (4) an explanation of the reason for the transfer. You may obtain additional information concerning [ABC Insurance Company] from reference materials in your local library or by contacting your Insurance Commissioner at [insert address and phone number].
The [ABC Insurance Company] is licensed to write this coverage in your state. The Commissioner of Insurance in your state has reviewed the potential effect of the proposed transaction, and has approved the transaction.
Your Rights
You may choose to consent to or reject the transfer of your policy to [ABC Insurance Company]. If you want your policy transferred, you may notify us in writing by signing and returning the enclosed pre-addressed, postage-paid card or by writing to us at:
[Insert name, address and facsimile number of contact person.]
Payment of your premium to the assuming company will also constitute acceptance of the transaction. However, a method will be provided to allow you to pay the premium while reserving the right to reject the transfer.
If you reject the transfer, you may keep your policy with us or exercise any option under your policy. If we do not receive a written rejection you will, as a matter of law, have consented to the transfer. However, before this consent is final you will be provided a second notice of the transfer 24 months from now. After the second notice is provided, you will have one month to reply. If you have paid your premium to the [ABC Insurance Company], without reserving your right to reject the transfer, you will not receive a second notice.
Effect of Transfer
If you accept this transfer, [ABC Insurance Company] will be your insurer. It will have direct responsibility to you for the payment of all claims, benefits and for all other policy obligations. We will no longer have any obligations to you.
If you accept this transfer, you should make all premium payments and claims submissions to [ABC Insurance Company] and direct all questions to [ABC Insurance Company].
If you have any further questions about this agreement, you may contact [XYZ Insurance] or [ABC Insurance].
Sincerely,
[XYZ Insurance Company [ABC Insurance Company
111 No Street 222 No Street
Smithville, USA Jonesville, USA
555/555-5555] 333/333-3333]
For your convenience, we have enclosed a pre-addressed postage-paid response card. Please take time now to read the enclosed notice and complete and return the response card to us.
[Notice Date]
RESPONSE CARD
| ________ | Yes, I accept the transfer of my policy from [name of transferring company] to [name of assuming company]. | | --- | --- | | ________ | No, I reject the proposed transfer of my policy from [name of transferring company] to [name of assuming company] and wish to retain my policy with [name of transferring company]. |
Date
Signature
Name: ________________________________________________
Street Address: _________________________________________
City, State, Zip: ________________________________________
This section shall take effect on and after July 1, 2004.
History: L. 2004, ch. 128, § 14; May 20.
(a) K.S.A. 40-5201 through 40-5210, and amendments thereto, shall be known and may be cited as the assumption reinsurance agreement act.
(b) This act shall be administered by the commissioner.
(c) The commissioner is hereby authorized to adopt such rules and regulations as may be necessary to carry out the provisions of this act.
History: L. 2004, ch. 128, § 15; L. 2008, ch. 83, § 2; July 1.
This act may be cited as the Interstate Insurance Product Regulation Compact.
ARTICLE I.
PURPOSES
The purposes of this Compact are, through means of joint and cooperative action among the Compacting States:
To promote and protect the interest of consumers of individual and group annuity, life insurance, disability income and long-term care insurance products;
To develop uniform standards for insurance products covered under the Compact;
To establish a central clearinghouse to receive and provide prompt review of insurance products covered under the Compact and in certain cases, advertisements related thereto, submitted by insurers authorized to do business in one or more Compacting States;
To give appropriate regulatory approval to those product filings and advertisements satisfying the applicable uniform standard;
To improve coordination of regulatory resources and expertise between state insurance departments regarding the setting of uniform standards and review of insurance products covered under the Compact;
To create the Interstate Insurance Product Regulation Commission; and
To perform these and such other related functions as may be consistent with the state regulation of the business of insurance.
ARTICLE II.
DEFINITIONS
For purposes of this Compact:
"Advertisement" means any material designed to create public interest in a Product, or induce the public to purchase, increase, modify, reinstate, borrow on, surrender, replace or retain a policy, as more specifically defined in the Rules and Operating Procedures of the Commission.
"Bylaws" mean those bylaws established by the Commission for its governance, or for directing or controlling the Commission's actions or conduct.
"Compacting State" means any State which has enacted this Compact legislation and which has not withdrawn pursuant to Article XIV, Section 1, or been terminated pursuant to Article XIV, Section 2.
"Commission" means the "Interstate Insurance Product Regulation Commission" established by this Compact.
"Commissioner" means the chief insurance regulatory official of a State including, but not limited to commissioner, superintendent, director or administrator.
"Domiciliary State" means the state in which an Insurer is incorporated or organized; or, in the case of an alien Insurer, its state of entry.
"Insurer" means any entity licensed by a State to issue contracts of insurance for any of the lines of insurance covered by this Act.
"Member" means the person chosen by a Compacting State as its representative to the Commission, or his or her designee.
"Non-compacting State" means any State which is not at the time a Compacting State.
"Operating Procedures" mean procedures promulgated by the Commission implementing a Rule, Uniform Standard or a provision of this Compact.
"Product" means the form of a policy or contract, including any application, endorsement, or related form which is attached to and made a part of the policy or contract, and any evidence of coverage or certificate, for an individual or group annuity, life insurance, disability income or long-term care insurance product that an Insurer is authorized to issue.
"Rule" means a statement of general or particular applicability and future effect promulgated by the Commission, including a Uniform Standard developed pursuant to Article VII of this Compact, designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of the Commission, which shall have the force and effect of law in the Compacting States.
"State" means any state, district or territory of the United States of America.
"Third-Party Filer" means an entity that submits a Product filing to the Commission on behalf of an Insurer.
"Uniform Standard" means a standard adopted by the Commission for a Product line, pursuant to Article VII of this Compact, and shall include all of the Product requirements in aggregate; provided, that each Uniform Standard shall be construed, whether express or implied, to prohibit the use of any inconsistent, misleading or ambiguous provisions in a Product and the form of the Product made available to the public shall not be unfair, inequitable or against public policy as determined by the Commission.
ARTICLE III.
ESTABLISHMENT OF THE COMMISSION
AND VENUE
The Compacting States hereby create and establish a joint public agency known as the "Interstate Insurance Product Regulation Commission." Pursuant to Article IV, the Commission will have the power to develop Uniform Standards for Product lines, receive and provide prompt review of Products filed therewith, and give approval to those Product filings satisfying applicable Uniform Standards; provided, it is not intended for the Commission to be the exclusive entity for receipt and review of insurance product filings. Nothing herein shall prohibit any Insurer from filing its product in any State wherein the Insurer is licensed to conduct the business of insurance; and any such filing shall be subject to the laws of the State where filed.
The Commission is a body corporate and politic, and an instrumentality of the Compacting States.
The Commission is solely responsible for its liabilities except as otherwise specifically provided in this Compact.
Venue is proper and judicial proceedings by or against the Commission shall be brought solely and exclusively in a Court of competent jurisdiction where the principal office of the Commission is located.
ARTICLE IV.
POWERS OF THE COMMISSION
The Commission shall have the following powers:
To promulgate Rules, pursuant to Article VII of this Compact, which shall have the force and effect of law and shall be binding in the Compacting States to the extent and in the manner provided in this Compact;
To exercise its rulemaking authority and establish reasonable Uniform Standards for Products covered under the Compact, and Advertisement related thereto, which shall have the force and effect of law and shall be binding in the Compacting States, but only for those Products filed with the Commission, provided, that a Compacting State shall have the right to opt out of such Uniform Standard pursuant to Article VII, to the extent and in the manner provided in this Compact, and, provided further, that any Uniform Standard established by the Commission for long-term care insurance products may provide the same or greater protections for consumers as, but shall not provide less than, those protections set forth in the National Association of Insurance Commissioners, Long-Term Care Insurance Model Act and Long-Term Care Insurance Model Regulation, respectively, adopted as of 2001. The Commission shall consider whether any subsequent amendments to the NAIC Long-Term Care Insurance Model Act or Long-Term Care Insurance Model Regulation adopted by the NAIC require amending of the Uniform Standards established by the Commission for long-term care insurance products;
To receive and review in an expeditious manner Products filed with the Commission, and rate filings for disability income and long-term care insurance Products, and give approval of those Products and rate filings that satisfy the applicable Uniform Standard, where such approval shall have the force and effect of law and be binding on the Compacting States to the extent and in the manner provided in the Compact;
To receive and review in an expeditious manner Advertisement relating to long-term care insurance products for which Uniform Standards have been adopted by the Commission, and give approval to all Advertisement that satisfies the applicable Uniform Standard. For any product covered under this Compact, other than long-term care insurance products, the Commission shall have the authority to require an insurer to submit all or any part of its Advertisement with respect to that product for review or approval prior to use, if the Commission determines that the nature of the product is such that an Advertisement of the product could have the capacity or tendency to mislead the public. The actions of Commission as provided in this section shall have the force and effect of law and shall be binding in the Compacting States to the extent and in the manner provided in the Compact;
To exercise its rulemaking authority and designate Products and Advertisement that may be subject to a self-certification process without the need for prior approval by the Commission;
To promulgate Operating Procedures, pursuant to Article VII of this Compact, which shall be binding in the Compacting States to the extent and in the manner provided in this Compact;
To bring and prosecute legal proceedings or actions in its name as the Commission; provided, that the standing of any state insurance department to sue or be sued under applicable law shall not be affected;
To issue subpoenas requiring the attendance and testimony of witnesses and the production of evidence;
To establish and maintain offices;
To purchase and maintain insurance and bonds;
To borrow, accept or contract for services of personnel, including, but not limited to, employees of a Compacting State;
To hire employees, professionals or specialists, and elect or appoint officers, and to fix their compensation, define their duties and give them appropriate authority to carry out the purposes of the Compact, and determine their qualifications; and to establish the Commission's personnel policies and programs relating to, among other things, conflicts of interest, rates of compensation and qualifications of personnel;
To accept any and all appropriate donations and grants of money, equipment, supplies, materials and services, and to receive, utilize and dispose of the same; provided that at all times the Commission shall strive to avoid any appearance of impropriety;
To lease, purchase, accept appropriate gifts or donations of, or otherwise to own, hold, improve or use, any property, real, personal or mixed; provided that at all times the Commission shall strive to avoid any appearance of impropriety;
To sell, convey, mortgage, pledge, lease, exchange, abandon or otherwise dispose of any property, real, personal or mixed;
To remit filing fees to Compacting States as may be set forth in the Bylaws, Rules or Operating Procedures;
To enforce compliance by Compacting States with Rules, Uniform Standards, Operating Procedures and Bylaws;
To provide for dispute resolution among Compacting States;
To advise Compacting States on issues relating to Insurers domiciled or doing business in Non-compacting jurisdictions, consistent with the purposes of this Compact;
To provide advice and training to those personnel in state insurance departments responsible for product review, and to be a resource for state insurance departments;
To establish a budget and make expenditures;
To borrow money;
To appoint committees, including advisory committees comprising Members, state insurance regulators, state legislators or their representatives, insurance industry and consumer representatives, and such other interested persons as may be designated in the Bylaws;
To provide and receive information from, and to cooperate with law enforcement agencies;
To adopt and use a corporate seal; and
To perform such other functions as may be necessary or appropriate to achieve the purposes of this Compact consistent with the state regulation of the business of insurance.
ARTICLE V.
ORGANIZATION OF THE COMMISSION
a. Each Compacting State shall have and be limited to one Member. Each Member shall be qualified to serve in that capacity pursuant to applicable law of the Compacting State. Any Member may be removed or suspended from office as provided by the law of the State from which he or she shall be appointed. Any vacancy occurring in the Commission shall be filled in accordance with the laws of the Compacting State wherein the vacancy exists. Nothing herein shall be construed to affect the manner in which a Compacting State determines the election or appointment and qualification of its own Commissioner.
b. Each Member shall be entitled to one vote and shall have an opportunity to participate in the governance of the Commission in accordance with the Bylaws. Notwithstanding any provision herein to the contrary, no action of the Commission with respect to the promulgation of a Uniform Standard shall be effective unless two-thirds (⅔) of the Members vote in favor thereof.
c. The Commission shall, by a majority of the Members, prescribe Bylaws to govern its conduct as may be necessary or appropriate to carry out the purposes, and exercise the powers, of the Compact, including, but not limited to:
i. establishing the fiscal year of the Commission;
ii. providing reasonable procedures for appointing and electing members, as well as holding meetings, of the Management Committee;
iii. providing reasonable standards and procedures: (i) for the establishment and meetings of other committees, and (ii) governing any general or specific delegation of any authority or function of the Commission;
iv. providing reasonable procedures for calling and conducting meetings of the Commission that consists of a majority of Commission members, ensuring reasonable advance notice of each such meeting, and providing for the right of citizens to attend each such meeting with enumerated exceptions designed to protect the public's interest, the privacy of individuals, and insurers, proprietary information, including trade secrets. The Commission may meet in camera only after a majority of the entire membership votes to close a meeting en toto or in part. As soon as practicable, the Commission must make public (i) a copy of the vote to close the meeting revealing the vote of each Member with no proxy votes allowed, and (ii) votes taken during such meeting;
v. establishing the titles, duties and authority and reasonable procedures for the election of the officers of the Commission;
vi. providing reasonable standards and procedures for the establishment of the personnel policies and programs of the Commission. Notwithstanding any civil service or other similar laws of any Compacting State, the Bylaws shall exclusively govern the personnel policies and programs of the Commission;
vii. promulgating a code of ethics to address permissible and prohibited activities of commission members and employees; and
viii. providing a mechanism for winding up the operations of the Commission and the equitable disposition of any surplus funds that may exist after the termination of the Compact after the payment and/or reserving of all of its debts and obligations.
d. The Commission shall publish its bylaws in a convenient form and file a copy thereof and a copy of any amendment thereto, with the appropriate agency or officer in each of the Compacting States.
a. A Management Committee comprising no more than fourteen (14) members shall be established as follows:
(i) One (1) member from each of the six (6) Compacting States with the largest premium volume for individual and group annuities, life, disability income and long-term care insurance products, determined from the records of the NAIC for the prior year;
(ii) Four (4) members from those Compacting States with at least two percent (2%) of the market based on the premium volume described above, other than the six (6) Compacting States with the largest premium volume, selected on a rotating basis as provided in the Bylaws, and;
(iii) Four (4) members from those Compacting States with less than two percent (2%) of the market, based on the premium volume described above, with one (1) selected from each of the four (4) zone regions of the NAIC as provided in the Bylaws.
b. The Management Committee shall have such authority and duties as may be set forth in the Bylaws, including but not limited to:
i. managing the affairs of the Commission in a manner consistent with the Bylaws and purposes of the Commission;
ii. establishing and overseeing an organizational structure within, and appropriate procedures for, the Commission to provide for the creation of Uniform Standards and other Rules, receipt and review of product filings, administrative and technical support functions, review of decisions regarding the disapproval of a product filing, and the review of elections made by a Compacting State to opt out of a Uniform Standard; provided that a Uniform Standard shall not be submitted to the Compacting States for adoption unless approved by two-thirds (⅔) of the members of the Management Committee;
iii. overseeing the offices of the Commission; and
iv. planning, implementing, and coordinating communications and activities with other state, federal and local government organizations in order to advance the goals of the Commission.
c. The Commission shall elect annually officers from the Management Committee, with each having such authority and duties, as may be specified in the Bylaws.
d. The Management Committee may, subject to the approval of the Commission, appoint or retain an executive director for such period, upon such terms and conditions and for such compensation as the Commission may deem appropriate. The executive director shall serve as secretary to the Commission, but shall not be a Member of the Commission. The executive director shall hire and supervise such other staff as may be authorized by the Commission.
a. A legislative committee comprising state legislators or their designees shall be established to monitor the operations of, and make recommendations to, the Commission, including the Management Committee; provided that the manner of selection and term of any legislative committee member shall be as set forth in the Bylaws. Prior to the adoption by the Commission of any Uniform Standard, revision to the Bylaws, annual budget or other significant matter as may be provided in the Bylaws, the Management Committee shall consult with and report to the legislative committee.
b. The Commission shall establish two (2) advisory committees, one of which shall comprise consumer representatives independent of the insurance industry, and the other comprising insurance industry representatives.
c. The Commission may establish additional advisory committees as its Bylaws may provide for the carrying out of its functions.
The Commission shall maintain its corporate books and records in accordance with the Bylaws.
a. The Members, officers, executive director, employees and representatives of the Commission shall be immune from suit and liability, either personally or in their official capacity, for any claim for damage to or loss of property or personal injury or other civil liability caused by or arising out of any actual or alleged act, error or omission that occurred, or that the person against whom the claim is made had a reasonable basis for believing occurred within the scope of Commission employment, duties or responsibilities; provided, that nothing in this paragraph shall be construed to protect any such person from suit and/or liability for any damage, loss, injury or liability caused by the intentional or willful and wanton misconduct of that person.
b. The Commission shall defend any Member, officer, executive director, employee or representative of the Commission in any civil action seeking to impose liability arising out of any actual or alleged act, error or omission that occurred within the scope of Commission employment, duties or responsibilities, or that the person against whom the claim is made had a reasonable basis for believing occurred within the scope of Commission employment, duties or responsibilities; provided, that nothing herein shall be construed to prohibit that person from retaining his or her own counsel; and provided further, that the actual or alleged act, error or omission did not result from that person's intentional or willful and wanton misconduct.
c. The Commission shall indemnify and hold harmless any Member, officer, executive director, employee or representative of the Commission for the amount of any settlement or judgment obtained against that person arising out of any actual or alleged act, error or omission that occurred within the scope of Commission employment, duties or responsibilities, or that such person had a reasonable basis for believing occurred within the scope of Commission employment, duties or responsibilities, provided, that the actual or alleged act, error or omission did not result from the intentional or willful and wanton misconduct of that person.
ARTICLE VI.
MEETINGS AND ACTS OF
THE COMMISSION
The Commission shall meet and take such actions as are consistent with the provisions of this Compact and the Bylaws.
Each Member of the Commission shall have the right and power to cast a vote to which that Compacting State is entitled and to participate in the business and affairs of the Commission. A Member shall vote in person or by such other means as provided in the Bylaws. The Bylaws may provide for Members' participation in meetings by telephone or other means of communication.
The Commission shall meet at least once during each calendar year. Additional meetings shall be held as set forth in the Bylaws.
ARTICLE VII.
RULES & OPERATING PROCEDURES: RULEMAKING
FUNCTIONS OF THE COMMISSION AND
OPTING OUT OF UNIFORM STANDARDS
Rulemaking Authority. The Commission shall promulgate reasonable Rules, including Uniform Standards, and Operating Procedures in order to effectively and efficiently achieve the purposes of this Compact. Notwithstanding the foregoing, in the event the Commission exercises its rulemaking authority in a manner that is beyond the scope of the purposes of this Act, or the powers granted hereunder, then such an action by the Commission shall be invalid and have no force and effect.
Rulemaking Procedure. Rules and Operating Procedures shall be made pursuant to a rulemaking process that conforms to the Model State Administrative Procedure Act of 1981 as amended, as may be appropriate to the operations of the Commission. Before the Commission adopts a Uniform Standard, the Commission shall give written notice to the relevant state legislative committee(s) in each Compacting State responsible for insurance issues of its intention to adopt the Uniform Standard. The Commission in adopting a Uniform Standard shall consider fully all submitted materials and issue a concise explanation of its decision.
Effective Date and Opt Out of a Uniform Standard. A Uniform Standard shall become effective ninety (90) days after its promulgation by the Commission or such later date as the Commission may determine; provided, however, that a Compacting State may opt out of a Uniform Standard as provided in this Article. "Opt out" shall be defined as any action by a Compacting State to decline to adopt or participate in a promulgated Uniform Standard. All other Rules and Operating Procedures, and amendments thereto, shall become effective as of the date specified in each Rule, Operating Procedure or amendment.
Opt Out Procedure. A Compacting State may opt out of a Uniform Standard, either by legislation or regulation duly promulgated by the Insurance Department under the Compacting State's Administrative Procedure Act. If a Compacting State elects to opt out of a Uniform Standard by regulation, it must (a) give written notice to the Commission no later than ten (10) business days after the Uniform Standard is promulgated, or at the time the State becomes a Compacting State and (b) find that the Uniform Standard does not provide reasonable protections to the citizens of the State, given the conditions in the State. The Commissioner shall make specific findings of fact and conclusions of law, based on a preponderance of the evidence, detailing the conditions in the State which warrant a departure from the Uniform Standard and determining that the Uniform Standard would not reasonably protect the citizens of the State. The Commissioner must consider and balance the following factors and find that the conditions in the State and needs of the citizens of the State outweigh: (i) the intent of the legislature to participate in, and the benefits of, an interstate agreement to establish national uniform consumer protections for the Products subject to this Act; and (ii) the presumption that a Uniform Standard adopted by the Commission provides reasonable protections to consumers of the relevant Product.
Notwithstanding the foregoing, a Compacting State may, at the time of its enactment of this Compact, prospectively opt out of all Uniform Standards involving long-term care insurance products by expressly providing for such opt out in the enacted Compact, and such an opt out shall not be treated as a material variance in the offer or acceptance of any State to participate in this Compact. Such an opt out shall be effective at the time of enactment of this Compact by the Compacting State and shall apply to all existing Uniform Standards involving long-term care insurance products and those subsequently promulgated.
Once the opt out of a Uniform Standard by a Compacting State becomes effective as provided under the laws of that State, the Uniform Standard shall have no further force and effect in that State unless and until the legislation or regulation implementing the opt out is repealed or otherwise becomes ineffective under the laws of the State. If a Compacting State opts out of a Uniform Standard after the Uniform Standard has been made effective in that State, the opt out shall have the same prospective effect as provided under Article XIV for withdrawals.
Stay of Uniform Standard. If a Compacting State has formally initiated the process of opting out of a Uniform Standard by regulation, and while the regulatory opt out is pending, the Compacting State may petition the Commission, at least fifteen (15) days before the effective date of the Uniform Standard, to stay the effectiveness of the Uniform Standard in that State. The Commission may grant a stay if it determines the regulatory opt out is being pursued in a reasonable manner and there is a likelihood of success. If a stay is granted or extended by the Commission, the stay or extension thereof may postpone the effective date by up to ninety (90) days, unless affirmatively extended by the Commission; provided, a stay may not be permitted to remain in effect for more than one (1) year unless the Compacting State can show extraordinary circumstances which warrant a continuance of the stay, including, but not limited to, the existence of a legal challenge which prevents the Compacting State from opting out. A stay may be terminated by the Commission upon notice that the rulemaking process has been terminated.
Not later than thirty (30) days after a Rule or Operating Procedure is promulgated, any person may file a petition for judicial review of the Rule or Operating Procedure; provided, that the filing of such a petition shall not stay or otherwise prevent the Rule or Operating Procedure from becoming effective unless the court finds that the petitioner has a substantial likelihood of success. The court shall give deference to the actions of the Commission consistent with applicable law and shall not find the Rule or Operating Procedure to be unlawful if the Rule or Operating Procedure represents a reasonable exercise of the Commission's authority.
ARTICLE VIII.
COMMISSION RECORDS AND ENFORCEMENT
The Commission shall promulgate Rules establishing conditions and procedures for public inspection and copying of its information and official records, except such information and records involving the privacy of individuals and insurers' trade secrets. The Commission may promulgate additional Rules under which it may make available to federal and state agencies, including law enforcement agencies, records and information otherwise exempt from disclosure, and may enter into agreements with such agencies to receive or exchange information or records subject to nondisclosure and confidentiality provisions.
Except as to privileged records, data and information, the laws of any Compacting State pertaining to confidentiality or nondisclosure shall not relieve any Compacting State Commissioner of the duty to disclose any relevant records, data or information to the Commission; provided, that disclosure to the Commission shall not be deemed to waive or otherwise affect any confidentiality requirement; and further provided, that, except as otherwise expressly provided in this Act, the Commission shall not be subject to the Compacting State's laws pertaining to confidentiality and nondisclosure with respect to records, data and information in its possession. Confidential information of the Commission shall remain confidential after such information is provided to any Commissioner.
The Commission shall monitor Compacting States for compliance with duly adopted Bylaws, Rules, including Uniform Standards, and Operating Procedures. The Commission shall notify any non-complying Compacting State in writing of its noncompliance with Commission Bylaws, Rules or Operating Procedures. If a non-complying Compacting State fails to remedy its noncompliance within the time specified in the notice of noncompliance, the Compacting State shall be deemed to be in default as set forth in Article XIV.
The Commissioner of any State in which an Insurer is authorized to do business, or is conducting the business of insurance, shall continue to exercise his or her authority to oversee the market regulation of the activities of the Insurer in accordance with the provisions of the State's law. The Commissioner's enforcement of compliance with the Compact is governed by the following provisions:
a. With respect to the Commissioner's market regulation of a Product or Advertisement that is approved or certified to the Commission, the content of the Product or Advertisement shall not constitute a violation of the provisions, standards or requirements of the Compact except upon a final order of the Commission, issued at the request of a Commissioner after prior notice to the Insurer and an opportunity for hearing before the Commission.
b. Before a Commissioner may bring an action for violation of any provision, standard or requirement of the Compact relating to the content of an Advertisement not approved or certified to the Commission, the Commission, or an authorized Commission officer or employee, must authorize the action. However, authorization pursuant to this Paragraph does not require notice to the Insurer, opportunity for hearing or disclosure of requests for authorization or records of the Commission's action on such requests.
ARTICLE IX.
DISPUTE RESOLUTION
The Commission shall attempt, upon the request of a Member, to resolve any disputes or other issues that are subject to this Compact and which may arise between two or more Compacting States, or between Compacting States and Non-compacting States, and the Commission shall promulgate an Operating Procedure providing for resolution of such disputes.
ARTICLE X.
PRODUCT FILING AND APPROVAL
Insurers and Third-Party Filers seeking to have a Product approved by the Commission shall file the Product with, and pay applicable filing fees to, the Commission. Nothing in this Act shall be construed to restrict or otherwise prevent an insurer from filing its Product with the insurance department in any State wherein the insurer is licensed to conduct the business of insurance, and such filing shall be subject to the laws of the States where filed.
The Commission shall establish appropriate filing and review processes and procedures pursuant to Commission Rules and Operating Procedures. Notwithstanding any provision herein to the contrary, the Commission shall promulgate Rules to establish conditions and procedures under which the Commission will provide public access to Product filing information. In establishing such Rules, the Commission shall consider the interests of the public in having access to such information, as well as protection of personal medical and financial information and trade secrets, that may be contained in a Product filing or supporting information.
Any Product approved by the Commission may be sold or otherwise issued in those Compacting States for which the Insurer is legally authorized to do business.
ARTICLE XI.
REVIEW OF COMMISSION DECISIONS
REGARDING FILINGS
Not later than thirty (30) days after the Commission has given notice of a disapproved Product or Advertisement filed with the Commission, the Insurer or Third-Party Filer whose filing was disapproved may appeal the determination to a review panel appointed by the Commission. The Commission shall promulgate Rules to establish procedures for appointing such review panels and provide for notice and hearing. An allegation that the Commission, in disapproving a Product or Advertisement filed with the Commission, acted arbitrarily, capriciously, or in a manner that is an abuse of discretion or otherwise not in accordance with the law, is subject to judicial review in accordance with Article III, Section 4.
The Commission shall have authority to monitor, review and reconsider Products and Advertisement subsequent to their filing or approval upon a finding that the product does not meet the relevant Uniform Standard. Where appropriate, the Commission may withdraw or modify its approval after proper notice and hearing, subject to the appeal process in Section 1 above.
ARTICLE XII.
FINANCE
The Commission shall pay or provide for the payment of the reasonable expenses of its establishment and organization. To fund the cost of its initial operations, the Commission may accept contributions and other forms of funding from the National Association of Insurance Commissioners, Compacting States and other sources. Contributions and other forms of funding from other sources shall be of such a nature that the independence of the Commission concerning the performance of its duties shall not be compromised.
The Commission shall collect a filing fee from each Insurer and Third-Party Filer filing a product with the Commission to cover the cost of the operations and activities of the Commission and its staff in a total amount sufficient to cover the Commission's annual budget.
The Commission's budget for a fiscal year shall not be approved until it has been subject to notice and comment as set forth in Article VII of this Compact.
The Commission shall be exempt from all taxation in and by the Compacting States.
The Commission shall not pledge the credit of any Compacting State, except by and with the appropriate legal authority of that Compacting State.
The Commission shall keep complete and accurate accounts of all its internal receipts, including grants and donations, and disbursements of all funds under its control. The internal financial accounts of the Commission shall be subject to the accounting procedures established under its Bylaws. The financial accounts and reports including the system of internal controls and procedures of the Commission shall be audited annually by an independent certified public accountant. Upon the determination of the Commission, but no less frequently than every three (3) years, the review of the independent auditor shall include a management and performance audit of the Commission. The Commission shall make an Annual Report to the Governor and legislature of the Compacting States, which shall include a report of the independent audit. The Commission's internal accounts shall not be confidential and such materials may be shared with the Commissioner of any Compacting State upon request, provided, however, that any work papers related to any internal or independent audit and any information regarding the privacy of individuals and insurers' proprietary information, including trade secrets, shall remain confidential.
No Compacting State shall have any claim to or ownership of any property held by or vested in the Commission or to any Commission funds held pursuant to the provisions of this Compact.
ARTICLE XIII.
COMPACTING STATES, EFFECTIVE DATE
AND AMENDMENT
Any State is eligible to become a Compacting State.
The Compact shall become effective and binding upon legislative enactment of the Compact into law by two Compacting States; provided, the Commission shall become effective for purposes of adopting Uniform Standards for, reviewing, and giving approval or disapproval of, Products filed with the Commission that satisfy applicable Uniform Standards only after twenty-six (26) States are Compacting States or, alternatively, by States representing greater than forty percent (40%) of the premium volume for life insurance, annuity, disability income and long-term care insurance products, based on records of the NAIC for the prior year. Thereafter, it shall become effective and binding as to any other Compacting State upon enactment of the Compact into law by that State.
Amendments to the Compact may be proposed by the Commission for enactment by the Compacting States. No amendment shall become effective and binding upon the Commission and the Compacting States unless and until all Compacting States enact the amendment into law.
ARTICLE XIV.
WITHDRAWAL, DEFAULT AND
TERMINATION
a. Once effective, the Compact shall continue in force and remain binding upon each and every Compacting State; provided, that a Compacting State may withdraw from the Compact ("Withdrawing State") by enacting a statute specifically repealing the statute which enacted the Compact into law.
b. The effective date of withdrawal is the effective date of the repealing statute. However, the withdrawal shall not apply to any product filings approved or self-certified, or any Advertisement of such products, on the date the repealing statute becomes effective, except by mutual agreement of the Commission and the Withdrawing State unless the approval is rescinded by the Withdrawing State as provided in Paragraph e of this section.
c. The Commissioner of the Withdrawing State shall immediately notify the Management Committee in writing upon the introduction of legislation repealing this Compact in the Withdrawing State.
d. The Commission shall notify the other Compacting States of the introduction of such legislation within ten (10) days after its receipt of notice thereof.
e. The Withdrawing State is responsible for all obligations, duties and liabilities incurred through the effective date of withdrawal, including any obligations, the performance of which extend beyond the effective date of withdrawal, except to the extent those obligations may have been released or relinquished by mutual agreement of the Commission and the Withdrawing State. The Commission's approval of Products and Advertisement prior to the effective date of withdrawal shall continue to be effective and be given full force and effect in the Withdrawing State, unless formally rescinded by the Withdrawing State in the same manner as provided by the laws of the Withdrawing State for the prospective disapproval of products or advertisement previously approved under state law.
f. Reinstatement following withdrawal of any Compacting State shall occur upon the effective date of the Withdrawing State reenacting the Compact.
a. If the Commission determines that any Compacting State has at any time defaulted ("Defaulting State") in the performance of any of its obligations or responsibilities under this Compact, the Bylaws or duly promulgated Rules or Operating Procedures, then, after notice and hearing as set forth in the Bylaws, all rights, privileges and benefits conferred by this Compact on the Defaulting State shall be suspended from the effective date of default as fixed by the Commission. The grounds for default include, but are not limited to, failure of a Compacting State to perform its obligations or responsibilities, and any other grounds designated in Commission Rules. The Commission shall immediately notify the Defaulting State in writing of the Defaulting State's suspension pending a cure of the default. The Commission shall stipulate the conditions and the time period within which the Defaulting State must cure its default. If the Defaulting State fails to cure the default within the time period specified by the Commission, the Defaulting State shall be terminated from the Compact and all rights, privileges and benefits conferred by this Compact shall be terminated from the effective date of termination.
b. Product approvals by the Commission or product self-certifications, or any Advertisement in connection with such product, that are in force on the effective date of termination shall remain in force in the Defaulting State in the same manner as if the Defaulting State had withdrawn voluntarily pursuant to Section 1 of this article.
c. Reinstatement following termination of any Compacting State requires a reenactment of the Compact.
a. The Compact dissolves effective upon the date of the withdrawal or default of the Compacting State which reduces membership in the Compact to one Compacting State.
b. Upon the dissolution of this Compact, the Compact becomes null and void and shall be of no further force or effect, and the business and affairs of the Commission shall be wound up and any surplus funds shall be distributed in accordance with the Bylaws.
ARTICLE XV.
SEVERABILITY AND CONSTRUCTION
The provisions of this Compact shall be severable; and if any phrase, clause, sentence or provision is deemed unenforceable, the remaining provisions of the Compact shall be enforceable.
The provisions of this Compact shall be liberally construed to effectuate its purposes.
ARTICLE XVI.
BINDING EFFECT OF COMPACT
AND OTHER LAWS
a. Nothing herein prevents the enforcement of any other law of a Compacting State, except as provided in Paragraph b of this section.
b. For any Product approved or certified to the Commission, the Rules, Uniform Standards and any other requirements of the Commission shall constitute the exclusive provisions applicable to the content, approval and certification of such Products. For Advertisement that is subject to the Commission's authority, any Rule, Uniform Standard or other requirement of the Commission which governs the content of the Advertisement shall constitute the exclusive provision that a Commissioner may apply to the content of the Advertisement. Notwithstanding the foregoing, no action taken by the Commission shall abrogate or restrict: (i) the access of any person to state courts; (ii) remedies available under state law related to breach of contract, tort, or other laws not specifically directed to the content of the Product; (iii) state law relating to the construction of insurance contracts; or (iv) the authority of the attorney general of the state, including but not limited to maintaining any actions or proceedings, as authorized by law.
c. All insurance products filed with individual States shall be subject to the laws of those States.
a. All lawful actions of the Commission, including all Rules and Operating Procedures promulgated by the Commission, are binding upon the Compacting States.
b. All agreements between the Commission and the Compacting States are binding in accordance with their terms.
c. Upon the request of a party to a conflict over the meaning or interpretation of Commission actions, and upon a majority vote of the Compacting States, the Commission may issue advisory opinions regarding the meaning or interpretation in dispute.
d. In the event any provision of this Compact exceeds the constitutional limits imposed on the legislature of any Compacting State, the obligations, duties, powers or jurisdiction sought to be conferred by that provision upon the Commission shall be ineffective as to that Compacting State, and those obligations, duties, powers or jurisdiction shall remain in the Compacting State and shall be exercised by the agency thereof to which those obligations, duties, powers or jurisdiction are delegated by law in effect at the time this Compact becomes effective.
History: L. 2005, ch. 102, § 1; July 1.
The commissioner of insurance shall represent this state on the Interstate Insurance Product Regulation Commission.
History: L. 2005, ch. 102, § 2; July 1.
The member representing this state on the interstate insurance product regulation compact may be represented thereon by an alternate designated by the commissioner of insurance. Any such alternate shall be an assistant commissioner or a division director of the insurance department.
History: L. 2005, ch. 102, § 3; July 1.
The provisions of K.S.A. 40-5401 through 40-5405, and amendments thereto, shall be known and may be cited as the controlled insurance programs act.
History: L. 2009, ch. 136, § 1; July 1.
As used in the controlled insurance programs act:
(a) "Commissioner" means the commissioner of insurance.
(b) "Completed operations liability" has the meaning ascribed thereto in K.S.A. 40-4101, and amendments thereto.
(c) The terms "construction," "contract," "contractor," "owner," "person" and "subcontractor" have the meanings ascribed thereto in K.S.A. 16-1802, and amendments thereto.
(d) "Controlled insurance program" means a program of liability or workers compensation insurance coverage, or both, that is established by an owner or contractor who contractually requires participation by contractors or subcontractors who are engaged in work required by a construction contract. Controlled insurance programs shall include, but not be limited to, coverage programs that are for a fixed term of coverage on a single construction site or project or multiple projects, and a consolidated or wrap-up insurance program as the term is used in subsection (b)(3) of K.S.A. 16-1803, and amendments thereto. A controlled insurance program subject to this act shall not include surety or builders risk.
(e) "Participant" means any contractor or subcontractor whose participation in a controlled insurance program is required by a construction contract.
(f) "Sponsoring participant" means the owner or contractor who establishes the controlled insurance program.
(g) "Substantial completion" shall have the meaning ascribed to it in K.S.A. 16-1902, and amendments thereto.
History: L. 2009, ch. 136, § 2; July 1.
The commissioner by rules and regulations, shall require that:
(a) Controlled insurance programs shall:
(1) Establish a method for quarterly reporting of the participant's respective claims details and loss information to that participant;
(2) provide that cancellation of any or all of the coverage provided to a participant prior to completion of work on the applicable project, shall require the owner or contractor who establishes a controlled insurance program to either replace the insurance or pay the subcontractor's cost to do so;
(3) not charge enrolled participants who are not the sponsoring participants, a deductible in excess of $2,500 per occurrence or a per claim assessment by the sponsor;
(4) keep self-insured retentions fully funded or collateralized by the owner or contractor establishing the controlled insurance program. This paragraph shall not apply to deductible programs;
(5) disclose specific requirements for safety or equipment prior to accepting bids from contractors and subcontractors on a construction project; and
(6) allow monetary fines for alleged safety violations to be assessed only by government agencies.
(b) If a controlled insurance program includes general liability coverage for the participants, then:
(1) Coverage for completed operations liability shall not, after substantial completion of a construction project, be canceled, lapse or expire before the limitation on actions has expired as established by subsection (b) of K.S.A. 60-513, and amendments thereto, but in no case greater than 10 years, and if another carrier takes responsibility for completed operations liability coverage, any and all prior completed operation liability carriers will be released from completed operations liability unless specified otherwise in subsequent policies;
(2) general liability coverage shall not be required of project participants except for liabilities not arising on the site or sites of the construction project. Any coverage maintained by the participants shall cover liabilities not arising on the site or sites of the construction project;
(3) the general liability coverage provided to participants shall provide for severability of interest, except with respect to limits of liability, so that participants shall be treated as if separately covered under the policy;
(4) participants shall be given the same shared limits of liability coverage as applies to the sponsoring participant under the controlled insurance program; and
(5) participants shall not be required to waive rights of recovery for claims covered by the controlled insurance program against another participant in the controlled insurance program covered by general liability insurance provided by the controlled insurance program.
(c) If a controlled insurance program includes coverage for the workers compensation liabilities of the participants, then:
(1) Workers compensation coverage shall include all workers compensation for which payroll attributable to the contractual agreement has been reported and the premiums collected covering all services performed incidental to, arising out of or emanating from the construction site or sites and the coming or going to or from the site or sites; and
(2) participants shall not be required to provide employment to a worker who has been injured on the job unless:
(A) The worker's treating health care provider certifies that the worker is fit to perform the participant's work on the job site consistent with the treating physician's limitations; and
(B) the employer has the pre-injury job or modified work available.
Nothing in this subsection or any rules and regulations adopted pursuant to the controlled insurance program act shall affect any rights, remedies or duties under the workers compensation act or any other state or federal employment law.
History: L. 2009, ch. 136, § 3; July 1.
In addition to such other rules and regulations adopted pursuant to this act, the commissioner is hereby authorized to adopt such rules and regulations relating to controlled insurance programs as may be necessary to carry out the provisions of the controlled insurance programs act.
History: L. 2009, ch. 136, § 4; July 1.
The commissioner shall adopt all rules and regulations required by this act by January 1, 2010.
History: L. 2009, ch. 136, § 5; July 1.
K.S.A. 40-5501 through 40-5519, and amendments thereto, shall be known and may be cited as the public adjusters licensing act, and it shall govern the qualifications and procedures for the licensing of public adjusters, on and after July 1, 2009. It specifies the duties of and restrictions on public adjusters, which include limiting their licensure to assisting insureds in first party claims.
History: L. 2009, ch. 83, § 1; April 23.
As used in K.S.A. 40-5501 through 40-5519, and amendments thereto:
(a) "Applicant" means a person who has submitted an application to become a licensed public adjuster in accordance with this act.
(b) "Business entity" means a corporation, association, partnership, limited liability company, limited liability partnership or other legal entity.
(c) "Catastrophic disaster" means, according to the federal response plan, an event:
(1) Declared by the president of the United States or governor of Kansas;
(2) results in large numbers of deaths and injuries;
(3) causes extensive damage or destruction of facilities that provide and sustain human needs;
(4) produces an overwhelming demand on state and local response resources and mechanisms;
(5) causes a severe long-term effect on general economic activity; and
(6) severely affects state, local and private sector capabilities to begin and sustain response activities.
(d) "Commissioner" means the state commissioner of insurance.
(e) "FBI" means the federal bureau of investigation.
(f) "Fingerprint" means an impression of the lines on a finger taken for purpose of identification. The impression may be electronic or in ink converted to electronic format.
(g) "Home state" means the District of Columbia and any state or territory of the United States in which a public adjuster's principal place of residence or principal place of business is located. If neither the state in which the public adjuster maintains the principal place of residence nor the state in which the public adjuster maintains the principal place of business has a law governing public adjusters substantially similar to this act, the public adjuster may declare another state in which it becomes licensed and acts as a public adjuster to be the home state.
(h) "KBI" means the Kansas bureau of investigation.
(i) "Licensed public adjuster" means a public adjuster licensed in accordance with this act.
(j) "NAIC" means the national association of insurance commissioners and its affiliates and subsidiaries.
(k) "Person" means an individual or a business entity.
(l) "Public adjuster" means any individual who:
(1) For compensation or any other thing of value, and solely in relation to first party claims arising under insurance claims or contracts that insure the real or personal property of the insured, aids or acts on behalf of an insured in negotiating for, or effecting the settlement of, a claim for loss or damage covered by and limited to commercial lines insurance contracts;
(2) advertises for employment as a public adjuster of insurance claims or directly or indirectly solicits business or represents to the public that such person is a public adjuster of first party insurance claims for losses or damages to real or personal property covered by and limited to commercial lines insurance contracts; or
(3) for compensation or any other thing of value, investigates or adjusts losses or advises an insured about first party claims for losses or damages to real or personal property of the insured covered by and limited to commercial lines insurance contracts, for another person engaged in the business of adjusting losses or damages covered by and limited to commercial lines insurance contracts.
(m) "Uniform individual application" means the current version of the NAIC uniform individual application for resident and nonresident individuals.
(n) "Uniform business entity application" means the current version of the NAIC uniform business entity application for resident and nonresident business entities.
History: L. 2009, ch. 83, § 2; L. 2024, ch. 15, § 29; July 1.
(a) A person shall not act as or represent that such person is a public adjuster in this state unless the person is an individual licensed as a public adjuster in accordance with this act.
(b) A licensed public adjuster shall not misrepresent to a claimant that the individual is an adjuster representing an insurer in any capacity, including acting as an employee of the insurer or acting as an independent adjuster, unless so appointed by an insurer in writing to act on the insurer's behalf for that specific claim or purpose. A licensed public adjuster is prohibited from charging that specific claimant a fee when appointed by the insurer and the appointment is accepted by the licensed public adjuster.
(c) Notwithstanding the provisions of this section, a license as a public adjuster shall not be required of the following:
(1) An attorney-at-law admitted to practice in this state, when acting in such person's professional capacity as an attorney;
(2) a person who negotiates or settles claims arising under a life or health insurance policy or an annuity contract;
(3) a person employed only for the purpose of obtaining facts surrounding a loss or furnishing technical assistance to a licensed public adjuster, including photographers, estimators, private investigators, engineers and handwriting experts;
(4) a licensed health care provider, or employee of a licensed health care provider, who prepares or files a health claim form on behalf of a patient; or
(5) a person who settles subrogation claims between insurers.
History: L. 2009, ch. 83, § 3; April 23.
(a) An individual applying for a public adjuster license shall make application to the commissioner on the appropriate uniform application or other application prescribed by the commissioner.
(b) The applicant shall declare under penalty of perjury and under penalty of refusal, suspension or revocation of the license, that the statements made in the application are true, correct and complete to the best of the applicant's knowledge and belief.
(c) In order to make a determination of license eligibility, the commissioner shall require a criminal history record check in accordance with K.S.A. 2025 Supp. 22-4714, and amendments thereto, on each applicant who is not exempt from pre-licensing examination pursuant to K.S.A. 40-5507, and amendments thereto.
History: L. 2009, ch. 83, § 4; L. 2024, ch. 15, § 30; July 1.
(a) Before issuing a public adjuster license to an applicant under the public adjusters licensing act, the commissioner shall find that the applicant:
(1) Is eligible to designate this state as the applicant's home state or is a nonresident who is not eligible for a license under K.S.A. 40-5508, and amendments thereto;
(2) has not committed any act that is a ground for denial, suspension or revocation of a license as set forth in K.S.A. 40-5510, and amendments thereto;
(3) is trustworthy, reliable and of good reputation, evidence of which may be determined by the commissioner;
(4) is financially responsible to exercise the rights and privileges under the license and has provided proof of financial responsibility as required in K.S.A. 40-5511, and amendments thereto;
(5) has paid an application fee not to exceed $100; and
(6) maintains an office in the home state with public access during regular business hours or by reasonable appointment.
(b) In addition to satisfying the requirements of subsection (a), an applicant shall:
(1) Be at least 18 years of age; and
(2) have successfully passed the public adjuster examination.
(c) The commissioner may require any documents reasonably necessary to verify the information contained in the application.
(d) (1) The commissioner may require an applicant to be fingerprinted and submit to a state and national criminal history record check in accordance with K.S.A. 2025 Supp. 22-4714, and amendments thereto, or to submit to a background check, or both.
(2) Whenever the commissioner requires fingerprinting, a background check, or both, any associated costs shall be paid by the applicant.
(e) Not later than December 1 of each year, the commissioner shall set and publish in the Kansas register the application fees required pursuant to subsection (a) for the next calendar year.
History: L. 2009, ch. 83, § 5; L. 2021, ch. 23, § 8; L. 2023, ch. 49, § 5; L. 2024, ch. 15, § 31; July 1.
(a) An applicant for a public adjuster license under this act shall pass a written examination, unless exempt from this requirement pursuant to K.S.A. 40-5507, and amendments thereto. The examination shall test the knowledge of the individual concerning the duties and responsibilities of a public adjuster and the insurance laws and regulations of this state. Examinations required by this section shall be developed and conducted under rules and regulations prescribed by the commissioner.
(b) The commissioner may make arrangements, including contracting with an outside testing service, for administering examinations.
(c) An applicant who fails to appear for the examination as scheduled or fails to pass the examination may retake the examination following a waiting period of not less than seven days following the date of the first examination. If the applicant again fails to satisfactorily complete the examination, the applicant may retake the examination following a waiting period of not less than seven days following the date of the second examination. If the applicant again fails to satisfactorily complete the examination, the applicant may retake the examination following a waiting period of not less than six months following the date of the third examination, except that following a waiting period of not less than two years following the date of the third examination, the applicant will be treated as a new applicant and new examination and waiting periods shall apply.
History: L. 2009, ch. 83, § 6; April 23.
(a) An applicant who applies for a public adjuster license in this state, who is currently licensed as a public adjuster in another state based on the individual's passage of a public adjuster examination, shall not be required to complete any pre-licensing examination.
(b) An individual licensed as a public adjuster in another state, based on the individual's passage of a public adjuster examination, who moves to this state shall make application within 90 days of establishing legal residence in this state to become a resident licensee pursuant to K.S.A. 40-5505, and amendments thereto. No pre-licensing examination shall be required of that individual to obtain a public adjuster license.
(c) An individual who applies for a public adjuster license in this state and who was previously licensed as a public adjuster in this state, shall not be required to complete any pre-licensing examination, if the individual's application for licensure as a public adjuster is received within 12 months of the cancellation of the applicant's previous license in this state and if, at the time of cancellation, the applicant was in good standing in this state.
History: L. 2009, ch. 83, § 7; April 23.
(a) Unless denied licensure pursuant to K.S.A. 40-5510, and amendments thereto, a nonresident individual shall receive a nonresident public adjuster license, if:
(1) The individual is currently licensed and in good standing as a resident public adjuster in that individual's home state;
(2) the individual has submitted the proper request for licensure, has paid the appropriate fee required by K.S.A. 40-5505, and amendments thereto, and, if required by the commissioner to do so, has provided proof of financial responsibility in accordance with K.S.A. 40-5511, and amendments thereto;
(3) the individual has submitted to the commissioner the appropriate completed application for licensure; and
(4) the individual's home state awards nonresident public adjuster licenses to residents of this state on the same basis.
(b) The commissioner may verify the public adjuster's licensing status through the producer database maintained by the NAIC.
(c) As a condition to continuation of a public adjuster license issued under this section, the licensee shall maintain a resident public adjuster license in the licensee's home state. The nonresident public adjuster license issued under this section shall terminate and be surrendered immediately to the commissioner, if the home state public adjuster license terminates for any reason, unless the public adjuster has a new home state and has been issued a license as a resident public adjuster in the new home state. Notification to the state or states where the nonresident license is issued must be made as soon as practicable, but no later than 30 days of a change in the new home state resident license. The licensee shall include in such notification the licensee's new and old addresses. A new home state resident license is required for a nonresident license to remain valid, and the new home state must have reciprocity with this state, in order for the nonresident license to remain valid.
History: L. 2009, ch. 83, § 8; April 23.
(a) (1) An individual who has met the requirements for licensure under this act shall be issued a public adjuster license. A public adjuster license shall remain in effect, unless revoked, terminated or suspended, as long as the request for renewal is timely submitted and a license renewal fee not to exceed $100 is paid and any other requirements for license renewal are met by the due date. The licensee shall inform the commissioner by any means acceptable to the commissioner of a change of address, change of legal name or change of information submitted on the application within 30 days of the change.
(2) Not later than December 1 of each year, the commissioner shall set and cause to be published in the Kansas register the fees required pursuant to this subsection for the next calendar year.
(b) A public adjuster shall be subject to the provisions of K.S.A. 40-2404(9), and amendments thereto.
(c) A public adjuster who allows such person's license to lapse may, within 12 months from the due date of the renewal, be issued a new public adjuster license upon the commissioner's receipt of proof that the licensee has satisfactorily completed the renewal process and the licensee's payment of a reinstatement fee of $100. The new public adjuster license shall be effective on the date that the commissioner receives such proof and the reinstatement fee.
(d) A licensed public adjuster that is unable to comply with license renewal procedures due to military service, a long-term medical disability or some other extenuating circumstance, may request an extension of time to comply with those procedures.
(e) The public adjuster license shall contain the licensee's name, city and state of business address, personal identification number, the date of issuance, the expiration date and any other information the commissioner deems necessary.
(f) In order to assist in the performance of the commissioner's duties, the commissioner may contract with non-governmental entities, including the NAIC, to perform any ministerial functions, including the collection of fees and data related to licensing that the commissioner may deem appropriate.
History: L. 2009, ch. 83, § 9; L. 2025, ch. 87, § 36; July 1.
(a) The commissioner may suspend, revoke or refuse to issue or renew a public adjuster's license for any of the following causes:
(1) Providing incorrect, misleading, incomplete or materially untrue information in the license application;
(2) violating:
(A) Any provision of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, or any rule and regulation promulgated thereunder;
(B) any subpoena or order of the commissioner;
(C) any insurance law or regulation of another state; or
(D) any subpoena or order issued by the regulatory official for insurance in another state;
(3) obtaining or attempting to obtain a license through misrepresentation or fraud;
(4) misappropriating, converting or improperly withholding any monies or properties received in the course of doing insurance business;
(5) intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance;
(6) having been convicted of a misdemeanor or felony;
(7) having admitted or committed any insurance unfair trade practice or insurance fraud;
(8) using fraudulent, coercive or dishonest practices or demonstrating incompetence, untrustworthiness or financial irresponsibility in the conduct of business in this state or elsewhere;
(9) having an insurance license, public adjuster license, securities registration or their equivalent, denied, suspended or revoked in any other state, province, district or territory;
(10) forging another's name to an application for insurance or to any document related to an insurance transaction;
(11) cheating, including improperly using notes or any other reference material, to complete an examination for an insurance license;
(12) knowingly accepting insurance business from an individual who is not licensed but who is required to be licensed by the commissioner;
(13) failing to comply with an administrative or court order imposing a child support obligation upon the applicant or license holder;
(14) failing to pay state income tax or comply with any administrative or court order directing payment of state income tax; or
(15) failing to respond to an inquiry from the commissioner within 15 business days.
(b) In addition, the commissioner may deny, suspend, revoke or refuse renewal of a public adjuster's license if the commissioner finds that the interests of the public are not properly served under such license. Any action taken under this section which affects any license or imposes any administrative penalty shall be taken only after notice and an opportunity for a hearing conducted in accordance with the Kansas administrative procedure act.
(c) In lieu of any action under subsection (a), the commissioner may:
(1) Censure the individual; or
(2) issue an order imposing an administrative penalty up to a maximum of $500 for each violation, but not to exceed $2,500 for the same violation occurring within any six consecutive calendar months from the date of the original violation, unless such person knew or should have known that the violative act could give rise to disciplinary action under subsection (a). If such person knew or reasonably should have known the violative act could give rise to any disciplinary proceeding authorized by subsection (a), the commissioner may impose a penalty up to a maximum of $1,000 for each violation, but not to exceed $5,000 for the same violation occurring within any six consecutive calendar months from the date of the original violation.
(d) (1) When considering whether to deny, suspend, revoke or refuse to renew the application of an individual who has been convicted of a misdemeanor or felony, the commissioner shall consider the:
(A) Applicant's age at the time of the conduct;
(B) recency of the conduct;
(C) reliability of the information concerning the conduct;
(D) seriousness of the conduct;
(E) factors underlying the conduct;
(F) cumulative effect of the conduct or the information;
(G) evidence of rehabilitation;
(H) applicant's social contributions since the conduct;
(I) applicant's candor in the application process; and
(J) materiality of any omissions or misrepresentations.
(2) In determining whether to reinstate or grant to an applicant a license that has been revoked, the commissioner shall consider the:
(A) Present moral fitness of the applicant;
(B) demonstrated consciousness by the applicant of the wrongful conduct and disrepute that the conduct has brought to the insurance profession;
(C) extent of the applicant's rehabilitation;
(D) seriousness of the original conduct;
(E) applicant's conduct subsequent to discipline;
(F) amount of time that has elapsed since the original discipline;
(G) applicant's character, maturity and experience at the time of revocation; and
(H) applicant's present competence and skills in the insurance industry.
(e) Any action taken under this section that affects any license or imposes any administrative penalty shall be taken only after notice and an opportunity for a hearing conducted in accordance with the provisions of the Kansas administrative procedure act.
(f) The commissioner shall remit all such fines collected under subsection (c) to the state treasurer in accordance with the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount in the state treasury to the credit of the state general fund.
(g) Whenever the commissioner imposes any administrative penalty or denies, suspends, revokes or refuses renewal of any license pursuant to subsection (a), any costs incurred as a result of conducting an administrative hearing authorized under the provisions of this section shall be assessed against the person who is the subject of the hearing or any business entity represented by such person who is the party to the matters giving rise to the hearing. As used in this subsection, "costs" includes witness fees, mileage allowances, any costs associated with the reproduction of documents that become a part of the hearing record and the expense of making a record of the hearing.
(h) No person whose license as a public adjuster had been suspended or revoked shall be employed by any insurance company doing business in this state either directly, indirectly, as an independent contractor or otherwise to negotiate or effect contracts of insurance, suretyship or indemnity or perform any act toward the solicitation or transaction of any business of insurance during the period of such suspension or revocation.
(i) The commissioner shall retain the authority to enforce the provisions of and impose any penalty or remedy authorized by this act against any individual who is under investigation for or charged with a violation of this act, even if the individual's license or registration has been surrendered or has lapsed by operation of law.
(j) (1) An applicant to whom a license has been denied after a hearing shall not apply again for a license until after the expiration of a period of one year from the date of the commissioner's order.
(2) A licensee whose license was revoked shall not apply again for a license until after the expiration of a period of two years from the date of the commissioner's order.
History: L. 2009, ch. 83, § 10; L. 2025, ch. 99, § 31; July 1.
(a) Prior to issuance of a public adjuster license and for the duration of the license, the commissioner may require the applicant to furnish evidence of financial responsibility, in a format prescribed by the commissioner, by means of:
(1) A surety bond executed and issued by an insurer authorized to issue surety bonds in this state, which bond:
(A) Shall be in such reasonable amount as the commissioner may require;
(B) shall be in favor of the commissioner and shall specifically authorize recovery by the commissioner on behalf of any person in this state who sustains damages as the result of erroneous acts, failure to act, conviction of fraud or conviction of unfair practices in the applicant's capacity as a public adjuster; and
(C) shall not be terminated unless at least 30-days prior written notice has been filed by the insurer with the commissioner and given to the licensee.
(2) An irrevocable letter of credit issued by a qualified financial institution, which letter of credit:
(A) Shall be in such reasonable amount as the commissioner may require;
(B) shall be to an account of the commissioner and subject to lawful levy of execution on behalf of any person to whom the public adjuster has been found to be legally liable as the result of erroneous acts, failure to act, fraudulent acts or unfair practices in the applicant's capacity as a public adjuster; and
(C) shall not be terminated unless at least 30-days prior written notice has been filed by the issuer with the commissioner and given to the licensee.
(b) Where the commissioner has required an applicant to furnish evidence of financial responsibility pursuant to subsection (a):
(1) The issuer of the evidence of financial responsibility shall notify the commissioner upon termination of the bond or letter of credit, unless otherwise directed by the commissioner;
(2) the commissioner may ask for the evidence of the public adjuster's financial responsibility at any time the commissioner deems relevant; and
(3) the authority to act as a public adjuster shall terminate automatically if the evidence of financial responsibility terminates or becomes impaired.
History: L. 2009, ch. 83, § 11; April 23.
(a) As used in this section:
(1) "Biennial due date" means the last day of the month of the date of birth of any public adjuster who is required to complete continuing education credits and report the completion of the continuing education credits to the commissioner, except that such due date shall not be earlier than two years from the date of the public adjuster's initial licensure under this act.
(2) "Biennium" means, for any public adjuster who was born in an odd-numbered year, the two-year period starting with the public adjuster's biennial due date in 2011 and each two-year period thereafter. For any public adjuster who was born in an even-numbered year, such term means the two-year period starting with the public adjuster's biennial due date in 2012 and each two-year period thereafter.
(b) An individual, who holds a public adjuster license and who is not exempt under subsection (d), shall satisfactorily complete a minimum of 18 hours of continuing education courses including three hours of ethics, reported on a biennial basis in conjunction with the license renewal cycle. Only continuing education courses approved by the commissioner shall be used to satisfy the requirements of this subsection.
(c) Unless suspended, revoked or refused renewal pursuant to K.S.A. 40-5510, and amendments thereto, a public adjuster's license shall remain in effect as long as the education requirements for a resident public adjuster are met by such public adjuster's biennial due date.
(d) The continuing education requirements of this section shall not apply to licensees holding nonresident public adjuster licenses who have met the continuing education requirements of their home state and whose home state gives credit to residents of this state on the same basis.
History: L. 2009, ch. 83, § 12; L. 2021, ch. 23, § 9; July 1.
(a) No public adjuster shall charge, agree to or accept as compensation or reimbursement any payment, commission, fee or other thing of value equal to more than 10% of any insurance settlement or proceeds.
(b) A public adjuster shall not pay a commission, service fee or other valuable consideration to a person for investigating or settling first party claims in this state, if that person is a business entity or is an individual required to be licensed under this act and is not so licensed.
(c) A person shall not accept a commission, service fee or other valuable consideration for investigating or settling first party claims in this state, if that person is a business entity or is an individual required to be licensed under this act and is not so licensed.
(d) No public adjuster shall require, demand or accept any fee, retainer, compensation, deposit or other thing of value, prior to settlement of a claim.
History: L. 2009, ch. 83, § 13; April 23.
(a) Public adjusters shall ensure that all contracts for their services are in writing and contain the following:
(1) Legible full name of the public adjuster signing the contract;
(2) permanent home state business address and phone number of the public adjuster;
(3) the public adjuster's license number;
(4) title of "public adjuster contract";
(5) the insured's full name, street address, insurance company name and policy number, if known or upon notification;
(6) a description of the loss and its location, if applicable;
(7) description of services to be provided to the insured;
(8) signatures of the public adjuster and the insured;
(9) the date the contract was signed by the public adjuster and the date the contract was signed by the insured;
(10) attestation language stating that the public adjuster is fully bonded pursuant to this act; and
(11) full salary, fee, commission, compensation or other considerations the public adjuster is to receive for services to be rendered by the public adjuster for or on behalf of the insured.
(b) The public adjuster contract may specify that the public adjuster shall be named as a co-payee on an insurer's payment of a claim. If the compensation is based on a share of the insurance settlement, the exact percentage shall be specified. Compensation provisions in a public adjuster contract shall not be redacted in any copy of the contract provided to the commissioner.
(c) If the insurer, not later than 72 hours after the date on which the loss is reported to the insurer, either pays or commits in writing to pay to the insured the policy limit of the insurance policy, the public adjuster shall:
(1) Not receive a commission consisting of a percentage of the total amount paid by an insurer to resolve a claim;
(2) inform the insured that the loss recovery amount might not be increased by the insurer; and
(3) be entitled only to reasonable compensation from the insured for services provided by the public adjuster on behalf of the insured, based on the time spent on a claim and expenses incurred by the public adjuster, until the claim is paid or the insured receives a written commitment to pay from the insurer.
(d) A public adjuster shall provide the insured a written disclosure concerning any direct or indirect financial interest that the public adjuster has with any other party who is involved in any aspect of the claim, other than the salary, fee, commission or other consideration established in the written contract with the insured, including, but not limited to, any ownership of, other than as a minority stockholder, or any compensation expected to be received from, any construction firm, salvage firm, building appraisal firm, motor vehicle repair shop or any other firm that provides estimates for work, or that performs any work, in conjunction with damages caused by the insured loss on which the public adjuster is engaged. As used in this subsection, the word "firm" shall include any individual or business entity.
(e) A public adjuster contract may not contain any contract term that:
(1) Allows the public adjuster's percentage fee to be collected when money is due from an insurance company, but not paid, or that allows a public adjuster to collect the entire fee from the first check issued by an insurance company, rather than as percentage of each check issued by an insurance company;
(2) requires the insured to authorize an insurance company to issue a check only in the name of the public adjuster;
(3) imposes collection costs or late fees; or
(4) precludes a public adjuster from pursuing civil remedies.
(f) Prior to the signing of the contract the public adjuster shall provide the insured with a separate disclosure document regarding the claim process that states:
(1) Property insurance policies obligate the insured to present a claim to the insured's insurance company for consideration;
(2) there are three types of adjusters that could be involved in that process, and they are as follows:
(A) A company adjuster who is an employee of an insurance company, represents the interest of the insurance company, is paid by the insurance company and will not charge the insured a fee;
(B) an independent adjuster who is hired on a contract basis by an insurance company to represent the insurance company's interest in the settlement of the claim, who is paid by the insured's insurance company and will not charge the insured a fee; or
(C) a public adjuster who does not work for any insurance company but works for an insured to assist in the preparation, presentation and settlement of a claim. An insured engages a public adjuster by signing a contract agreeing to pay the public adjuster a fee or commission based on a percentage of the settlement, or other method of compensation;
(3) the insured is not required to hire a public adjuster to help the insured meet the insured's obligations under the policy, but has the right to do so;
(4) the insured has the right to initiate direct communications with the insured's attorney, the insurer, the insurer's adjuster and the insurer's attorney, or any other person regarding the settlement of the insured's claim;
(5) the public adjuster is not a representative or employee of the insurer;
(6) the salary, fee, commission or other consideration is the obligation of the insured, not the insurer.
(g) The contracts shall be executed in duplicate to provide an original contract to the public adjuster and an original contract to the insured. The public adjuster's original contract shall be available at all times for inspection without notice by the commissioner.
(h) The public adjuster shall provide the insurer a notification letter, which has been signed by the insured, authorizing the public adjuster to represent the insured's interest.
(i) The insured has the right to rescind the public adjuster contract within three business days after the date the contract was signed. The rescission shall be in writing and mailed or delivered to the public adjuster at the address in the contract within the three business day period.
(j) If the insured exercises the right to rescind the contract, anything of value given by the insured under the contract will be returned to the insured within 15 business days following the receipt by the public adjuster of the rescission notice.
History: L. 2009, ch. 83, § 14; April 23.
(a) A public adjuster shall maintain a complete record of each transaction as a public adjuster. The records required by this section shall include the following:
(1) Name of the insured;
(2) date, location and amount of the loss;
(3) copy of the contract between the public adjuster and insured;
(4) name of the insurer and the amount, expiration date and number of each policy carried by the insured with respect to the loss;
(5) itemized statement of the insured's recoveries;
(6) itemized statement of all compensation received by the public adjuster, from any source whatsoever, in connection with the loss;
(7) a register of all moneys received, deposited, disbursed or withdrawn in connection with a transaction with an insured, including fees, transfers and disbursements from a trust account and all transactions concerning all interest-bearing accounts;
(8) name of public adjuster who executed the contract;
(9) name of the attorney representing the insured, if applicable, and the name of the claims representatives of the insurance company; and
(10) evidence of financial responsibility in the format prescribed by the commissioner.
(b) Records shall be maintained for at least five years after the termination of the transaction with an insured and shall be open to examination by the commissioner at all times.
(c) Records submitted to the commissioner in accordance with this section that contain information identified in writing as proprietary by the public adjuster shall be treated as confidential by the commissioner and shall not be open for inspection under the Kansas open records act.
History: L. 2009, ch. 83, § 15; L. 2014, ch. 72, § 1; July 1.
(a) A public adjuster is obligated, under the public adjuster's license, to serve with objectivity and complete loyalty, the interest of the insured only and to render to the insured such information, counsel and service, as within the knowledge, understanding and opinion in good faith of the public adjuster, as will best serve the insured's insurance claim needs and interest.
(b) A public adjuster shall not solicit, or attempt to solicit, an insured during the progress of a loss-producing occurrence, as defined in the insured's insurance contract.
(c) A public adjuster shall not permit an unlicensed employee or representative of the public adjuster to conduct business for which a license is required under this act.
(d) A public adjuster shall not have a direct or indirect financial interest in any aspect of the claim, other than the salary, fee, commission or other consideration established in the written contract with the insured, unless full written disclosure has been made to the insured as set forth in K.S.A. 40-5514, and amendments thereto.
(e) A public adjuster shall not acquire any interest in salvage of property subject to the contract with the insured, unless the public adjuster obtains written permission from the insured after settlement of the claim with the insurer as set forth in K.S.A. 40-5514, and amendments thereto.
(f) The public adjuster shall abstain from referring or directing the insured to get needed repairs or services in connection with a loss from any person, unless disclosed to the insured:
(1) With whom the public adjuster has a financial interest; or
(2) from whom the public adjuster may receive direct or indirect compensation for the referral.
(g) The public adjuster shall disclose to an insured if the public adjuster has any interest or will be compensated by any construction firm, salvage firm, building appraisal firm, motor vehicle repair shop or any other firm that performs any work in conjunction with damages caused by the insured loss. As used in this subsection "firm" shall include any business entity or individual.
(h) Any compensation or anything of value in connection with an insured's specific loss that will be received by a public adjuster shall be disclosed by the public adjuster to the insured in writing, including the source and amount of any such compensation.
(i) Public adjusters shall adhere to the following general ethical requirements:
(1) A public adjuster shall not undertake the adjustment of any claim if the public adjuster is not competent and knowledgeable as to the terms and conditions of the insurance coverage, or which otherwise exceeds the public adjuster's current expertise;
(2) a public adjuster shall not knowingly make any oral or written material misrepresentations or statements which are false or maliciously critical and intended to injure any person engaged in the business of insurance to any insured client or potential insured client;
(3) no licensed public adjuster may represent or act as a company adjuster or independent adjuster on the same claim;
(4) the public adjuster contract shall not be construed to prevent an insured from pursuing any civil remedy after the three-business day revocation or cancellation period;
(5) a public adjuster shall not enter into a contract or accept a power of attorney that vests in the public adjuster the effective authority to choose the persons who shall perform repair work; and
(6) a public adjuster shall ensure that all contracts for the public adjuster's services are in writing and set forth all terms and conditions of the engagement.
(j) A public adjuster may not agree to any loss settlement without the insured's knowledge and consent.
History: L. 2009, ch. 83, § 16; April 23.
(a) The public adjuster shall report to the commissioner any administrative action taken against the public adjuster in another jurisdiction or by another governmental agency in this state within 30 days of the final disposition of the matter. This report shall include a copy of the order, consent to order or other relevant legal documents.
(b) Within 30 days of the initial pretrial hearing date, the public adjuster shall report to the commissioner any criminal prosecution of the public adjuster taken in any jurisdiction. The report shall include a copy of the initial complaint filed, the order resulting from the hearing and any other relevant legal documents.
History: L. 2009, ch. 83, § 17; April 23.
The commissioner shall promulgate such reasonable rules and regulations as are necessary to carry out the provisions of this act. The commissioner shall adopt such rules and regulations by July 1, 2010.
History: L. 2009, ch. 83, § 18; April 23.
If any provisions of this act, or the application of a provision to any person or circumstances, shall be held invalid, the remainder of the act, and the application of the provision to persons or circumstances other than those to which it is held invalid, shall not be affected.
History: L. 2009, ch. 83, § 19; April 23.
K.S.A. 40-5601 through 40-5609, and amendments thereto, shall be known and may be cited as the portable electronics insurance act.
History: L. 2011, ch. 75, § 1; January 1, 2012.
For purposes of this act:
(a) "Commissioner" means the commissioner of insurance.
(b) "Covered customer" means a customer who elects coverage under a portable electronics insurance policy issued to a vendor of portable electronics devices.
(c) "Customer" means a person who purchases or leases portable electronics devices or services.
(d) "Insurance producer" shall have the meaning ascribed to it in K.S.A. 40-4902, and amendments thereto.
(e) "Location" means any physical location in the state of Kansas.
(f) "Portable electronic device" means an electronic device that is portable in nature. The term portable electronic device also includes any accessory for such device and any service related to the use of such portable electronic device that is sold to a customer.
(g) "Portable electronic devices" does not mean devices used exclusively by communication companies or commercial entities to provide service to a customer.
(h) (1) "Portable electronics insurance" means insurance providing coverage for the repair or replacement of portable electronics devices which may provide coverage for portable electronics devices against any one or more of the following causes of loss: loss, theft, are inoperable due to mechanical failure, malfunction, damage or other similar causes of loss.
(2) "Portable electronics insurance" does not include:
(A) Any service contract as defined by K.S.A. 40-201a, and amendments thereto;
(B) any policy of insurance covering a seller's or a manufacturer's obligations under a warranty; or
(C) any homeowner's, renter's, private passenger automobile, commercial multiperil, or similar policy.
(i) "Portable electronics transaction" means:
(1) The sale or lease of portable electronics device by a vendor to a customer; or
(2) the sale of a service related to the use of portable electronics device by a vendor to a customer.
(j) "Supervising entity" means a business entity that is a licensed insurance producer or insurer.
(k) "Vendor" means a person in the business of engaging in portable electronics transactions directly or indirectly.
History: L. 2011, ch. 75, § 2; January 1, 2012.
(a) A vendor shall be required to hold a limited lines license to sell or offer coverage under a policy of portable electronics insurance. To hold a limited lines license to sell or offer coverage under a policy of portable electronics insurance, a vendor shall meet all the requirements to be a producer including:
(1) Paying all fees to be an insurance producer;
(2) complying with all the same terms and conditions that are specified for an insurance producer license; and
(3) submitting to the commissioner any additional information or documentation that the commissioner requires, including any information or documentation needed to determine the professional competence, good character and trustworthiness of the vendor.
(b) The supervising entity shall maintain a registry of vendor locations which are authorized to sell or solicit portable electronics insurance coverage in this state. Upon request by the commissioner and with 10 days notice to the supervising entity, the registry shall be provided to the commissioner.
(c) Notwithstanding any other provision of law, any license issued pursuant to this section shall authorize the licensee and its employees or authorized representatives to engage in those activities that are permitted in this act.
History: L. 2011, ch. 75, § 3; L. 2012, ch. 44, § 1; July 1.
(a) At every location where portable electronics insurance is offered to customers, brochures or other written material shall be made available to a prospective customer which:
(1) Discloses that portable electronics insurance may provide a duplication of coverage already provided by a customer's homeowner's insurance policy, renter's insurance policy or other source of coverage;
(2) states that the enrollment by the customer in a portable electronics insurance program is not required in order to purchase or lease portable electronics devices or services;
(3) summarizes the material terms of the insurance coverage, including:
(A) The identity of the insurer;
(B) the identity of the supervising entity;
(C) the amount of any applicable deductible and how it is to be paid;
(D) benefits of the coverage; and
(E) key terms and conditions of coverage such as whether portable electronics devices may be repaired or replaced with similar make and model, reconditioned, or repaired with nonoriginal manufacturer parts or equipment.
(4) Summarizes the process for filing a claim, including a description of how to return portable electronics devices and the maximum fee applicable in the event the customer fails to comply with any equipment return requirements.
(5) States that the customer may cancel enrollment for coverage under a portable electronics insurance policy at any time and receive any applicable unearned premium refund.
(b) Portable electronics insurance may be offered on a month-to-month or other periodic basis as a group or master commercial policy issued to a vendor of portable electronics devices under which individual customers may elect to enroll for coverage.
(c) Eligibility and underwriting standards for customers electing to enroll in coverage shall be established for each portable electronics insurance program.
History: L. 2011, ch. 75, § 4; January 1, 2012.
(a) The employees and authorized representatives of vendors may sell or offer portable electronics insurance to customers at each location at which the vendor engages in portable electronics transactions and shall not be subject to licensure as an insurance producer under K.S.A. 40-4901 et seq., and amendments thereto, if:
(1) The vendor has a limited lines license to authorize its employees or authorized representatives to sell or offer portable electronics insurance pursuant to this section;
(2) the insurer complies with all statutes and regulations applicable to limited lines insurers;
(3) the insurer issuing the portable electronics insurance either directly supervises or appoints a supervising entity to supervise the administration of the program including development of a training program for employees and authorized representatives of the vendors. The training required by this subdivision shall comply with the following:
(A) The training shall be delivered to employees and authorized representatives of a vendor who is directly engaged in the activity of selling or offering portable electronics insurance.
(B) The training may be provided in electronic form. However, if conducted in an electronic form, the supervising entity shall implement a supplemental education program regarding the portable electronics insurance product that is conducted and overseen by licensed employees of the supervising entity.
(C) Each employee and authorized representative shall receive basic instruction about the portable electronics insurance offered to customers and the disclosures required under K.S.A. 40-5604, and amendments thereto.
(4) No employee or authorized representative of a vendor of portable electronics devices shall advertise, represent or otherwise hold one's self out as a nonlimited lines licensed insurance producer.
(b) The charges for portable electronics insurance coverage may be billed and collected by the vendor of portable electronics devices. Any charge to the customer for coverage that is not included in the cost associated with the purchase or lease of portable electronics devices or related services shall be separately itemized on the customer's bill. If the portable electronic insurance coverage is included in the cost associated with the purchase or lease of portable electronics devices or related services, the vendor shall clearly and conspicuously disclose to the customer that the portable electronics insurance coverage is included with the portable electronics or related services. Vendors billing and collecting such charges shall not be required to maintain such funds in a segregated account provided that the vendor is authorized by the insurer to hold such funds in an alternative manner and remits such amounts to the supervising entity within 60 days of receipt. All funds received by a vendor from a customer for the sale of portable electronics insurance shall be considered funds held in trust by the vendor in a fiduciary capacity for the benefit of the insurer. Vendors may receive compensation for billing and collection services.
History: L. 2011, ch. 75, § 5; L. 2012, ch. 44, § 2; July 1.
If a supervising entity, vendor of portable electronics, or employee or authorized representative of a vendor violates any provision of this act, K.A.R. 40-1-34, K.S.A. 40-2404 or 40-4909, and amendments thereto, the commissioner may: (a) Impose on the supervising entity or vendor any or all of the penalties authorized under chapter 40 of the Kansas Statutes Annotated, and amendments thereto, for those violations; and
(b) suspend or revoke the ability of individual employees or authorized representatives to act under the license of the vendor.
History: L. 2011, ch. 75, § 6; January 1, 2012.
Notwithstanding any other provision of law:
(a) An insurer may not terminate an individually enrolled customer based solely upon the age of such enrolled customer's covered portable electronic device.
(b) If the insurer changes the terms and conditions of a policy, the insurer shall provide the policyholder with a revised policy or endorsement and each enrolled customer with a revised certificate, endorsement, updated brochure or other evidence indicating a change in the terms and conditions has occurred and a summary of material changes 30 days prior to the end of the term of the policy.
(c) An insurer may terminate an enrolled customer's enrollment under a portable electronics insurance policy upon 15 days notice for:
(1) Fraud or material misrepresentation in obtaining coverage or in the presentation of a claim thereunder; or
(2) nonpayment of premium.
(d) An insurer may terminate an enrolled customer's enrollment under a portable electronics insurance policy immediately if:
(1) The enrolled customer ceases to have an active service with the vendor of portable electronics; or
(2) an enrolled customer exhausts the aggregate limit of liability, if any, under the terms of the portable electronics insurance policy and the insurer sends notice of termination to the customer within 30 calendar days after exhaustion of the limit. However, if notice is not timely sent, enrollment shall continue notwithstanding the aggregate limit of liability until the insurer sends notice of termination to the enrolled customer.
(e) Whenever notice is required pursuant to this section, it shall be in writing and may be mailed or delivered to the vendor of portable electronics devices at the vendor's mailing address and to its affected enrolled customers' last known mailing addresses on file with the insurer. The insurer or vendor of portable electronics, as the case may be, shall maintain proof of mailing in a form authorized or accepted by the United States postal service or other commercial mail delivery service. Alternatively, an insurer or vendor policyholder may comply with any notice required by this section by providing electronic notice to a vendor or its affected enrolled customers, as the case may be, by electronic means. If notice is accomplished through electronic means, the insurer or vendor of portable electronics, as the case may be, shall maintain proof that the notice was sent. Additionally, if an insurer or vendor policyholder provides electronic notice to an affected enrolled customer and such delivery by electronic means is not available or fails, the insurer or vendor policyholder shall provide written notice to the enrolled customer by mail in accordance with this section.
(f) Notice or correspondence required by this section or otherwise required by law may be sent on behalf of an insurer or vendor, as the case may be, by the supervising entity appointed by the insurer.
(g) Regardless of whether the insurer or the enrolled customer terminates the policy the insurer shall return any unearned premium to the customer without requiring the consumer to request it. The unearned premium shall be calculated on a pro rata basis such that the enrolled customer pays for the actual number of days of coverage. No penalty for early termination may be charged. A return or refund of any applicable unearned premium may be accomplished by crediting the billing mechanism used to pay the premium so long as there is a balance for which to apply the credit.
History: L. 2011, ch. 75, § 7; L. 2012, ch. 44, § 3; L. 2013, ch. 60, § 1; July 1.
If any provision of this act, or the application of such provision to any person or circumstances, shall be held invalid, the remainder of the act, and the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby.
History: L. 2011, ch. 75, § 8; January 1, 2012.
The commissioner may adopt rules and regulations necessary to implement this act.
History: L. 2011, ch. 75, § 9; January 1, 2012.
History: L. 2011, ch. 61, § 5; Repealed, L. 2015, ch. 83, § 10; January 1, 2016.
History: L. 2011, ch. 61, § 6; Repealed, L. 2015, ch. 83, § 10; January 1, 2016.
History: L. 2011, ch. 61, § 7; Repealed, L. 2015, ch. 83, § 10; January 1, 2016.
The provisions of K.S.A. 40-5801 through 40-5804, and amendments thereto, and K.S.A. 2025 Supp. 40-5805, and amendments thereto, shall be known and may be cited as the electronic notice and document act.
History: L. 2013, ch. 97, § 1; L. 2024, ch. 70, § 7; July 1.
History: L. 2013, ch. 97, § 2; L. 2018, ch. 76, § 1; Repealed, L. 2024, ch. 70, § 12; July 1.
For the purposes of this act:
(a) "Delivered by electronic means" includes:
(1) Delivery to an electronic mail address at which a party has consented to receive notices or documents; or
(2) posting on an electronic network or site accessible via the internet, mobile application, computer, mobile device, tablet or any other electronic device, together with separate notice of the posting, which shall be provided by electronic mail to the address at which the party has consented to receive notice or by any other delivery method that has been consented to by the party.
(b) "Party" means any recipient of any notice or document required as part of an insurance transaction, including, but not limited to, an applicant, an insured, a policyholder or an annuity contract holder. "Party" does not include a "health benefit plan covered person."
(c) "Health benefit plan" means the same as in K.S.A. 40-4602, and amendments thereto. "Health benefit plan" shall also include any:
(1) Individual health insurance policy;
(2) individual or group dental insurance policy; or
(3) nonprofit dental services corporation.
(d) "Health benefit plan covered person" means a policyholder, subscriber, enrollee or other individual participating in a health benefit plan.
(e) "Insured" means an individual who is covered by an insurance policy, including a health benefit plan.
(f) "Nonprofit dental services corporation" means a nonprofit corporation organized pursuant to the nonprofit dental service corporation act, K.S.A. 40-19a01 et seq., and amendments thereto.
(g) "Plan sponsor" means the:
(1) Employer in the case of an employee benefit plan established or maintained by a single employer;
(2) employee organization in the case of a plan established or maintained by an employee organization; or
(3) association, committee, joint board of trustees or similar group of representatives of the parties who establish or maintain the plan in the case of a plan established or maintained by two or more employers or jointly by one or more employers and one or more employee organizations.
History: L. 2013, ch. 97, § 3; L. 2018, ch. 76, § 2; L. 2024, ch. 70, § 8; July 1.
(a) Subject to subsection (c) or K.S.A. 2025 Supp. 40-5805, and amendments thereto, any notice to a party or any other document required under applicable law in an insurance transaction or that is to serve as evidence of insurance coverage may be delivered, stored and presented by electronic means so long as it meets the requirements of this act.
(b) Delivery of a notice or document in accordance with this section shall be considered equivalent to any delivery method required under applicable law, including delivery by first class mail; first class mail, postage prepaid; certified mail; certificate of mail; or certificate of mailing.
(c) A notice or document may be delivered by electronic means by an insurer to a party under this section if:
(1) The party has affirmatively consented to that method of delivery and has not withdrawn the consent;
(2) the party, before giving consent, is provided with a clear and conspicuous statement informing the party of:
(A) Any right or option of the party to have the notice or document provided or made available in paper or another non-electronic form;
(B) the right of the party to withdraw consent to have a notice or document delivered by electronic means and any fees, conditions or consequences imposed in the event consent is withdrawn;
(C) whether the party's consent applies: (i) Only to the particular transaction as to which the notice or document must be given; or (ii) to identified categories of notices or documents that may be delivered by electronic means during the course of the parties' relationship;
(D) (i) the means, after consent is given, by which a party may obtain a paper copy of a notice or document delivered by electronic means; and (ii) the fee, if any, for the paper copy; and
(E) the procedure a party must follow to withdraw consent to have a notice or document delivered by electronic means and to update information needed to contact the party electronically;
(3) the party, before giving consent, is provided with a statement of the hardware and software requirements for access to and retention of a notice or document delivered by electronic means; and consents electronically, or confirms consent electronically, in a manner that reasonably demonstrates that the party can access information in the electronic form that will be used for notices or documents delivered by electronic means as to which the party has given consent; and
(4) after consent of the party is given, the insurer, in the event a change in the hardware or software requirements needed to access or retain a notice or document delivered by electronic means creates a material risk that the party will not be able to access or retain a subsequent notice or document to which the consent applies, provides the party with a statement of: (A) The revised hardware and software requirements for access to and retention of a notice or document delivered by electronic means; and (B) the right of the party to withdraw consent without the imposition of any fee, condition, or consequence that was not disclosed under subsection (c)(2).
(d) This act does not affect requirements related to content or timing of any notice or document required under applicable law.
(e) If a provision of this act or applicable law requiring a notice or document to be provided to a party or health benefit plan covered person expressly requires verification or acknowledgment of receipt of the notice or document, the notice or document may be delivered by electronic means only if the method used provides for verification or acknowledgment of receipt.
(f) The legal effectiveness, validity, or enforceability of any contract or policy of insurance executed by a party or health benefit plan covered person may not be denied solely because of the failure to obtain electronic consent or confirmation of consent of the party in accordance with subsection (c)(3) or K.S.A. 2025 Supp. 40-5805, and amendments thereto.
(g) A withdrawal of consent by a party or health benefit plan covered person shall not affect the legal effectiveness, validity, or enforceability of a notice or document delivered by electronic means to the party or health benefit plan covered person before the withdrawal of consent is effective. A withdrawal of consent by a party or health benefit plan covered person is effective within a reasonable period of time after receipt of the withdrawal by the insurer. Failure by an insurer to comply with subsection (c)(4) may be treated, at the election of the party or health benefit plan covered person, as a withdrawal of consent for purposes of this section.
(h) This section does not apply to a notice or document delivered by an insurer in an electronic form before the effective date of this act to a party or health benefit plan covered person who, before that date, has consented to receive a notice or document in an electronic form otherwise allowed by law.
(i) If the consent of a party to receive certain notices or documents in an electronic form is on file with an insurer before the effective date of this act, and pursuant to this section, an insurer intends to deliver additional notices or documents to such party in an electronic form, then prior to delivering such additional notices or documents electronically, the insurer shall notify the party of the notices or documents that may be delivered by electronic means under this section that were not previously delivered electronically and the party's right to withdraw consent to have notices or documents delivered by electronic means.
(j) Notwithstanding any other provisions of this section, insurance policies and endorsements that do not contain personally identifiable information may be mailed, delivered or posted on the insurer's website. If the insurer elects to post insurance policies and endorsements on its website in lieu of mailing or delivering such policies and endorsements to the insured, such insurer shall comply with all of the following conditions:
(1) The policy and endorsements shall be easily accessible and remain that way for as long as the policy is in force;
(2) after the expiration of the policy, the insurer shall archive its expired policies and endorsements for five years and make them available upon request;
(3) the policies and endorsements shall be posted in a manner that enables the insured to print and save the policy and endorsements using programs or applications that are widely available on the internet and free to use;
(4) the insurer shall provide notice, at the time of issuance of the initial policy forms and any renewal forms, of a method by which insureds may obtain, upon request and without charge, a paper or electronic copy of their policy or endorsements;
(5) on each declarations page issued to an insured, the insurer shall clearly identify the exact policy and endorsement forms purchased by the insured; and
(6) the insurer shall provide notice of any changes to the forms or endorsements, and of the insured's right to obtain, upon request and without charge, a paper or electronic copy of such forms or endorsements.
(k) Except as otherwise provided by law, if an oral communication or a recording of an oral communication from a party can be reliably stored and reproduced by an insurer, the oral communication or recording may qualify as a notice or document delivered by electronic means for purposes of this section. If a provision of this title or applicable law requires a signature or notice or document to be notarized, acknowledged, verified or made under oath, the requirement is satisfied if the electronic signature of the person authorized to perform those acts, together with all other information required to be included by the provision, is attached to or logically associated with the signature, notice or document.
(l) This section shall not affect any obligation of the insurer to provide notice to any person other than the insured of any notice provided to the insured.
(m) This section shall not be construed to modify, limit or supersede the provisions of the federal electronic signatures in global and national commerce act, public law 106-229, or the provisions of the uniform electronic transactions act, K.S.A. 16-1601 et seq., and amendments thereto.
(n) The provisions of the electronic notice and document act shall not apply to any mutual insurance company organized pursuant to article 12a of chapter 40 of the Kansas Statutes Annotated, and amendments thereto.
(o) The provisions of this section shall not apply to the electronic delivery of explanation of benefits and policies, including federally required summary of benefit and coverage documents, to a party by a health benefit plan.
History: L. 2013, ch. 97, § 4; L. 2018, ch. 76, § 3; L. 2024, ch. 70, § 9; July 1.
(a) The plan sponsor of a health benefit plan may, on behalf of health benefit plan covered persons, provide the consent to the delivery of all communications related to the plan by electronic means, otherwise required by K.S.A. 40-5804, and amendments thereto, and to the electronic delivery of any health insurance identification cards.
(b) Before providing consent on behalf of a health benefit plan covered person, pursuant to subsection (a), a plan sponsor shall confirm that such health benefit plan covered person routinely, at least once every 24 hours during the work week, uses electronic communications during the normal course of employment of such health benefit plan covered person.
(c) Before utilizing electronic means to deliver any plan communications or health insurance identification cards, the health benefit plan shall:
(1) Provide the health benefit plan covered person with an opportunity to opt out of electronic delivery and select United States mail as the preferred method of delivery for such health benefit plan covered person; and
(2) document that all applicable requirements under K.S.A. 40-5804, and amendments thereto, have been satisfied.
History: L. 2024, ch. 70, § 2; July 1.
No contract issued or renewed on or after the effective date of this act between any insurer, health insurer or any other entity that writes vision care insurance or a vision care discount plan and a vision care provider shall contain any provisions which requires the vision care provider to:
(a) Provide services or materials to an insured under such vision care insurance or health benefit plan or to a subscriber to a vision care discount plan at a fee limited or set by such vision care insurance plan or health benefit plan or vision care discount plan unless the services or materials are reimbursed as covered services under the contract; or
(b) participate in a vision care insurance or a vision care discount plan as a condition to participate in any other health benefit plan or vision care plan, regardless of whether such vision care plan is a plan of insurance or a vision care discount program which is not an insurance plan.
History: L. 2014, ch. 73, § 1; April 24.
No vision care provider shall charge more for services and materials that are not covered services under either vision care insurance or a vision care discount plan than such vision care provider's usual and customary rate for those services and materials.
History: L. 2014, ch. 73, § 2; April 24.
(a) No vision care insurance policy or vision care discount plan contract covered by this act shall change the terms, discounts or rates provided therein without the concurrence and agreement at the time of such change by the vision care provider.
(b) No vision care insurance policy or vision care discount plan that provides covered services for materials shall have the effect, directly or indirectly, of limiting the choice of sources and suppliers of materials by a patient of a vision care provider.
History: L. 2014, ch. 73, § 3; April 24.
No provision of this act shall prohibit the use of a discount card by a patient or client of a vision care provider if:
(a) Enrollment by the vision care provider is:
(1) Completely voluntary; and
(2) not conditioned upon the vision care provider's participation in any other discount card with different provider terms and conditions or insurance program; and
(b) the discount card program does not make or include any coverage or payment to the vision care provider.
History: L. 2014, ch. 73, § 4; April 24.
For the purposes of this act:
(a) (1) "Covered service" means any service or material for which:
(A) Reimbursement from the vision care insurance or health benefit plan is provided for by an insured's vision care insurance plan or health benefit plan contract subject to the application of the vision care insurance or health benefit plan's deductibles, copayments or coinsurance; or
(B) a reimbursement would be available subject to the application of any contractual limitations of deductibles or copayments required under the vision care discount plan coinsurance.
(2) "Covered services" does not include any services or materials covered or provided at a nominal or de minimus rate.
(b) "Contractual discount" means a percentage reduction from a vision care provider's usual and customary rate for providing covered services and materials required under a participating provider agreement.
(c) "Discount card" shall have the meaning ascribed to such term in K.S.A. 50-1,100, and amendments thereto.
(d) "Health benefit plan" shall have the meaning ascribed to such term in K.S.A. 40-4602, and amendments thereto.
(e) "Health insurer" shall have the meaning ascribed to such term in K.S.A. 40-4602, and amendments thereto.
(f) "Material" includes, but is not limited to, lenses, devices containing lenses, prisms, lens treatments and coatings, contact lenses, orthoptics, vision training and any prosthetic device necessary to correct, relieve, or treat any defect or abnormal condition of the human eye or its adnexa.
(g) "Participating provider agreement" includes a health benefit plan, vision care insurance or a vision care discount plan.
(h) "Participating provider" shall have the meaning ascribed to such term in K.S.A. 40-4602, and amendments thereto.
(i) "Vision care insurance" means an integrated health benefit plan or vision care insurance policy or contract which provides vision benefits pertaining to the provision of covered services or materials.
(j) "Vision care provider" means an optometrist licensed by the board of examiners in optometry or an ophthalmologist licensed by the state board of healing arts.
(k) "Vision care discount plan" means any entity which has been specifically authorized by the vision care providers to provide discounts to patients, but which plan is not insurance nor a discount card as defined in K.S.A. 50-1,100, and amendments thereto.
History: L. 2014, ch. 73, § 5; L. 2015, ch. 97, § 1; July 1.
(a) K.S.A. 40-5901 through 40-5906, and amendments thereto, shall be known and may be cited as the vision care services act.
(b) The commissioner of insurance shall administer the provisions of the vision care services act and may adopt such rules and regulations as necessary to carry out the provisions of the act as it applies to any insurer, health insurer, health benefit plan or vision care insurance provider. Such rules and regulations shall be adopted no later than January 1, 2016.
(c) The attorney general shall administer the provisions of the vision care services act as it applies to discount cards and vision care discount plans and may adopt such rules and regulations as necessary to carry out the provisions of the act. Such rules and regulations shall be adopted no later than January 1, 2016.
History: L. 2014, ch. 73, § 6; L. 2015, ch. 97, § 2; July 1.
(a) This act shall be known and may be cited as the risk management and own risk and solvency assessment act.
(b) The risk management and own risk and solvency assessment act provides the requirements for maintaining a risk management framework and completing an own risk and solvency assessment (ORSA) summary report with the insurance commissioner of the state of Kansas. The requirements of the act shall apply to all insurers domiciled in the state of Kansas unless exempted pursuant to K.S.A. 40-6006, and amendments thereto.
(c) The risk management and own risk and solvency assessment act and the ORSA summary report will contain confidential and sensitive information related to an insurer or insurance group's identification of risks material and relevant to the insurer or insurance group filing the report. This information will include proprietary and trade secret information that has the potential for harm and competitive disadvantage to the insurer or insurance group if the information is made public. The ORSA summary report shall be a confidential document filed with the commissioner and shall only be shared as stated herein and to assist the commissioner in the performance of the commissioner's duties. In no event shall the ORSA summary report be subject to public disclosure.
History: L. 2015, ch. 18, § 1; January 1, 2017.
As used in this act:
(a) "Act" means the risk management and own risk and solvency assessment act.
(b) "Commissioner" means the state commissioner of insurance.
(c) "Insurance group" means those insurers and affiliates included within an insurance holding company system as defined in K.S.A.
40-3302, and amendments thereto.
(d) "Insurer" has the meaning ascribed to it in K.S.A.
40-3302, and amendments thereto, except that it shall not include agencies, authorities or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state.
(e) "NAIC" means the national association of insurance commissioners.
(f) "Own risk and solvency assessment" or "ORSA" means a confidential internal assessment, appropriate to the nature, scale and complexity of an insurer or insurance group, conducted by that insurer or insurance group of the material and relevant risks associated with the insurer or insurance group's current business plan and the sufficiency of capital resources to support those risks.
(g) "ORSA guidance manual" means the current version of the own risk and solvency assessment guidance manual developed and adopted by the NAIC, as in effect on January 1, 2017.
(h) "ORSA summary report" means a confidential high-level summary of an insurer or insurance group's ORSA.
History: L. 2015, ch. 18, § 2; January 1, 2017.
An insurer shall maintain a risk management framework to assist the insurer with identifying, assessing, monitoring, managing and reporting on its material and relevant risks. This requirement may be satisfied if the insurance group of which the insurer is a member maintains a risk management framework applicable to the operations of the insurer.
History: L. 2015, ch. 18, § 3; January 1, 2017.
Subject to K.S.A. 40-6006, and amendments thereto, an insurer or the insurance group of which the insurer is a member shall regularly conduct an ORSA consistent with a process comparable to the ORSA guidance manual. The ORSA shall be conducted no less than annually, but also at any time when there are significant changes to the risk profile of the insurer or the insurance group of which the insurer is a member.
History: L. 2015, ch. 18, § 4; January 1, 2017.
(a) Upon the commissioner's request, and no more than once each year, an insurer shall submit to the commissioner an ORSA summary report or any combination of reports that together contain the information described in the ORSA guidance manual, applicable to the insurer and the insurance group of which it is a member. Notwithstanding any request from the commissioner, if the insurer is a member of an insurance group, the insurer shall submit the reports required by this subsection if the commissioner is the lead state commissioner of the insurance group as determined by the procedures within the financial analysis handbook adopted by the NAIC.
(b) The reports shall include a signature of the insurer or insurance group's chief risk officer or other executive having responsibility for the oversight of the insurer's enterprise risk management process attesting to the best of such person's belief and knowledge that the insurer applies the enterprise risk management process described in the ORSA summary report and that a copy of the report has been provided to the insurer's board of directors or appropriate committee thereof.
(c) An insurer may comply with subsection (a) by providing the most recent and substantially similar reports provided by the insurer or another member of an insurance group of which the insurer is a member to the commissioner of another state or to a supervisor or regulator of a foreign jurisdiction, if that report provides information that is comparable to the information described in the ORSA guidance manual. Any such report in a language other than English must be accompanied by a translation of that report into the English language.
(d) The ORSA summary report shall be prepared consistent with the ORSA guidance manual, subject to the requirements of subsection (e). Documentation and supporting information shall be maintained and made available upon examination or upon request of the commissioner.
(e) The review of the ORSA summary report and any additional requests for information shall be made using similar procedures currently used in the analysis and examination of multi-state or global insurers and insurance groups.
History: L. 2015, ch. 18, § 5; January 1, 2017.
(a) An insurer shall be exempt from the requirements of this act if:
(1) The insurer has annual written and unaffiliated assumed premium, including international direct and assumed premium but excluding premiums reinsured with the federal crop insurance corporation and federal flood program, less than $500,000,000; and
(2) The insurance group of which the insurer is a member has annual direct written and unaffiliated assumed premium, including international direct and assumed premium, but excluding premiums reinsured with the federal crop insurance corporation and federal flood program, less than $1,000,000,000.
(b) If an insurer qualifies for exemption pursuant to subsection (a)(1), but the insurance group of which the insurer is a member does not qualify for exemption pursuant to subsection (a)(2), then the ORSA summary report that may be required pursuant to K.S.A. 40-6005, and amendments thereto, shall include every insurer within the insurance group. This requirement may be satisfied by the submission of more than one ORSA summary report for any combination of insurers provided any combination of reports includes every insurer within the insurance group.
(c) If an insurer does not qualify for exemption pursuant to subsection (a)(1), but the insurance group of which it is a member qualifies for exemption pursuant to subsection (a)(2), then the only ORSA summary report that may be required pursuant to K.S.A. 40-6005, and amendments thereto, shall be the report applicable to that insurer.
(d) An insurer that does not qualify for exemption pursuant to subsection (a) may apply to the commissioner for a waiver from the requirements of this act based upon unique circumstances. In deciding whether to grant the insurer's request for waiver, the commissioner may consider the type and volume of business written, ownership and organizational structure and any other factor the commissioner considers relevant to the insurer or insurance group of which the insurer is a member. If the insurer is part of an insurance group with insurers domiciled in more than one state, the commissioner shall coordinate with the lead state commissioner and with the other domiciliary commissioners in considering whether to grant the insurer's request for a waiver.
(e) Notwithstanding the exemptions stated in this section:
(1) The commissioner may require that an insurer maintain a risk management framework, conduct an ORSA and file an ORSA summary report based on unique circumstances including, but not limited to, the type and volume of business written, ownership and organizational structure, federal agency requests and international supervisor requests.
(2) The commissioner may require that an insurer maintain a risk management framework, conduct an ORSA and file an ORSA summary report if the insurer has risk-based capital for a company action level event as set forth in K.S.A.
40-2c01 et seq., and K.S.A.
40-2d01 et seq., and amendments thereto, meets one or more of the standards of an insurer deemed to be in hazardous financial condition as defined in K.A.R. 40-1-38, or otherwise exhibits qualities of a troubled insurer as determined by the commissioner.
(f) If an insurer that qualifies for an exemption pursuant to subsection (a) subsequently no longer qualifies for that exemption due to changes in premium as reflected in the insurer's most recent annual statement or in the most recent annual statements of the insurers within the insurance group of which the insurer is a member, the insurer shall have one year following the year the threshold is exceeded to comply with the requirements of this act.
History: L. 2015, ch. 18, § 6; January 1, 2017.
(a) Documents, materials or other information, including the ORSA summary report, in the possession or control of the department of insurance that are obtained or created by or disclosed to the commissioner or any other person under this act, are recognized by this state as being proprietary and to contain trade secrets. All such documents, materials, or other information shall be confidential by law and privileged; shall not be subject to the open records act, K.S.A. 45-215 et seq., and amendments thereto; and shall not be subject to subpoena and shall not be subject to discovery or admissible in evidence in any private civil action. However, the commissioner is authorized to use the documents, materials or other information in the furtherance of any regulatory or legal action brought as part of the commissioner's official duties. The commissioner shall not otherwise make the documents, materials or other information public without the prior written consent of the insurer.
(b) Neither the commissioner nor any person who received documents, materials or other ORSA-related information, through examination or otherwise while acting under the authority of the commissioner, or with whom such documents, materials or other information are shared pursuant to this act, shall be permitted or required to testify in any private civil action concerning any confidential documents, materials or information subject to subsection (a).
(c) In order to assist in the performance of the commissioner's regulatory duties, the commissioner:
(1) May, upon request, share documents, materials or other ORSA-related information, including the confidential and privileged documents, materials or information subject to subsection (a), including proprietary and trade secret documents and materials with other state, federal and international financial regulatory agencies, including members of any supervisory college as defined in K.S.A.
40-3316, and amendments thereto, the NAIC and with any third-party consultants designated by the commissioner, provided that the recipient agrees in writing to maintain the confidentiality and privileged status of the ORSA-related documents, materials or other information and has verified in writing the legal authority to maintain confidentiality;
(2) may receive documents, materials or other ORSA-related information, including otherwise confidential and privileged documents, materials or information, including proprietary and trade secret information or documents, from regulatory officials of other foreign or domestic jurisdictions, including members of any supervisory college as defined in K.S.A.
40-3316, and amendments thereto, and the NAIC, and shall maintain as confidential or privileged any documents, materials or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information; and
(3) shall enter into a written agreement with the NAIC or a third-party consultant governing sharing and use of information provided pursuant to this act, consistent with this subsection that shall:
(A) Specify procedures and protocols regarding the confidentiality and security of information shared with the NAIC or a third-party consultant pursuant to this act, including procedures and protocols for sharing by the NAIC with other state regulators from states in which the insurance group has domiciled insurers. The agreement shall provide that the recipient agrees in writing to maintain the confidentiality and privileged status of the ORSA-related documents, materials or other information and has verified in writing the legal authority to maintain confidentiality;
(B) specify that ownership of information shared with the NAIC or a third-party consultant pursuant to this act remains with the commissioner and use of the information by the NAIC or a third-party consultant is subject to the direction of the commissioner;
(C) prohibit the NAIC or third-party consultant from storing the information shared pursuant to this act in a permanent database after the underlying analysis is completed;
(D) require prompt notice to be given to an insurer whose confidential information in the possession of the NAIC or a third-party consultant pursuant to this act is subject to a request or subpoena to the NAIC or a third-party consultant for disclosure or production;
(E) require the NAIC or a third-party consultant to consent to intervention by an insurer in any judicial or administrative action in which the NAIC or a third-party consultant may be required to disclose confidential information about the insurer shared with the NAIC or a third-party consultant pursuant to this act; and
(F) in the case of an agreement involving a third-party consultant, provide for the insurer's written consent.
(d) The sharing of information and documents by the commissioner pursuant to this act shall not constitute a delegation of regulatory authority or rulemaking and the commissioner is solely responsible for the administration, execution and enforcement of the provisions of this act.
(e) No waiver of any applicable privilege or claim of confidentiality in the documents, proprietary and trade secret materials or other ORSA-related information shall occur as a result of disclosure of such ORSA-related information or documents to the commissioner under this section or as a result of sharing as authorized in this act.
(f) Documents, materials or other information in the possession or control of the NAIC or third-party consultants pursuant to this act shall be confidential by law and privileged, shall not be subject to subpoena and shall not be subject to discovery or admissible as evidence in any private civil action.
History: L. 2015, ch. 18, § 7; January 1, 2017.
Any insurer failing, without just cause, to timely file the ORSA summary report as required in this act shall be required, after notice and hearing, to pay a penalty for each day's delay, to be recovered by the commissioner. The penalty so recovered shall be paid into the state general revenue fund. The maximum penalty under this section is $50,000. The commissioner may reduce the penalty if the insurer demonstrates to the commissioner that the imposition of the penalty would constitute a financial hardship to the insurer.
History: L. 2015, ch. 18, § 8; January 1, 2017.
If any provision of this act, or the application thereof to any person or circumstance is held invalid, such determination shall not affect the provisions or applications of this act which can be given effect without the invalid provision or application, and to that end, the provisions of this act are severable.
History: L. 2015, ch. 18, § 9; January 1, 2017.
The first filing of the ORSA summary report shall be in 2017 pursuant to K.S.A. 40-6005, and amendments thereto, of this act.
History: L. 2015, ch. 18, § 10; January 1, 2017.
History: L. 2015, ch. 18, § 11; Repealed, L. 2022, ch. 62, § 8; July 1.
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