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10  AN ACT relating to insurance; directors; numbers; election and term;
11    oath; amending K.S.A. 40-305 and repealing the existing section. [re-
12    lating to the payment of certain insurance proceeds; amending
13    K.S.A. 40-305, 40-3901 and 40-3903 and repealing the existing
14    sections.]
15  
16  Be it enacted by the Legislature of the State of Kansas:
17    Section 1.  K.S.A. 40-305 is hereby amended to read as follows: 40-
18  305. The affairs of any such insurance company, now existing or hereafter
19  organized under the laws of this state, shall be managed by a board of
20  not more than twenty-five nor less than five directors, all of whom shall
21  be stockholders, and a majority of whom shall be residents of this state.
22  The persons named as such in the charter shall constitute the directors
23  for the first year. Thereafter the directors shall be elected at the annual
24  meeting of the stockholders, which shall be held at such time as may be
25  provided in the bylaws. The bylaws shall also provide for the election of
26  at least one member and not more than one-third of the members of the
27  board of directors each year, to serve for not more than five years. Any
28  vacancy in the board shall be filled by the remaining members until the
29  next annual meeting of the stockholders, at which time a successor shall
30  be elected to fill the unexpired term. directors. The board of directors
31  shall consist of one or more members, the number of which shall be fixed
32  by the bylaws, unless the articles of incorporation establish the number
33  of directors, in which case a change in the number of directors shall be
34  made only by amendment of the articles.
35    The directors shall be elected by ballot, and each full-paid share of
36  stock shall be entitled to one vote. Shares may be voted by proxy, signed
37  by the person legally entitled to vote the same. Each stockholder shall
38  have the right to cast as many votes in the aggregate as shall equal the
39  number of shares of stock held by him, multiplied by the number of
40  directors to be elected, and each stockholder may cast the whole number
41  of votes for one candidate, or may divide his votes among two or more
42  candidates. The director shall take the oath of office as in other corpo-
43  rations. The bylaws shall specify the A majority of the total number of
HB 2045--Am. by SCW
                                     

 1  directors necessary to shall constitute a quorum, which shall be not less
 2  than five members, except that if the board of directors consists of nine
 3  members or less, a majority may constitute a quorum for the transaction
 4  of business, unless the articles of incorporation or the bylaws require a
 5  greater number.
 6    Sec. 2.  K.S.A. 40-305 is hereby repealed.
 7    [Sec. 2.  K.S.A. 40-3901 is hereby amended to read as follows:
 8  40-3901. (a) The governing body of any city is hereby authorized
 9  to establish, by ordinance, a procedure for the payment of $5,000
10  or 10%, whichever is less, not to exceed 15% of the proceeds of any
11  insurance policy based upon a covered claim payment made for
12  damage or loss to a building or other structure, caused by or arising
13  out of any fire or explosion. fire, explosion or windstorm. The ordinance
14  shall apply only to a covered claim payment which is in excess of
15  75% of the face value of the policy covering a building or other
16  insured structure.
17    (b)  The insurer shall first shall pay all amounts due the holder
18  of a first real estate mortgage against the building or other structure
19  pursuant to the terms of the policy and endorsements thereto and
20  then shall withhold from the covered claim payment the sum of
21  $5,000 or 10% of the covered claim payment a sum not to exceed the
22  amount authorized pursuant to subsection (a), whichever is less and shall
23  pay such moneys to the city to deposit into an interest-bearing ac-
24  count, unless the city has issued a certificate pursuant to K.S.A. 40-
25  3905, and amendments thereto.
26    (c)  The city shall release the insured's proceeds and any interest
27  which has accrued on such proceeds received under subsection (b)
28  within 30 days after receipt of such moneys, unless the city has
29  instituted legal proceedings under the provisions of K.S.A. 12-1752,
30  and amendments thereto. If the city has proceeded under the provi-
31  sions of K.S.A. 12-1752, and amendments thereto, all moneys in excess
32  of that necessary to comply with the provisions of K.S.A. 12-1750
33  et seq., and amendments thereto, for the removal of the building or
34  structure, less salvage value, shall be paid to the insured.
35    Sec. 3.  K.S.A. 40-3903 is hereby amended to read as follows:
36  40-3903. (a) The governing body of any county is hereby authorized
37  to establish, by resolution, a procedure for the payment of $5,000
38  or 10%, whichever is less, not to exceed 15% of the proceeds of any
39  insurance policy based upon a covered claim payment made for
40  damage or loss to a building or other structure, caused by or arising
41  out of any fire or, explosion. This or windstorm. The resolution shall
42  not apply to cities which have adopted an ordinance under the pro-
43  visions of K.S.A. 40-3901, and amendments thereto. The resolution
HB 2045--Am. by SCW
                                     

 1  shall apply only to a covered claim payment which is in excess of
 2  75% of the face value of the policy covering a building or other
 3  insured structure.
 4    (b)  The insurer shall first shall pay all amounts due the holder
 5  of a first real estate mortgage against the building or other structure
 6  pursuant to the terms of the policy and endorsements thereto and
 7  then shall withhold from the covered claim payment of the sum of
 8  $5,000 or 10% of the covered claim payment, whichever is less, not to
 9  exceed the amount authorized pursuant to subsection (a) and shall pay
10  such moneys to the county to deposit into an interest-bearing ac-
11  count, unless the city has issued a certificate pursuant to K.S.A. 40-
12  3906, and amendments thereto.
13    (c)  The county shall release the insured's proceeds and any in-
14  terest which has accrued on such proceeds received under subsec-
15  tion (b) within 30 days after receipt of such moneys, unless the
16  county has instituted legal proceedings, using the procedure under
17  K.S.A. 12-1752, and amendments thereto, insofar as same can be made
18  applicable. If the county has instituted legal proceedings, all mon-
19  eys in excess of that necessary for the removal of the building or
20  structure, less salvage value, shall be paid to the insured.
21    Sec. 4.  K.S.A. 40-305, 40-3901 and 40-3903 are hereby re-
22  pealed.
23    Sec. 3. [5]  This act shall take effect and be in force from and after
24  its publication in the statute book.