Session of 1998
SENATE BILL No. 392
By Senator Steffes
12-12
9
AN ACT concerning insurance; allowing the
merger or consolidation of
10 mutual insurance
companies providing liability insurance for health
11 care providers with
certain insurance companies; amending K.S.A.
12 1997 Supp. 40-12a02,
40-12a04, 40-12a06 and 40-12a07 and repealing
13 the existing sections;
also repealing K.S.A. 1997 Supp. 40-12a08.
14
15 Be it enacted by the Legislature of the
State of Kansas:
16 Section 1. K.S.A. 1997 Supp.
40-12a02 is hereby amended to read
17 as follows: 40-12a02. (a) Except as
otherwise provided in this act, the
18 provisions of article 12 of chapter 40 of
the Kansas Statutes Annotated
19 shall control the formation and operation
of companies organized under
20 this act.
21 (b) Any association of health
care providers domiciled within the state
22 of Kansas which has been in existence for
three years or more, may, as
23 provided in this act, form an insurance
company for the purpose of issuing
24 contracts of insurance ;'oviding
liability insurance for health care provid-
25 ers which are members of the
association, the member's employees, di-
26 rectors, professional associations
and affiliates.
27 (c) Any two or more
such associations of health care providers, may
28 form an insurance company for the
purpose of issuing contracts of insur-
29 ance providing liability insurance
for such association's respective mem-
30 bers, the member's employees,
directors, professional associations and
31 affiliates upon the assessment
plan.
32 Sec. 2. K.S.A. 1997 Supp.
40-12a04 is hereby amended to read as
33 follows: 40-12a04. The persons proposing to
form any such company shall
34 subscribe, acknowledge and file with the
commissioner articles of incor-
35 poration specifying:
36 (a) The name, which
shall contain the word ``mutual,'' the names of
37 persons initially associated, the
;>=thod by which other persons may be
38 admitted to the company as
members organizational form of the com-
39 pany, whether stock or mutual, the
purposes for which the company is
40 organized and the location of such
company's principal or home office,
41 which shall be within this state. The
articles of incorporation shall provide
42 for bylaws and for the amendment of the
articles of incorporation and
43 the bylaws.
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1 (b) The names and
addresses of those persons composing the board.
2 (c) The names and
addresses of the incorporators.
3 Sec. 3. K.S.A. 1997
Supp. 40-12a06 is hereby amended to read as
4 follows: 40-12a06. (a) Any company
organized under the provisions of this
5 act shall be empowered to make
contracts of insurance as provided herein
6 and to cede to any insurer or
accept from any insurer reinsurance on any
7 portion of any such risk for
the following kinds of insurance:
8 (1) Against
loss or liability arising out of the performance of
profes-
9 sional services rendered or
which should have been rendered by an in-
10 sured.
11 (2) Against loss or
liability to persons or property for which the in-
12 sured may be liable or have assumed
liability, including but not limited
13 to liability of any person who is a
director or officer of a health care
14 provider arising out of acts
performed or which should have been per-
15 formed by such director or
officer.
16 (3) Against loss or
liability to persons or property resulting from the
17 ownership, maintenance or use of
any ambulance, aircraft or other vehicle
18 used by an insured in connection
with rendering professional services in
19 K.S.A. 40-901 et seq., and
amendments thereto and K.S.A. 40-1101 et
20 seq., and amendments
thereto.
21 (b) Any company organized
under the provisions of this act shall be
22 empowered to contract with the governing
board of any plan created
23 pursuant to K.S.A. 40-3413 and amendments
thereto to issue policies to
24 any applicant for liability insurance under
the provisions of any such plan,
25 to service and manage such policies and in
all respects to administer and
26 carry out the functions of any plan as the
same may be authorized by the
27 contract. Policies may be issued to persons
and corporations under the
28 provisions of such contract even though the
insured is not a member of
29 the association of health care providers
forming the insurance company.
30 No provision of this act or of article 12
of chapter 40 of the Kansas Statutes
31 Annotated regarding the voting rights of
members or the payment of
32 dividends shall apply to policies issued
under this subsection.
33 (c) Any company organized
under the provisions of this act may
34 unite, merge or consolidate with any
insurance company organized pur-
35 suant to K.S.A. 40-301 et
seq., and amendments thereto, and authorized
36 by K.S.A. 40-901 et seq.,
and amendments thereto, or K.S.A. 40-1101 et
37 seq., and amendments thereto, or
any organization composed of health
38 care providers in accordance with K.S.A.
40-4001 et seq., and amend-
39 ments thereto, provided that the
resulting company shall be governed by
40 the provisions of this act. The
resulting company may be a mutual or a
41 stock company.
42 Sec. 4. K.S.A. 1997 Supp.
40-12a07 is hereby amended to read as
43 follows: 40-12a07. The commissioner shall
issue a certificate of authority
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3
1 when any company, organized under
this act, has fully complied with the
2 following conditions:
3 (a) The company holds
bona fide applications for insurance upon
4 which it shall issue at least 20
policies to at least 20 ;>--bers
insureds.
5 If the company is in compliance with
all other provisions of this act, the
6 commissioner shall not revoke or
refuse to renew the certificate of au-
7 thority because
;>--bership the number of insureds has
declined to less
8 than 20
;>--bers.
9 (b) No insurance
company organized pursuant to this act shall expose
10 itself to loss on any one risk or hazard to
an amount exceeding 20% of its
11 surplus unless the excess is reinsured.
12 (c) It shall have collected,
in accordance with the method provided
13 in the articles of incorporation or the
bylaws, the full consideration ac-
14 cording to its filed rate on each contract
for which application has been
15 made. The total of such consideration shall
be held in cash or securities
16 in which such insurance companies are
authorized to invest, or one or
17 more clean and irrevocable letters of
credit, and it shall possess and there-
18 after maintain a surplus of lawful assets
or letters of credit over and above
19 liabilities in an amount not less than the
capital and surplus required of
20 a domestic stock insurance company
transacting the same kinds of insur-
21 ance. Pursuant to K.S.A. 1997 Supp.
40-229a, and amendments thereto,
22 the company shall deposit with the
commissioner securities in which such
23 insurance companies are authorized to
invest, or one or more clean and
24 irrevocable letters of credit, for the
benefit of the commissioner, in an
25 amount not less than the minimum capital
stock required of a domestic
26 stock insurance company. For the purpose of
this act, letters of credit
27 shall be in the form allowed by K.S.A.
40-221a(b)(2), and amendments
28 thereto, drawn on the account of a health
care provider for the benefit
29 of the company, or for the benefit of the
commissioner if the letter of
30 credit is on deposit in accordance with
this section.
31 Sec. 5. K.S.A. 1997 Supp.
40-12a02, 40-12a04, 40-12a06, 40-12a07
32 and 40-12a08 are hereby repealed.
33 Sec. 6. This act shall take
effect and be in force from and after its
34 publication in the Kansas register.
35