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Session of 2000
          SENATE BILL No. 442           By Committee on Financial Institutions and Insurance           1-19          

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10             AN  ACT concerning the insurance department; relating to the insurance
11             department service regulation fund; amending K.S.A. 1999 Supp. 40-
12             110 and 40-112 and repealing the existing sections.
13      
14       Be it enacted by the Legislature of the State of Kansas:
15             Section  1. K.S.A. 1999 Supp. 40-110 is hereby amended to read as
16       follows: 40-110. The commissioner of insurance is hereby authorized to
17       appoint an assistant commissioner of insurance, actuaries who are mem-
18       bers in good standing of either the American academy of actuaries or the
19       casualty actuarial society or the society of actuaries, two special attorneys
20       who shall have been regularly admitted to practice, an executive secretary,
21       policy examiners, two field representatives, and a secretary to the com-
22       missioner. Such appointees shall each receive an annual salary to be de-
23       termined by the commissioner of insurance, within the limits of available
24       appropriations but in no case shall any such annual salary exceed the salary
25       of the commissioner of insurance as established by law, except that the
26       commissioner of insurance may appoint two actuaries, who are members
27       in good standing of either the American Academy of Actuaries or the
28       Casualty Actuarial Society or the Society of Actuaries, whose annual sal-
29       aries may exceed the annual salary of the commissioner. The commis-
30       sioner is also authorized to appoint, within the provisions of the civil
31       service law, and available appropriations, other employees as necessary
32       to administer the provisions of this act. The field representatives author-
33       ized by this section may be empowered to conduct inquiries, investiga-
34       tions or to receive complaints. Such field representatives shall not be
35       empowered to make, or direct to be made, an examination of the affairs
36       and financial condition of any insurance company in the process of or-
37       ganization, or applying for admission or doing business in this state.
38             The appointees authorized by this section shall take the proper official
39       oath and shall be in no way interested, except as policyholders, in any
40       insurance company. In the absence of the commissioner of insurance the
41       assistant commissioner shall perform the duties of the commissioner of
42       insurance, but shall in all cases execute papers in the name of the com-
43       missioner of insurance, as assistant. The commissioner of insurance shall

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  1       be responsible for all acts of an official nature done and performed by
  2       the commissioner's assistant or any person employed in such office. All
  3       the appointees authorized by this section shall hold their office at the will
  4       and pleasure of the commissioner of insurance.
  5             Sec.  2. K.S.A. 1999 Supp. 40-112 is hereby amended to read as fol-
  6       lows: 40-112. (a) For the purpose of maintaining the insurance depart-
  7       ment and the payment of expenses incident thereto, there is hereby es-
  8       tablished the insurance department service regulation fund in the state
  9       treasury which shall be administered by the commissioner of insurance.
10       All expenditures from the insurance department service regulation fund
11       shall be made in accordance with appropriation acts upon warrants of the
12       director of accounts and reports issued pursuant to vouchers approved
13       by the commissioner of insurance or by a person or persons designated
14       by the commissioner.
15             (b) On and after the effective date of this act, all fees received by the
16       commissioner of insurance pursuant to any statute and 1% of taxes re-
17       ceived pursuant to K.S.A. 40-252 and amendments thereto shall be re-
18       mitted to the state treasurer for deposit in the state treasury and credited
19       to the insurance department service regulation fund.
20             (c) Except For the fiscal year ending on June 30, 2001, and for each
21       fiscal year thereafter, except as otherwise provided by this section, the
22       commissioner of insurance shall make an annual assessment on each
23       group of affiliated insurers insurer whose certificates certificate of au-
24       thority to do business in this state are is in good standing at the time of
25       the assessment. The total amount of all such assessments for a fiscal year
26       shall be equal to the amount sufficient which, when combined with the
27       total amount to be credited to the insurance department service regula-
28       tion fund pursuant to subsection (b) is equal to the amount approved by
29       the legislature to fund the insurance company regulation program. With
30       respect to each group of affiliated insurers insurer, such assessment shall
31       be in proportion to the amount of total assets of the group of affiliated
32       insurers insurer as reported to the commissioner of insurance pursuant
33       to K.S.A. 40-225 and amendments thereto for the immediately preceding
34       calendar year, shall not be less than $500 and shall not be more than the
35       amount equal to .0000015 of the amount of total assets of the group of
36       affiliated insurers insurer or $25,000, whichever is less. The total assess-
37       ment for any fiscal year shall not increase by any amount greater than
38       15% of the total budget approved by the legislature to fund the insurance
39       company regulation program for the fiscal year immediately preceding
40       the fiscal year for which the assessment is made. In the event the total
41       amount of the assessment would be less than the aggregate amount re-
42       sulting by assessing the $500 minimum on each insurer, the commissioner
43       may establish a lower minimum to be assessed equally on each insurer.

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  1             (d) If, by the laws of any state other than Kansas or by the retaliatory
  2       laws of any state other than Kansas, any insurer domiciled in Kansas shall
  3       be required to pay any fee or tax in such other state of licensure, and the
  4       fee or tax is due and payable either because the insurance department
  5       service regulation fee imposed by this section on insurers licensed in
  6       Kansas and organized or domiciled in such other state is greater than the
  7       comparable fee or tax assessed in such other state, or such other state has
  8       no comparable fee or tax but requires payment on a retaliatory basis, then
  9       to the extent such fee or tax amounts are legally due and are paid in such
10       other state, any insurer domiciled in Kansas may claim a dollar-for-dollar
11       credit for such fees paid against insurer's annual premium taxes due the
12       state of Kansas under K.S.A. 40-252 and amendments thereto or privilege
13       fee due the state of Kansas under K.S.A. 40-3213 and amendments
14       thereto, but such credit shall only be calculated on the amount which
15       would not have been required to be paid in such other state of licensure
16       in the absence of the existence of the insurance department service reg-
17       ulation fee imposed by this section, and in no event shall the credit per-
18       mitted by this section exceed 90% of the insurer's annual premium tax
19       or privilege fee due the state of Kansas. The insurance commissioner shall
20       prescribe the forms for reporting such credits.
21             (e) Assessments payable under this section shall be past due if not
22       paid to the insurance department within 45 days of the billing date of
23       such assessment. A penalty equal to 10% of the amount assessed shall be
24       imposed upon any past due payment and the total amount of the assess-
25       ment and penalty shall bear interest at the rate of 1.5% per month or any
26       portion thereof.
27             (f) When there exists in the insurance department service regulation
28       fund a deficiency which would render such fund temporarily insufficient
29       during any fiscal year to meet the insurance department's funding
30       requirements, the commissioner of insurance shall certify the amount of
31       the insufficiency. Upon receipt of any such certification, the director of
32       accounts and reports shall transfer an amount of moneys equal to the
33       amount so certified from the state general fund to the insurance depart-
34       ment service regulation fund. On June 30 of any fiscal year during which
35       an amount or amounts are certified and transferred under this subsection,
36       the director of accounts and reports shall provide for the repayment of
37       the amounts so transferred and shall transfer the amount equal to the
38       total of all such amounts transferred during the fiscal year from the in-
39       surance department service regulation fund to the state general fund.
40             (g) Any unexpended balance in the insurance department service reg-
41       ulation fund at the close of a fiscal year shall remain credited to the
42       insurance department service regulation fund for use in the succeeding
43       fiscal year and shall be used to reduce future assessments or to accom-

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  1       modate cash flow demands on the fund.
  2             (h) The commissioner of insurance shall exempt the assessment of
  3       any insurer which, as of December 31 of the calendar year preceding the
  4       assessment, has a surplus of less than two times the minimum amount of
  5       surplus required for a certificate of authority on and after May 1, 1994,
  6       and which is subject to the premium tax or privilege fee liability imposed
  7       on insurers organized under the laws of this state. The commissioner of
  8       insurance may also exempt or defer, in whole or in part, the assessment
  9       of any other insurer if, in the opinion of the commissioner of insurance,
10       immediate payment of the total assessment would be detrimental to the
11       solvency of the insurer.
12             (i) As used in this section:
13             (1) "Affiliates" or "affiliated" has the meaning ascribed by K.S.A. 40-
14       3302 and amendments thereto;
15             (2) "group" or "group of affiliated insurers" means the affiliated in-
16       surers of a group and also includes an individual, unaffiliated insurer; and
17             (3) , "insurer" means any insurance company, as defined by K.S.A.
18       40-201 and amendments thereto, any fraternal benefit society, as defined
19       by K.S.A. 40-738 and amendments thereto, any reciprocal or interinsur-
20       ance exchange under K.S.A. 40-1601 through 40-1614 and amendments
21       thereto, any mutual insurance company organized to provide health care
22       provider liability insurance under K.S.A. 40-12a01 through 40-12a09 and
23       amendments thereto, any nonprofit dental service corporation under
24       K.S.A. 40-19a01 through 40-19a14 and amendments thereto, any non-
25       profit medical and hospital service corporation under K.S.A. 40-19c01
26       through 40-19c11 and amendments thereto, any health maintenance or-
27       ganization, as defined by K.S.A. 40-3202 and amendments thereto, or any
28       captive insurance company, as defined by K.S.A. 40-4301 and amend-
29       ments thereto, which is authorized to do business in Kansas. 
30       Sec.  3. K.S.A. 1999 Supp. 40-110 and 40-112 are hereby repealed.
31        Sec.  4. This act shall take effect and be in force from and after its
32       publication in the statute book.