An Act concerning insurance; relating to the revocation or suspension of an agent's or broker's license; amending K.S.A. 40-242 and repealing the existing section.

Be it enacted by the Legislature of the State of Kansas:

Section 1. K.S.A. 40-242 is hereby amended to read as follows: 40- 242. (a) The commissioner of insurance may impose a penalty prescribed by subsection (e) or revoke or suspend the license of any broker or agent in the event that investigation by the commissioner discloses that:

(1) Such license was obtained by fraud or misrepresentations;

(2) the holder of such license had misrepresented the provisions, terms and conditions contained in any contract of insurance;

(3) the holder of such license has rebated the whole or any part of any insurance premium or offered in connection with the presentation of a contract of insurance any other inducement not contained in the con- tract of insurance;

(4) the holder of such license has intentionally omitted any material fact in such presentation;

(5) the holder of such license has made any misleading representa- tions or incomplete comparisons of policies to any person for the purposes of inducing or tending to induce such persons to lapse, forfeit or surren- der such person's insurance then in force;

(6) the holder of such license has been convicted of a misdemeanor or felony involving fraud, deceit, dishonesty, intent to deprive or intent to defraud; or

(7) the interests of the insurer or the insurable interests of the public are not properly served under such license. Actions affecting any license or imposing any penalty shall be taken only after a hearing conducted in accordance with the provisions of the Kansas administrative procedure act.

(b) The imposition of a penalty, or the lapse or suspension of any license by operation of law, by failure to renew or by its voluntary sur- render shall not deprive the commissioner of jurisdiction or right to in- stitute or proceed with any disciplinary proceeding against such licensee, to render a decision suspending or revoking such license, or to establish and make a record of the facts of any violation of law for any lawful purpose. No such disciplinary proceedings shall be instituted against any licensee after the expiration of two years from the termination of such license.

(c) In the event the commissioner of insurance imposes a penalty as permitted under subsection (e) or suspends or revokes the license of any agent or broker, any costs incurred as a result of conducting any admin- istrative hearing authorized under the provisions of this section shall be assessed against the broker or agent who is the subject of the hearing or the company or companies represented by such broker or agent who is the party to the matters giving rise to the hearing. As used in this sub- section, ``costs'' shall include witness fees, mileage allowances, any costs associated with the reproduction of documents which become a part of the hearing record and the expense of making a record of the hearing.

(d) No person whose license as an agent or broker has been sus- pended or revoked shall be employed by any insurance company doing business in this state either directly, indirectly, as an independent con- tractor or otherwise to negotiate or effect contracts of insurance, sure- tyship or indemnity or do any act toward soliciting or otherwise transact- ing the business of insurance during the period of such suspension or revocation.

(e) In lieu of revocation or suspension of the agent's or broker's li- cense, the commissioner may:

(1) Censure the person; or

(2) issue an order imposing an administrative penalty up to a maxi- mum of $500 for each violation but not to exceed $2,500 for the same violation occurring within any six consecutive calendar months unless the agent or broker knew or reasonably should have known the act could give rise to disciplinary action under subsection (a). If the agent or broker knew or reasonably should have known the act could give rise to disci- plinary proceedings as aforementioned, 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 cal- endar months.

(f) When the license of any agent is suspended or revoked, the broker's license of such person is also suspended or revoked.

Sec. 2. K.S.A. 40-242 is hereby repealed.

Sec. 3. This act shall take effect and be in force from and after its publication in the statute book.

Approved March 22, 1996.