An Act concerning insurance; relating to insurance agents; amending K.S.A. 40-241 and 40-246b and K.S.A. 1995 Supp. 40-240f and repealing the existing sections.

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

Section 1. K.S.A. 1995 Supp. 40-240f is hereby amended to read as follows: 40-240f. (a) For purposes of this section:

(1) ``Biennial due date'' means March 31, 1991, and March 31 of each odd-numbered year thereafter. Effective January 1, 1997, the term shall mean the date of birth of the licensed 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 section, except that such due date shall not be earlier than two years from the date of the agent's initial licensure.

(2) ``Approved subject'' or ``approved course'' means any educational presentation involving insurance fundamentals, insurance law, insurance policies and coverage, insurance needs, insurance risk management, in- surance agency management or other areas, which is offered in a class, seminar or other similar form of instruction, and which has been approved by the commissioner or the commissioner's designee under this section as expanding skills and knowledge obtained prior to initial licensure or de- veloping new and relevant skills and knowledge.

(3) ``C.E.C.'' means continuing education credit. One C.E.C. is at least 50 to 60 minutes of each clock hour of instruction or the C.E.C. value assigned by the commissioner or the commissioner's designee. The C.E.C. values shall be assigned in whole units. The commissioner or the commissioner's designee shall assign a C.E.C. value to each approved sub- ject on a case-by-case basis.

(4) ``Biennium'' means the period beginning on the effective date of this section and ending on March 31, 1991, and each two-year period thereafter. Effective January 1, 1997, for those agents who were born in an odd-numbered year, the term shall mean the period starting with the agent's biennial due date in 1997 and each two-year period thereafter, for those agents who were born in an even-numbered year, the term shall mean the period starting with the agent's biennial due date in 1998 and each two-year period thereafter.

(5) ``Inactive agent'' means a licensed agent who presents evidence satisfactory to the commissioner which demonstrates that such agent will not do any act toward transacting the business of insurance for not less than two but not more than six years from the date such evidence is received by the commissioner. Such additional periods may be granted by the commissioner upon further presentation of evidence satisfactory to the commissioner.

(b) (1) Every licensed agent who is an individual and holds a property or casualty qualification, or both, shall biennially obtain a minimum of twelve C.E.C.'s in courses certified as property and casualty which, on and after April 1, 1995, shall include at least one hour of instruction in insurance ethics. No more than three C.E.C.'s shall be in insurance agency management.

(2) Every licensed agent who is an individual and holds a life, accident and health, or variable contracts qualification, or any combination thereof, shall biennially complete twelve C.E.C.'s in courses certified as life, ac- cident and health, or variable contracts which, on and after April 1, 1995, shall include at least one hour of instruction in insurance ethics. No more than three C.E.C.'s shall be in insurance agency management.

(3) Every licensed agent who is an individual and holds a crop only qualification shall biennially obtain a minimum of two C.E.C.'s in courses certified as crop under the property and casualty category.

(4) Every licensed 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 under the property and casualty category.

(5) Every licensed agent who is an individual and holds a life insur- ance license solely for the purpose of selling life insurance or annuity products used to fund a prearranged funeral program and whose report of compliance required by subsection (f) of this section is accompanied by a certification from an officer of each insurance company represented that the agent transacted no other insurance business during the period covered by the report shall biennially obtain a minimum of two C.E.C.'s in courses certified as life or variable contracts under the life, accident and health, or variable contracts category.

(c) Individual agents who hold licenses with both a property or ca- sualty qualification, or both, and a life, accident and health, or variable contracts qualification, or any combination thereof, and who earn C.E.C.'s from courses certified by the commissioner or the commissioner's desig- nee as qualifying for credit in any class, may apply those C.E.C.'s toward either the property or casualty continuing education requirement or to the life, accident and health, or variable contracts continuing education requirement. However, a C.E.C. shall not be applied to satisfy both the biennial property or casualty requirement, or both, and the biennial re- quirement for life, accident and health, or variable contracts, or any com- bination thereof.

(d) An instructor of an approved subject shall be entitled to the same credit as a student completing the study.

(e) (1) An individual agent who has been licensed for more than one year shall, on or before the biennial due date, file a report with the com- missioner that such agent has met the continuing education requirements for the previous biennium ending on such biennial due date. Every in- dividual agent shall maintain a record of all courses attended together with a certificate of attendance for three years after the date of attendance the remainder of the biennium in which the courses were attended and the entire biennium immediately following.

(2) A newly licensed individual agent shall have the remainder of the biennium in which such agent is initially licensed plus the next biennium to comply with the C.E.C. requirements.

(3) (2) If the required report showing proof of continuing education completion is not received by the commissioner by the biennial due date, the individual agent's qualification and corresponding license or licenses shall be automatically suspended for a period of 90 calendar days or until such time as the agent satisfactorily demonstrates completion of the con- tinuing education requirement whichever is sooner and a penalty of $100 shall be assessed for each license suspended. If the required proof of continuing education completion and the monetary penalty is not fur- nished within 90 calendar days of the biennial due date, the individual agent's qualification and corresponding license or licenses shall be re- voked will expire.

(4) (3) An applicant for an individual agent's license who previously held a license which terminated expires on or after May 1, 1989, because of failure to meet continuing education requirements and who seeks to be relicensed shall pass the examination required for issuance of the new qualification and license and provide evidence that appropriate C.E.C.'s have been completed for the prior biennium.

(5) (4) An applicant for an individual agent's license who previously held a license which was terminated expired on or before April 30, 1989, for failure to meet the minimum educational requirements contained in K.S.A. 40-240b, and amendments thereto, as it existed prior to the passage of this act and who seeks to be relicensed shall pass the examination required for issuance of the new license.

(6) (5) Upon written application by an individual agent, the commis- sioner may, in cases involving medical hardship or military service, extend the time within which to fulfill the minimum continuing educational requirements for a period of not to exceed 180 days.

(7) (6) This section shall not apply to inactive agents as herein defined during the period of such inactivity. Upon return to active status or ex- piration of the maximum inactive period, the agent shall have the re- mainder of the current calendar year plus the next calendar year to com- ply with the continuing education requirement.

(f) (1) A course, program of study, or subject shall be submitted to and certified by the commissioner or the commissioner's designee in order to qualify for purposes of continuing education.

(2) The following information shall be furnished with each request for certification:

(A) Name of provider or sponsoring provider organization;

(B) course title;

(C) date course will be offered;

(D) location where course will be offered;

(E) outline of the course including a schedule of times when subjects will be presented;

(F) names and qualifications of instructors;

(G) number of C.E.C.'s requested; and

(H) a nonrefundable course fee in the amount of $50 per course or a nonrefundable fee in the amount of $250 per year for all courses, and a nonrefundable annual provider fee of $100.

(3) Upon receipt of such information, the commissioner or commis- sioner's designee shall grant or deny certification as an approved subject and indicate the number of C.E.C.'s that will be recognized for the sub- ject. Each approved subject or course shall be assigned by the commis- sioner or commissioner's designee to one or both of the following classes:

(A) Property and casualty insurance contracts or

(B) life insurance contracts (including annuity and variable contracts) and accident and health insurance contracts.

(4) A course or subject shall have a value of at least one C.E.C.

(5) A provider seeking approval of a course for continuing education credit shall provide for the issuance of a certificate of attendance to each person who attends a course offered by it. The certificate shall be signed by either the course instructor or the provider's authorized representa- tive. Providers shall also maintain a list of all persons who attend courses offered by them for continuing education credit for the remainder of the biennium in which the courses are offered and the entire biennium im- mediately following.

(6) A course may be approved after a program of study has been held if the required material is furnished within 60 days after the program was completed and prior to the biennial due date.

(7) (6) The commissioner may grant approval to specific programs of study that have appropriate merit, such as programs with broad national or regional recognition, notwithstanding the lack of a request for certifi- cation. The fee prescribed by subsection(f)(2)(H) of this section shall not apply to approvals granted hereunder.

(8) (7) The C.E.C. value assigned to any course, program of study or subject, other than a correspondence course or other course pursued by independent study, shall in no way be contingent upon passage or satis- factory completion of any examination given in connection with such course, program of study or subject.

(g) The commissioner shall provide, upon request, a list of all ap- proved continuing education courses currently available to the public.

(h) An individual agent who studies independently for an insurance examination subject independently, other than an agent's examination, approved by the commissioner or commissioner's designee, and who passes an independently monitored examination, shall receive credit for the C.E.C.'s assigned by the commissioner or commissioner's designee as recognition for the approved subject. No other credit shall be given for independent study.

(i) The commissioner may waive the continuing education require- ments imposed by this act for nonresident agents who have complied provide evidence of compliance with continuing education requirements imposed by their state of domicile.

Sec. 2. K.S.A. 40-241 is hereby amended to read as follows: 40-241. Any applicant or prospective applicant for an agent's license, if an indi- vidual, shall be given an examination by the commissioner or the com- missioner'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 subclas- sification of insurance which may be written. An examination fee pre- scribed 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.

The commissioner of insurance shall adopt rules and regulations with respect to the scope, subclassification, type and conduct of such exami- nation. 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 pre- pare for such examination. One or more rating organizations, advisory organizations or other associations may be designated by the commis- sioner 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 ap- proved 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 in- curs no expense or obligation, the provisions of K.S.A. 75-3738 to 75- 3744, inclusive, and amendments thereto, shall not apply. If the commis- sioner of insurance finds that the individual applicant is trustworthy, competent and has satisfactorily completed the examination, the com- missioner 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. 40-241i, 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 com- plete the examination, it may be retaken following another waiting period of not less than seven days from the date of the most recent attempt. Thereafter, the examination may be retaken following a waiting period of not less than six months from the date of the most recent attempt, except that following a waiting period of two years from the date of the appli- cant's last examination attempt an applicant will be treated as a new applicant and new examination and waiting periods shall apply. The cer- tification fee shall not be returned for any reason. The commissioner of insurance shall keep a permanent record of all agents' licenses issued and the insurance companies that the respective agents were certified to rep- resent under such licenses for a period of 10 years.

Sec. 3. K.S.A. 40-246b is hereby amended to read as follows: 40- 246b. The commissioner of insurance may issue to any duly licensed res- ident agent of this state, who has been licensed as a fire or casualty, or both, resident agent in this or any other state or combination thereof, for three consecutive years immediately prior to application for the type of license herein prescribed, upon proper application therefor, an annual excess coverage license to negotiate the types of contracts of fire insur- ance 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, or to place risks, or to effect insur- ance or reinsurance for persons or corporations other than such agent, with insurers not authorized to do business in this state. An agent, as defined in K.S.A. 40-241e, and amendments thereto, may place the kind or kinds of business specified in this act for which such agent is licensed pursuant to K.S.A. 40-240 and 40-241, and amendments thereto, with an insurer not authorized to do business in this state 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 annual license shall be issued, the applicant shall submit proper appli- cation therefor on a form prescribed by the commissioner, which appli- cation shall be accompanied by an annual a fee of $50. Such license shall be renewable each year on May 1, upon the payment of a $50 fee and certification of appropriate errors and omissions coverage as required by K.S.A. 40-246f, and amendments thereto. Excess lines agents licensed by the department on the effective date of this act shall be exempt from the experience requirement.

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 dif- ferential shall not be grounds for placing a particular risk in a nonadmitted carrier when an admitted carrier would accept such risk at a different rate. The licensed excess coverage agent must, prior to placing insurance with an insurer not authorized to do business in this state, obtain the written consent of the prospective named insured and provide such in- sured the following information in a form promulgated by the commis- sioner:

(a) A statement that the coverage will be obtained from an insurer not authorized to do business in this state;

(b) a statement that the insurer's name appears on the list of com- panies maintained by the commissioner pursuant to K.S.A. 40-246e, and amendments thereto;

(c) 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;

(d) a statement that the protection of the guaranty associations is not afforded to policyholders of the insurer; and

(e) a statement or notice with respect to any other information deemed necessary by the commissioner pertinent to insuring with an insurer not authorized to do business in this state.

In the event the insured desires that coverage be bound with an insurer not admitted to this state 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 de- sires that coverage be placed with an insurer not admitted to this state within 30 days after binding coverage.

When business comes to a licensed excess lines agent for placement with an insurer not authorized to do business in this state 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 insurer not authorized to do business in this state. Each excess lines agent shall keep a separate record book in such agent's office showing the trans- actions of fire and casualty insurance and reinsurance placed in companies not authorized to do business in this state, the amount of gross premiums charged thereon, the insurer in which placed, the date, term and number of the policy, the location and nature of the risk, the name of the assured 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 com- missioner may revoke or suspend any license issued pursuant to the pro- visions of this act in the same manner and for the same reasons prescribed by K.S.A. 40-242, and amendments thereto.

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 insurer not authorized to do business 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.

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 com- plied 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.

Sec. 4. K.S.A. 40-241 and 40-246b and K.S.A. 1995 Supp. 40-240f are hereby repealed.

Sec. 5. This act shall take effect and be in force from and after its publication in the statute book.

Approved March 22, 1996.