CHAPTER 86
SENATE BILL No. 654
An Act concerning municipal funded insurance pools;
amending K.S.A. 12-2621
and K.S.A. 2001 Supp. 44-585 and repealing the existing
sections.
Be it enacted by the Legislature of the State of Kansas:
Section 1. K.S.A. 12-2621 is hereby
amended to read as follows: 12-
2621. (a) With respect to the categories of coverage described in
subpar-
agraphs (d)(1) through (4) of K.S.A. 12-2618, and amendments
thereto,
premium contributions to the pool shall be based upon appropriate
man-
ual classification and rates, plus or minus applicable experience
credits or
debits, and minus any advance discount approved by the trustees,
not to
exceed 25% of manual premium. The pool shall use rules,
classifications
and rates as promulgated by an approved rating organization for
workers
compensation if the pool has been in operation for less than five
years.
Such rates shall either be the rates
effective June 1, 1994, or the pro-
spective loss costs, as defined authorized
in K.S.A. 40-1113c 40-955, and
amendments thereto, plus expenses necessary to administer the pool.
For
purposes of subsection (b), the prospective loss costs shall be
presumed
to be the 70% required to be deposited in the claims fund. If the
pool
has been in operation for more than five years, the board of
trustees may
determine such rates and discounts as approved by the
commissioner.
Premium contributions to the pool for all other lines of insurance
shall
be based on rates filed by a licensed rating organization or on
rates of
certain companies filing rates with the commissioner and approved
by
the commissioner for the pool. In lieu of the foregoing, the board
of
trustees may determine such classification, rates and discounts as
ap-
proved by the commissioner.
Premium contributions to any pool providing
life insurance or any pool
providing group sickness and accident insurance as described in
K.S.A.
12-2617, and amendments thereto, shall be based on sound actuarial
prin-
ciples.
(b) An amount equal to at least 70% of
the annual premium shall be
maintained in a designated depository for the purpose of paying
claims
in a claims fund account. If so approved by the commissioner of
insurance,
the annual premium to be designated to such depository may be
deter-
mined to be the net amount of premium after all or a portion of
the specific
and aggregate excess insurance premium costs have been paid.
This shall
be called the claims fund account. If the pool has been in
operation for
more than five years the commissioner may authorize allocation of a
dif-
ferent amount to the claims fund account, if solvency of the pool
would
not be endangered. The remaining annual premium shall be placed
into
a designated depository for the payment of taxes, fees and
administrative
and other operational costs in an administrative fund account.
(c) Any moneys for a fund year in excess
of the amount necessary to
fulfill all obligations of the pool for that fund year, including
any obligation
to retain adequate surplus funds, as defined by subsection (h) of
K.S.A.
12-2618, and amendments thereto, in lieu of specific and aggregate
excess
insurance, may be declared to be refundable by the trustees not
less than
12 months after the end of the fund year. Any such refund shall be
paid
only to those members who remained participants in the pool for an
entire
year. Payment of previously earned refunds shall not be contingent
on
continued membership in the pool.
Sec. 2. K.S.A. 2001 Supp. 44-585 is
hereby amended to read as fol-
lows: 44-585. (a) Premium contributions to the pool shall be based
upon
appropriate manual classification and rates, plus or minus
applicable ex-
perience credits or debits, and minus any advance discount approved
by
the trustees, not to exceed 15% of manual premium. The pool must
use
rules, classifications and rates as promulgated by an approved
rating or-
ganization and must report premium and loss data to a rating
organization.
Such rates shall either be the rates
effective June 1, 1994, or the pro-
spective loss costs, as defined authorized
in K.S.A. 40-955, and amend-
ments thereto, plus expenses necessary to administer the pool. For
pur-
poses of subsection (b) the prospective loss costs shall be
presumed to be
the 70% required to be deposited in the claims fund. If the pool
has been
in operation for more than five years, the board of trustees may
determine
such rates as approved by the commissioner.
(b) At least 70% of the annual premium
shall be placed into a des-
ignated depository for the sole purpose of paying claims. If so
approved
by the commissioner of insurance, the annual premium to be
designated
to such depository may be determined to be the net amount of
premium
after all or a portion of the specific and aggregate excess
insurance pre-
mium costs have been paid. This shall be called the claims fund
account.
The remaining annual premium shall be placed into a designated
depos-
itory for the payment of taxes, fees and administrative costs. This
shall be
called the administrative fund account. If a pool has been in
operation
for more than five years, the commissioner may authorize allocation
of a
different amount to the claims fund account, if solvency of the
pool would
not be endangered.
(c) At the end of a fund year or any
time thereafter, the trustees may
declare a refund of any surplus moneys for the fund year in excess
of the
amount necessary to fulfill all obligations under the workers
compensa-
tion act for that fund year. Such refund shall not be distributed,
in whole
or in part, less than 12 months after the end of the fund year for
which
the refund was declared. After receipt from the pool of the notice
of
declared refund and satisfactory evidence that sufficient funds
remain on
deposit for the payment of all outstanding claims and expenses,
including
incurred but not reported claims, the commissioner shall approve
distri-
bution of the declared refund. Any such refund shall be paid only
to those
employers who remained participants in the pool for an entire year.
Pay-
ment of previously earned refunds shall not be contingent on
continued
membership in the pool.
Sec. 3. K.S.A. 12-2621 and K.S.A. 2001 Supp. 44-585 are
hereby
repealed.
Sec. 4. This act shall take effect and be in force
from and after its
publication in the statute book.
Approved April 23, 2002.
__________