Brief ⁽¹⁾

SB 651, as amended, concerns reciprocal insurance companies. Generally, the bill updates Kansas law by incorporating the following new provisions that:

• add a definition section to the current law;



• prescribe the manner in which the board of directors of a domestic reciprocal shall be selected and its financial supervisory responsibilities,



• authorize the execution of a subscribers' agreement and power of attorney and sets out the contents of the agreement and power of attorney;



• reciprocals may return any savings or credits to its subscribers' accounts; and



• reciprocals shall not issue assessable insurance policies.

Further, the bill amends existing law: to modernize the language of the law; to use the newly defined terms; to clarify what information the attorney-in-fact must file with the Insurance Commissioner; to change the holder of the certificate of authority to do business in Kansas from the attorney-in-fact to the reciprocal; to apply to reciprocals the act setting out unfair methods of competition and unfair or deceptive acts or practices applicable to the business of insurance; and to change the required majority for conversion from an insurance company to a reciprocal from 75 percent to two-thirds of the shares or policies eligible to vote.

Background

SB 651 was requested by the Insurance Commissioner whose representative explained that the bill updates and clarifies Kansas law regulating reciprocal insurance. The bill was supported by the Kansas Association of Property and Casualty Insurance Companies, Federated Rural Electric Insurance, the Armed Forces Insurance Exchange, and the Mutual Aid Association of Abilene.

The fiscal note prepared by the Division of the Budget indicates passage of the bill will have no fiscal impact.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/bill_search.html