Brief ⁽¹⁾

Sub. for SB 123, as amended, enacts the Uniform Insurance Agents Licensing Act. (To the extent the act incorporates existing Kansas law relative to insurance agents and brokers, except for excess and surplus line agents and brokers, and repeals those sections no longer necessary, they are not summarized in this Supplemental Note.)

The uniform provisions of the bill include:

• Incorporating into the definition of terms section of the bill, definitions of "solicit," "negotiate," and "sell" which are necessary for uniform or reciprocal application across the states adopting the uniform or model act.
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• Moving the definition of "broker" into the agent's section of the statutes and repealing the brokers licensing act.
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• Making consistent for residents and nonresidents the procedure for obtaining a license as an agent.
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• Increasing from four to six the areas in which an agent may receive qualifications for a license, adding variable life and variable annuity products and personal lines to life, accident and health or sickness, property, and casualty lines of insurance.
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• Removing the requirement that an applicant for licensure have a high school diploma or GED and inserting a requirement that the applicant be at least 18 years of age.
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• Creating uniform provisions for a nonresident agent to be licensed in Kansas.
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• Establishing specific grounds for which the Commissioner may suspend, revoke, or refuse to renew any license issued by the Commissioner.
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• Reiterating current law that prohibits an insurance company or agent from sharing a fee with a nonlicensed person, except that an agent may pay or assign a commission or fee to another agency or financial holding company which does not sell, solicit, or negotiate insurance in this state.
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• Establishing a uniform process for companies to appoint agents in this state and other states.
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• Codifying the process for an insurer to follow when terminating a business relationship with an insurance agent.
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In addition to adopting uniform provisions, the bill also makes other amendments, including:

• Reducing from six years to four the period of time an agent may be inactive without being re-licensed. (If inactive for four or more years, the agent would need to be reexamined.)
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• Requires completion of continuing education requirements before reactivation of an inactive license.
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• Eliminates the brokers license.
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House Committee amendments are technical, deleting a duplicate provision and renumbering the subsequent sections accordingly.

Background

SB 123, as introduced, was recommended by the Insurance Commissioner whose representative explained that part of the 1999 federal Gramm-Leach-Bliley Act requires that, within a three-year period of time, states must develop procedures, either for reciprocity or uniformity, for the licensure of insurance producers (agents). Absent at least 29 states developing such reciprocal or uniform laws by November 12, 2002, the National Association of Registered Agents and Brokers would be established and that entity would take over the licensing functions now residing with the states.

Sub. for SB 123 enacts in Kansas a uniform, model act recommended to all the state by the National Association of Insurance Commissioners.

The Senate Committee amendments for SB 123 as drafted include renaming the act from the Uniform Insurance Producers Licensing Act to the Uniform Insurance Agents Licensing Act and strikes most references to "producers" and inserts "agents." As a consequence of these changes, the Committee recommends Sub. for SB 123.

The bill is supported by the Kansas Association of Insurance and Financial Advisors and, as amended, by the Kansas Association of Insurance Agents. As drafted, the National Association of Independent Insurers opposed the bill.

The fiscal note provided by the Division of the Budget indicates passage of the bill would have a fiscal impact of $2,465 on the Department of Insurance.

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/fulltext.cgi