SB 226--
Session of 1997
By Committee on Financial Institutions and Insurance

9 AN ACT concerning insurance; reciprocity under certain conditions of 10 certain amounts; amending K.S.A. 40-2702 and repealing the existing 11 section. 12 13 Be it enacted by the Legislature of the State of Kansas: 14 Section 1. K.S.A. 40-2702 is hereby amended to read as follows: 40- 15 2702. (a) As used in this act, unless the context otherwise requires, the 16 term ``insurer'' means and includes all corporations, companies, associa- 17 tions, societies, fraternal benefit societies, mutual nonprofit hospital serv- 18 ice and nonprofit medical service companies, partnerships and persons 19 engaged as principals in the business of insurance of the kinds enumer- 20 ated in articles 4, 5, 6, 7, 11, 18, 19, 19a, 19b, 19c, 22, 32 and 38 of 21 chapter 40 of the Kansas Statutes Annotated, and any amendments 22 thereto, insofar as the business of insurance of the kinds enumerated in 23 such articles relate to life and accident or sickness. Whenever in this 24 section there is reference to an act effected or committed by mail, the 25 venue of such act shall be at the point where the matter transmitted by 26 mail is delivered and takes effect. 27 It shall be unlawful for any insurer to transact insurance business in 28 this state, as set forth in subsection (b) of this section, without a certificate 29 of authority from the commissioner of insurance. This section shall not 30 apply to: 31 (1) The lawful transaction of insurance procured by agents under the 32 authority of K.S.A. 40-246b, 40-246c and 40-246d, and amendments 33 thereto, relating to accident and sickness insurance; 34 (2) contracts of reinsurance issued by an insurer not organized under 35 the laws of this state; 36 (3) transactions in this state involving a policy lawfully solicited, writ- 37 ten and delivered outside of this state, covering only subjects of insurance 38 not resident in this state at the time of issuance and which transactions 39 are subsequent to the issuance of such policy; 40 (4) attorneys acting in the ordinary relation of attorney and client in 41 the adjustment of claims or losses; 42 (5) transactions in this state involving group life and group sickness 43 and accident or blanket sickness and accident insurance or group annui- SB 226

 1  ties, where the master policy of such groups was lawfully issued and de-
 2  livered in and pursuant to the laws of a state in which the insurer was
 3  authorized to do an insurance business to a group organized for purposes
 4  other than the procurement of insurance and where the policyholder is
 5  domiciled or otherwise has a bona fide residence;
 6    (6)  transactions in this state involving any policy of life or accident
 7  and health insurance or annuity contract issued prior to the effective date
 8  of this act;
 9    (7)  contracts of insurance written by certain lodges, societies, persons
10  and associations specified in K.S.A. 40-202, and amendments thereto, and
11  organizations preempted from state jurisdiction as a result of compliance
12  with both the employees retirement income security act of 1974, as
13  amended, including all bonding provisions, and paragraph (9) of subsec-
14  tion (c) of section 501 of the internal revenue code; and
15    (8)  any life insurance company which is not subject to guaranty fund
16  assessments by the insurance company's state of domicile organized and
17  operated, without profit to any private shareholder or individual, exclu-
18  sively for the purpose of aiding and strengthening educational institutions,
19  organized and operated without profit to any private shareholder or in-
20  dividual, by issuing insurance and annuity contracts directly from the
21  home office of the company, without insurance agents or insurance rep-
22  resentatives in this state, only to or for the benefit of such institutions
23  and individuals engaged in the services of such institutions, but this ex-
24  emption shall be conditioned upon any such company complying with the
25  following requirements:
26    (i)  Payment of an annual registration fee of $500;
27    (ii)  filing a copy of the form of any policy or contract issued to Kansas
28  residents with the commissioner of insurance;
29    (iii)  filing a copy of its annual statement prepared pursuant to the
30  laws of its state of domicile, as well as such other financial material as
31  may be requested, with the commissioner of insurance; and
32    (iv)  providing, in such form as may be prescribed by the commis-
33  sioner of insurance, for the appointment of the commissioner of insurance
34  as its true and lawful attorney upon whom may be served all lawful process
35  in any action or proceeding against such company arising out of any policy
36  or contract it has issued to, or which is currently held by, a Kansas citizen
37  and process so served against such company shall have the same force
38  and validity as if served upon the company.
39    (b)  Any of the following acts in this state effected by mail or otherwise
40  by or on behalf of an unauthorized insurer is deemed to constitute the
41  transaction of an insurance business in this state:
42    (1)  The making of or proposing to make, as an insurer, an insurance
43  contract;
SB 226

 1    (2)  the taking or receiving of any application for insurance;
 2    (3)  the receiving or collection of any premium, commission, mem-
 3  bership fees, assessments, dues or other consideration for any insurance
 4  or any part thereof;
 5    (4)  the issuance or delivery of contracts of insurance to residents of
 6  this state or to persons authorized to do business in this state;
 7    (5)  directly or indirectly acting as an agent for or otherwise repre-
 8  senting or aiding on behalf of another any person or insurer in the solic-
 9  itation, negotiation, procurement or effectuation of insurance or renewals
10  thereof or in the dissemination of information as to coverage or rates, or
11  forwarding of applications or delivery of policies or contracts or investi-
12  gation or adjustment of claims or losses or in the transaction of matters
13  subsequent to effectuation of the contract and rising out of it or in any
14  other manner representing or assisting a person or insurer in the trans-
15  action of insurance with respect to subjects of insurance resident in this
16  state. Nothing herein shall be construed to prohibit full-time salaried
17  employees of a corporate insured from acting in the capacity of an insur-
18  ance manager or buyer in placing insurance in behalf of such employer;
19    (6)  the transaction of any kind of insurance business specifically rec-
20  ognized as transacting an insurance business within the meaning of the
21  statutes relating to insurance; or
22    (7)  the transacting of or proposing to transact any insurance business,
23  in substance equivalent to any of the foregoing, in a manner designed to
24  evade the provisions of this act.
25    (c) (1)  The failure of an insurer transacting insurance business in this
26  state to obtain a certificate of authority from the commissioner of insur-
27  ance shall not impair the validity of any act or contract of such insurer
28  and shall not prevent such insurer from defending any action at law or
29  suit in equity in any court of this state, but no insurer transacting insur-
30  ance business in this state without a certificate of authority shall be per-
31  mitted to maintain an action in any court of this state to enforce any right,
32  claim or demand arising out of the transaction of such business until such
33  insurer shall have obtained a certificate of authority.
34    (2)  In the event of failure of any such unauthorized insurer to pay
35  any claim or loss within the provisions of such insurance contract, any
36  person who assisted or in any manner aided, directly or indirectly, in the
37  procurement of such insurance contract shall be liable to the insured for
38  the full amount of the claim or loss in the manner provided by the pro-
39  visions of such insurance contract.
40    Sec. 2.  K.S.A. 40-2702 is hereby repealed.
41    Sec. 3.  This act shall take effect and be in force from and after its
42  publication in the statute book.