SB 281--Am.
As Amended by Senate Committee
Session of 1997
By Committee on Financial Institutions and Insurance

10 AN ACT relating to certain deposits with commissioner of insurance or 11 a financial institution on behalf of the commissioner; amending K.S.A. 12 1996 Supp. 40-229a and repealing the existing section. 13 14 Be it enacted by the Legislature of the State of Kansas: 15 Section 1. K.S.A. 1996 Supp. 40-229a is hereby amended to read as 16 follows: 40-229a. (a) All cash, securities, real estate deeds, mortgages or 17 other assets deposited with the commissioner of insurance pursuant to 18 the provisions of the insurance code of the state of Kansas shall be de- 19 posited with any Kansas financial institution acceptable to the commis- 20 sioner through which a custodial or controlled account, a joint custody 21 receipt arrangement or any combination of these or other measures that 22 are acceptable to the commissioner is used. As used in this section, ``fi- 23 nancial institution'' means any Kansas domiciled bank acceptable to the 24 commissioner, which has its principal place of business in Kansas. As used 25 in this section, ``commissioner'' means the commissioner of insurance. All 26 such deposits shall be held by such financial institution on behalf of the 27 commissioner as in trust for the use and benefit of such company and 28 such company's policyholders and creditors. Such assets shall be released 29 from such deposits only upon written approval of the commissioner. All 30 income from deposits shall belong to the depositing organization and shall 31 be paid to it as it becomes available. The commissioner, upon written 32 approval, may direct the financial institution to permit exchange of se- 33 curities or assets upon deposit of specified substituted securities or assets. 34 All forms for deposit, withdrawal or exchange shall be prescribed, pre- 35 pared and furnished by the commissioner and no facsimile signatures shall 36 be used or recognized. The commissioner or assistant commissioner of 37 insurance or a duly authorized insurance department employee author- 38 ized by the commissioner may at any time inspect the securities on deposit 39 in any such financial institution. Nothing in this act shall be construed to 40 hold the state of Kansas, the commissioner, assistant commissioner or 41 authorized employee liable either personally or officially for any default 42 of such financial institution. 43 Real estate shall be deposited with the commissioner by the depositing SB 281--Am.

 1  organization executing a deed or assignment conveying title thereto to
 2  the commissioner, in trust for the use and benefit of such company. Such
 3  deeds or assignment shall be recorded in the office of the register of deeds
 4  of the county in which such real estate is situated. When the depositing
 5  organization is authorized to withdraw real estate from deposit, the com-
 6  missioner shall execute deeds to such organization or such other persons,
 7  companies or corporations as directed by such organization shall direct.
 8  The costs of registering such deeds shall be borne paid by the depositing
 9  organization.
10    All deposits made with the commissioner shall be audited by the com-
11  missioner and the state treasurer not less frequently than once each three
12  years. The commissioner may accept an audit performed by another gov-
13  ernmental agency acceptable to the commissioner, in lieu of this audit
14  requirement.
15    (b)  Assets, except real estate assets, deposited pursuant to this section
16  shall be held by the custodian on behalf of the commissioner as in trust
17  for the use and benefit of the depositing organization. Such assets shall
18  remain the specific property of the organization and shall not be subject
19  to the claim of any third party against the custodian.
20    (c)  The custodian is authorized to redeposit such assets with a clear-
21  ing corporation as defined in K.S.A. 84-8-102 and amendments thereto,
22  if such clearing corporation is domiciled in the United States. The cus-
23  todian is authorized to hold such assets through the federal reserve bank
24  book-entry system.
25    (d)  The commissioner shall by adopt rules and regulations to establish
26  requirements relating to deposits under this subsection section appropri-
27  ate to assure the security and safety of such deposits, including but not
28  limited to the following:
29    (1)  Capital and surplus of the custodian;
30    (2)  title in which deposited assets are held;
31    (3)  records to be kept by the custodian and the commissioner's access
32  thereto;
33    (4)  periodic reports by the custodian to the commissioner;
34    (5)  responsibility of the custodian to indemnify the company depos-
35  itor for loss of deposited assets;
36    (6)  withdrawal or exchange of deposited assets; and
37    (7)  authority of the commissioner to terminate the deposit if the con-
38  dition of the custodian should threaten the security of the deposited as-
39  sets.
40    (e)  As used in this section:
41    (1)  ``Commissioner'' means the commissioner of insurance; and
42    (2)  ``financial institution'' means banks and savings and loan institu-
43  tions incorporated under the laws of this state, and banks, savings and
SB 281--Am.

 1  loan associations and savings banks organized under the laws of the
 2  United States or another state which has have main or branch offices in
 3  this state. ``Main office'' and ``branch'' shall have the meaning as-
 4  cribed thereto in subsections (f) and (g) of section 1 of 1997 Sub-
 5  stitute for Senate Bill No. 86.
 6    Sec. 2.  K.S.A. 1996 Supp. 40-229a is hereby repealed.
 7    Sec. 3.  This act shall take effect and be in force from and after its
 8  publication in the statute book.