Session of 1997
SENATE BILL No. 303
By Committee on Ways and Means
AN ACT concerning health care provider liability insurance; discontinu-
ing making of assessments; amending K.S.A. 40-12a02, 40-12a04, 40-
12a05, 40-12a06 and 40-12a08 and repealing the existing sections.
Be it enacted by the Legislature of the State of Kansas:
Section 1. K.S.A. 40-12a02 is hereby amended to read as follows: 40-
12a02. (a) Except as otherwise provided in this act, the provisions of
article 12 of chapter 40 of the Kansas Statutes Annotated shall control
the formation and operation of companies organized under this act.
(b) Any association of health care providers domiciled within the state
of Kansas which has been in existence for three years or more, may, as
provided in this act, form an insurance company for the purpose of issuing
contracts of insurance providing liability insurance for health care provid-
ers which are members of the association, the member's employees, di-
rectors, professional associations and affiliates
upon the assessment plan.
(c) Any two or more such associations of health care providers, may
form an insurance company for the purpose of issuing contracts of insur-
ance providing liability insurance for such association's respective mem-
bers, the member's employees, directors, professional associations and
affiliates upon the assessment plan.
Sec. 2. K.S.A. 40-12a04 is hereby amended to read as follows: 40-
12a04. The persons proposing to form any such company shall subscribe,
acknowledge and file with the commissioner articles of incorporation
(a) The name, which shall contain the word ``mutual,'' the names of
persons initially associated, the method by which other persons may be
admitted to the company as members, the purposes for which the com-
pany is organized , the amount of the initial assessment which has been
paid into the company, the method of assessment thereafter and the lo-
cation of such company's principal or home office, which shall be within
this state. The articles of incorporation shall provide for bylaws and for
the amendment of the articles of incorporation and the bylaws.
(b) The names and addresses of those persons composing the board.
(c) The names and addresses of the incorporators.
Sec. 3. K.S.A. 40-12a05 is hereby amended to read as follows: 40-
1 12a05. The bylaws shall provide for a governing body for the company,
2 the manner of election thereof, and the specific kinds of insurance or
3 indemnification which will be offered
and may provide that assessments,
4 in such amounts as determined by the board to be fair and equitable,
5 may be made. The bylaws may provide for the transfer of risks to other
6 insurance companies or for reinsurance.
7 Sec. 4. K.S.A. 40-12a06 is hereby amended to read as follows: 40-
8 12a06. (a) Any company organized under the provisions of this act shall
9 be empowered to make contracts of insurance as provided herein and to
10 cede to any insurer or accept from any insurer reinsurance on any portion
11 of any such risk for the following kinds of insurance:
12 (1) Against loss or liability arising out of the performance of profes-
13 sional services rendered or which should have been rendered by an in-
15 (2) Against loss or liability to persons or property for which the in-
16 sured may be liable or have assumed liability, including but not limited
17 to liability of any person who is a director or officer of a health care
18 provider arising out of acts performed or which should have been per-
19 formed by such director or officer.
20 (3) Against loss or liability to persons or property resulting from the
21 ownership, maintenance or use of any ambulance, aircraft or other vehicle
22 used by an insured in connection with rendering professional services.
23 (b) Any company organized under the provisions of this act shall be
24 empowered to contract with the governing board of any plan created
25 pursuant to K.S.A. 40-3413 and amendments thereto to issue policies to
26 any applicant for liability insurance under the provisions of any such plan,
27 to service and manage such policies and in all respects to administer and
28 carry out the functions of any plan as the same may be authorized by the
29 contract. Policies may be issued to persons and corporations under the
30 provisions of such contract even though the insured is not a member of
31 the association of health care providers forming the insurance company.
32 No provision of this act or of article 12 of chapter 40 of the Kansas Statutes
33 Annotated regarding the issuance of assessable policies, voting rights of
34 members or the payment of dividends shall apply to policies issued under
35 this subsection.
36 Sec. 5. K.S.A. 40-12a08 is hereby amended to read as follows: 40-
37 12a08. No insured shall be liable for any amounts other than the annual
38 premium and all assessments as provided in the articles of incorporation
39 or bylaws. The business of the company shall be conducted so as to pre-
40 clude any distribution of income, profit or property of the company to
41 the individual members thereof except in payment of dividends, debts,
42 claims or indemnities or upon the final dissolution of the company.
43 Sec. 6. K.S.A. 40-12a02, 40-12a04, 40-12a05, 40-12a06 and 40-12a08
1 are hereby repealed.
2 Sec. 7. This act shall take effect and be in force from and after its
3 publication in the statute book.