Session of 1998
Substitute for SENATE BILL No. 494
By Committee on Ways and Means
            9             AN ACT concerning insurance; insurance department service regulation
10             fund; amending K.S.A. 1997 Supp. 40-112 and repealing the existing
11             section; also repealing K.S.A. 1997 Supp. 40-112a.
13       Be it enacted by the Legislature of the State of Kansas:
14           Section 1. K.S.A. 1997 Supp. 40-112 is hereby amended to read as
15       follows: 40-112. (a) For the purpose of maintaining the insurance de-
16       partment and the payment of expenses incident thereto, there is hereby
17       established the insurance department service regulation fund in the state
18       treasury which shall be administered by the commissioner of insurance.
19       All expenditures from the insurance department service regulation fund
20       shall be made in accordance with appropriation acts upon warrants of the
21       director of accounts and reports issued pursuant to vouchers approved
22       by the commissioner of insurance or by a person or persons designated
23       by the commissioner.
24           (b) On and after the effective date of this act, all fees received by the
25       commissioner of insurance pursuant to any statute and the portion of taxes
26       received pursuant to K.S.A. 40-252 and amendments thereto, which is
27       certified by the commissioner of insurance to be necessary for the pur-
28       poses of the insurance department service regulation fund and which,
29       together with the total amount of fees deposited to the credit of the
30       insurance department service regulation fund pursuant to this subsection,
31       does not total more than $4,800,000 for any fiscal year, shall be remitted
32       to the state treasurer for deposit in the state treasury and credited to the
33       insurance department service regulation fund. The total amount credited
34       to the insurance department service regulation fund pursuant to this sub-
35       section for any fiscal year shall not exceed $4,800,000.
36           (c) Except as otherwise provided by this section, the commissioner
37       of insurance shall make an annual assessment for the fiscal year ending
38       June 30, 1993, and for each fiscal year thereafter, on each group of affil-
39       iated insurers whose certificates of authority to do business in this state
40       are in good standing at the time of the assessment. The total amount of
41       all such assessments for a fiscal year shall be equal to the amount sufficient
42       which, when combined with the total amount to be credited to the in-
43       surance department service regulation fund pursuant to subsection (b) is

Sub. SB 494


  1       equal to the amount approved by the legislature to fund the insurance
  2       company regulation program. With respect to each group of affiliated
  3       insurers, such assessment shall be in proportion to the amount of total
  4       assets of the group of affiliated insurers as reported to the commissioner
  5       of insurance pursuant to K.S.A. 40-225 and amendments thereto for the
  6       immediately preceding calendar year, shall not be less than $500 and shall
  7       not be more than the amount equal to .0000015 of the amount of total
  8       assets of the group of affiliated insurers or $25,000, whichever is less. The
  9       total assessment for any fiscal year after the fiscal year ending June 30,
10       1993, shall not increase by any amount greater than 15% of the total
11       budget approved by the legislature to fund the insurance company reg-
12       ulation program for the fiscal year immediately preceding the fiscal year
13       for which the assessment is made. In the event the total amount of the
14       assessment would be less than the aggregate amount resulting by assess-
15       ing the $500 minimum on each insurer, the commissioner may establish
16       a lower minimum to be assessed equally on each insurer.
17           (d) Assessments payable under this section shall be past due if not
18       paid to the insurance department within 45 days of the billing date of
19       such assessment. A penalty equal to 10% of the amount assessed shall be
20       imposed upon any past due payment and the total amount of the assess-
21       ment and penalty shall bear interest at the rate of 1.5% per month or any
22       portion thereof.
23           (e) On or after July 1, 1992, when When there exists in the insurance
24       department service regulation fund a deficiency which would render such
25       fund temporarily insufficient during any fiscal year to meet the insurance
26       department's funding requirements, the commissioner of insurance shall
27       certify the amount of the insufficiency. Upon receipt of any such certi-
28       fication, the director of accounts and reports shall transfer an amount of
29       moneys equal to the amount so certified from the state general fund to
30       the insurance department service regulation fund. On June 30 of any fiscal
31       year during which an amount or amounts are certified and transferred
32       under this subsection, the director of accounts and reports shall provide
33       for the repayment of the amounts so transferred and shall transfer the
34       amount equal to the total of all such amounts transferred during the fiscal
35       year from the insurance department service regulation fund to the state
36       general fund.
37           (f) Any unexpended balance in the insurance department service reg-
38       ulation fund at the close of a fiscal year shall remain credited to the
39       insurance department service regulation fund for use in the succeeding
40       fiscal year and shall be used to reduce future assessments or to accom-
41       modate cash flow demands on the fund.
42           (g) The commissioner of insurance shall exempt the assessment of
43       any insurer which, as of December 31 of the calendar year preceding the

Sub. SB 494


  1       assessment, has a surplus of less than two times the minimum amount of
  2       surplus required for a certificate of authority on and after May 1, 1994,
  3       and which is subject to the premium tax liability imposed on insurers
  4       organized under the laws of this state. The commissioner of insurance
  5       may also exempt or defer, in whole or in part, the assessment of any other
  6       insurer if, in the opinion of the commissioner of insurance, immediate
  7       payment of the total assessment would be detrimental to the solvency of
  8       the insurer.
  9           (h) As used in this section:
10           (1) ``Affiliates'' or ``affiliated'' has the meaning ascribed by K.S.A.
11       40-3302 and amendments thereto;
12           (2) ``group'' or ``group of affiliated insurers'' means the affiliated in-
13       surers of a group and also includes an individual, unaffiliated insurer; and
14           (3) ``insurer'' means any insurance company, as defined by K.S.A. 40-
15       201 and amendments thereto, any fraternal benefit society, as defined by
16       K.S.A. 40-738 and amendments thereto, any reciprocal or interinsurance
17       exchange under K.S.A. 40-1601 through 40-1614 and amendments
18       thereto, any mutual insurance company organized to provide health care
19       provider liability insurance under K.S.A. 40-12a01 through 40-12a09 and
20       amendments thereto, any nonprofit dental service corporation under
21       K.S.A. 40-19a01 through 40-19a14 and amendments thereto, any non-
22       profit medical and hospital service corporation under K.S.A. 40-19c01
23       through 40-19c11 and amendments thereto, any health maintenance or-
24       ganization, as defined by K.S.A. 40-3202 and amendments thereto, or any
25       captive insurance company, as defined by K.S.A. 40-4301 and amend-
26       ments thereto, which is authorized to do business in Kansas.
27           Sec. 2. K.S.A. 1997 Supp. 40-112 and 40-112a are hereby repealed.
28           Sec. 3. This act shall take effect and be in force from and after its
29       publication in the statute book.