Session of 1999
By Committee on Taxation

  9             AN  ACT concerning the insurance department; insurance department
10             service regulation fund; concerning employees of the department of
11             insurance; salaries; amending K.S.A. 1998 Supp. 40-110 and 40-112
12             and repealing the existing sections; also repealing K.S.A. 1998 Supp.
13             40-112a.
15       Be it enacted by the Legislature of the State of Kansas:
16             Section  1. K.S.A. 1998 Supp. 40-110 is hereby amended to read as
17       follows: 40-110. The commissioner of insurance is hereby authorized to
18       appoint an assistant commissioner of insurance, actuaries who are mem-
19       bers in good standing of either the American academy of actuaries or the
20       casualty actuarial society, two special attorneys who shall have been reg-
21       ularly admitted to practice, an executive secretary, policy examiners, two
22       field representatives, and a secretary to the commissioner. Such appoint-
23       ees shall each receive an annual salary to be determined by the commis-
24       sioner of insurance, within the limits of available appropriations but in no
25       case shall any such annual salary exceed the salary of the commissioner
26       of insurance as established by law, except that the commissioner of in-
27       surance may appoint two actuaries, who are members in good standing
28       of either the American Academy of Actuaries or the Casualty Actuarial
29       Society or the Society of Actuaries, whose annual salaries may exceed the
30       annual salary of the commissioner. The commissioner is also authorized
31       to appoint, within the provisions of the civil service law, and available
32       appropriations, other employees as necessary to administer the provisions
33       of this act. The field representatives authorized by this section may be
34       empowered to conduct inquiries, investigations or to receive complaints.
35       Such field representatives shall not be empowered to make, or direct to
36       be made, an examination of the affairs and financial condition of any
37       insurance company in the process of organization, or applying for admis-
38       sion or doing business in this state.
39             The appointees authorized by this section shall take the proper official
40       oath and shall be in no way interested, except as policyholders, in any
41       insurance company. In the absence of the commissioner of insurance the
42       assistant commissioner shall perform the duties of the commissioner of
43       insurance, but shall in all cases execute papers in the name of the com-
44       missioner of insurance, as assistant. The commissioner of insurance shall
45       be responsible for all acts of an official nature done and performed by
46       the commissioner's assistant or any person employed in such office. All
47       the appointees authorized by this section shall hold their office at the will
48       and pleasure of the commissioner of insurance.
49             Sec.  2. K.S.A. 1998 Supp. 40-112 is hereby amended to read as fol-
50       lows: 40-112. (a) For the purpose of maintaining the insurance depart-
51       ment and the payment of expenses incident thereto, there is hereby es-
52       tablished the insurance department service regulation fund in the state
53       treasury which shall be administered by the commissioner of insurance.
54       All expenditures from the insurance department service regulation fund
55       shall be made in accordance with appropriation acts upon warrants of the
56       director of accounts and reports issued pursuant to vouchers approved
57       by the commissioner of insurance or by a person or persons designated
58       by the commissioner.
59             (b) On and after the effective date of this act, all fees received by the
60       commissioner of insurance pursuant to any statute and 1% of taxes re-
61       ceived pursuant to K.S.A. 40-252 and amendments thereto shall be re-
62       mitted to the state treasurer for deposit in the state treasury and credited
63       to the insurance department service regulation fund.
64             (c) Except as otherwise provided by this section, the commissioner
65       of insurance shall make an annual assessment on each group of affiliated
66       insurers whose certificates of authority to do business in this state are in
67       good standing at the time of the assessment. The total amount of all such
68       assessments for a fiscal year shall be equal to the amount sufficient which,
69       when combined with the total amount to be credited to the insurance
70       department service regulation fund pursuant to subsection (b) is equal to
71       the amount approved by the legislature to fund the insurance company
72       regulation program. With respect to each group of affiliated insurers, such
73       assessment shall be in proportion to the amount of total assets of the
74       group of affiliated insurers as reported to the commissioner of insurance
75       pursuant to K.S.A. 40-225 and amendments thereto for the immediately
76       preceding calendar year, shall not be less than $500 and shall not be more
77       than the amount equal to .0000015 of the amount of total assets of the
78       group of affiliated insurers or $25,000, whichever is less. The total as-
79       sessment for any fiscal year shall not increase by any amount greater than
80       15% of the total budget approved by the legislature to fund the insurance
81       company regulation program for the fiscal year immediately preceding
82       the fiscal year for which the assessment is made. In the event the total
83       amount of the assessment would be less than the aggregate amount re-
84       sulting by assessing the $500 minimum on each insurer, the commissioner
85       may establish a lower minimum to be assessed equally on each insurer.
86             (d) If, by the laws of any state other than Kansas or by the retaliatory
87       laws of any state other than Kansas, any insurer domiciled in Kansas shall
88       be required to pay any fee or tax in such other state of licensure, and the
89       fee or tax is due and payable either because the insurance department
90       service regulation fee imposed by this section on insurers licensed in Kan-
91       sas and organized or domiciled in such other state is greater than the
92       comparable fee or tax assessed in such other state, or such other state has
93       no comparable fee or tax but requires payment on a retaliatory basis, then
94       to the extent such fee or tax amounts are legally due and are paid in such
95       other state, any insurer domiciled in Kansas may claim a dollar-for-dollar
96       credit for such fees paid against insurer's annual premium taxes due the
97       state of Kansas under K.S.A. 40-252 and amendments thereto or privilege
98       fee due the state of Kansas under K.S.A. 40-3213 and amendments thereto,
99       but such credit shall only be calculated on the amount which would not
100       have been required to be paid in such other state of licensure in the ab-
101       sence of the existence of the insurance department service regulation fee
102       imposed by this section, and in no event shall the credit permitted by this
103       section exceed 90% of the insurer's annual premium tax or privilege fee
104       due the state of Kansas. The insurance commissioner shall prescribe the
105       forms for reporting such credits.
106             (d) (e) Assessments payable under this section shall be past due if not
107       paid to the insurance department within 45 days of the billing date of
108       such assessment. A penalty equal to 10% of the amount assessed shall be
109       imposed upon any past due payment and the total amount of the assess-
110       ment and penalty shall bear interest at the rate of 1.5% per month or any
111       portion thereof.
112             (e) (f)  When there exists in the insurance department service regu-
113       lation fund a deficiency which would render such fund temporarily in-
114       sufficient during any fiscal year to meet the insurance department's fund-
115       ing requirements, the commissioner of insurance shall certify the amount
116       of the insufficiency. Upon receipt of any such certification, the director
117       of accounts and reports shall transfer an amount of moneys equal to the
118       amount so certified from the state general fund to the insurance depart-
119       ment service regulation fund. On June 30 of any fiscal year during which
120       an amount or amounts are certified and transferred under this subsection,
121       the director of accounts and reports shall provide for the repayment of
122       the amounts so transferred and shall transfer the amount equal to the
123       total of all such amounts transferred during the fiscal year from the in-
124       surance department service regulation fund to the state general fund.
125             (f) (g) Any unexpended balance in the insurance department service
126       regulation fund at the close of a fiscal year shall remain credited to the
127       insurance department service regulation fund for use in the succeeding
128       fiscal year and shall be used to reduce future assessments or to accom-
129       modate cash flow demands on the fund.
130             (g) (h) The commissioner of insurance shall exempt the assessment
131       of any insurer which, as of December 31 of the calendar year preceding
132       the assessment, has a surplus of less than two times the minimum amount
133       of surplus required for a certificate of authority on and after May 1, 1994,
134       and which is subject to the premium tax or privilege fee liability imposed
135       on insurers organized under the laws of this state. The commissioner of
136       insurance may also exempt or defer, in whole or in part, the assessment
137       of any other insurer if, in the opinion of the commissioner of insurance,
138       immediate payment of the total assessment would be detrimental to the
139       solvency of the insurer.
140             (h) (i) As used in this section:
141             (1) "Affiliates" or "affiliated" has the meaning ascribed by K.S.A. 40-
142       3302 and amendments thereto;
143             (2) "group" or "group of affiliated insurers" means the affiliated in-
144       surers of a group and also includes an individual, unaffiliated insurer; and
145             (3) "insurer" means any insurance company, as defined by K.S.A. 40-
146       201 and amendments thereto, any fraternal benefit society, as defined by
147       K.S.A. 40-738 and amendments thereto, any reciprocal or interinsurance
148       exchange under K.S.A. 40-1601 through 40-1614 and amendments
149       thereto, any mutual insurance company organized to provide health care
150       provider liability insurance under K.S.A. 40-12a01 through 40-12a09 and
151       amendments thereto, any nonprofit dental service corporation under
152       K.S.A. 40-19a01 through 40-19a14 and amendments thereto, any non-
153       profit medical and hospital service corporation under K.S.A. 40-19c01
154       through 40-19c11 and amendments thereto, any health maintenance or-
155       ganization, as defined by K.S.A. 40-3202 and amendments thereto, or any
156       captive insurance company, as defined by K.S.A. 40-4301 and amend-
157       ments thereto, which is authorized to do business in Kansas. 
158       Sec.  3. K.S.A. 1998 Supp. 40-110, 40-112 and 40-112a are hereby
159       repealed.
160        Sec.  4. This act shall take effect and be in force from and after its
161       publication in the statute book.