As Amended by Senate Committee
Session of 2000
By Committee on Federal and State Affairs

11             AN  ACT concerning insurance; relating to reciprocal insurance compa-
12             nies; amending K.S.A. 40-1601, 40-1602, 40-1603, 40-1604, 40-1605,
13             40-1606, 40-1607, 40-1608, 40-1610, 40-1611, 40-1612 and 40-1613
14             and K.S.A. 1999 Supp. 40-1620 and 40-1622 and repealing the existing
15             sections; also repealing K.S.A. 40-1614.
17       Be it enacted by the Legislature of the State of Kansas:
18             New Section  1. As used in this act:
19             (a) ``Attorney-in-fact'' means the person designated and authorized by
20       subscribers as having authority to obligate them on reciprocal insurance
21       contracts.
22             (b) ``Commissioner'' means the commissioner of insurance.
23             (c) ``Person'' means any association, aggregate of individuals, busi-
24       ness, company, corporation, individual, joint-stock company, Lloyds-type
25       of organization, organization, cooperative, partnership, receiver, recip-
26       rocal or interinsurance exchange, trustee or society, with power to enter
27       into contractual undertakings within or without the state.
28             (d) ``Reciprocal'' means an aggregation of subscribers under a com-
29       mon name.
30             (e) ``Reciprocal insurance'' means insurance resulting from the mu-
31       tual exchange of insurance contracts among persons in an unincorporated
32       association under a common name through an attorney-in-fact having
33       authority to obligate each person both as insured and insurer.
34             (f) ``Subscriber'' means a person obligated under a reciprocal insur-
35       ance agreement.
36             New Sec.  2. Every reciprocal shall have and use a business name that
37       includes the word ``reciprocal,'' ``interinsurer,'' ``interinsurance,''
38       ``exchange,'' ``underwriters'' or ``underwriting.'' The name of the recip-
39       rocal shall not be so similar to any other name or title previously adopted
40       by a similar organization, or by any other insurance company or associa-
41       tion, as in the opinion of the commissioner of insurance is calculated to
42       result in confusion or deception.
43             New Sec.  3. The board of directors exercising the subscribers' rights


  1       in a domestic reciprocal shall be selected under rules adopted by the
  2       subscribers. At least 3/4 of the board of directors of a domestic reciprocal
  3       shall be composed of subscribers or representatives of subscribers, other
  4       than the attorney-in-fact or any person employed by, representing or hav-
  5       ing a financial interest in the attorney-in-fact. An individual shall not be
  6       considered to be employed by, representing or having a financial interest
  7       in the attorney-in-fact if such individual is a subscriber or a representative
  8       of a subscriber of the reciprocal. The board of directors shall supervise
  9       the finances of the reciprocal and the reciprocal's operations to the extent
10       required to assure their conformity with the subscriber's agreement and
11       power of attorney and shall exercise any other powers conferred on it by
12       the subscriber's agreement. The board of directors may also be referred
13       to as a subscribers advisory committee, board of trustees or by such other
14       name as the board chooses.
15             New Sec.  4. (a) Every subscriber of a domestic reciprocal may exe-
16       cute a subscriber's agreement and power of attorney setting forth the
17       rights, privileges and obligations of the subscriber as an underwriter and
18       as a policyholder, and the powers and duties of the attorney-in-fact. If a
19       domestic reciprocal does not require execution of a subscriber's agree-
20       ment and power of attorney, the reciprocal shall include on its policies a
21       statement that the subscriber shall be bound by the terms and conditions
22       of the then current subscriber's agreement and power of attorney on file
23       with the attorney-in-fact and the commissioner of insurance, and each
24       subscriber shall by operation of law be bound by such subscriber's agree-
25       ment and power of attorney as if individually executed. Without additional
26       execution, notice or acceptance, every subscriber of a reciprocal agrees
27       to be bound by any modification of the terms of the power of attorney
28       and subscriber's agreement which is jointly made by the attorney-in-fact
29       and the board of directors pursuant to K.S.A. 40-1616, and amendments
30       thereto, and which shall be on file with the attorney-in-fact and the com-
31       missioner of insurance. The subscriber's agreement and power of attorney
32       shall contain in substance the following provisions:
33             (1) A designation and appointment of the attorney-in-fact to act for
34       and bind the subscriber in all transactions relating to or arising out of the
35       operations of the reciprocal;
36             (2) a provision empowering the attorney-in-fact:
37             (A) To accept service of process on behalf of the reciprocal; and
38             (B) to appoint the commissioner as an agent of the reciprocal upon
39       whom may be served all lawful process against or notice to the reciprocal;
40       and
41             (3) the maximum amount to be deducted from advance premiums or
42       deposits to be paid the attorney-in-fact, and the items of expense, in
43       addition to losses, to be paid by the reciprocal.


  1             (b) The subscriber's agreement may:
  2             (1) Provide for the right of substitution of the attorney-in-fact and
  3       revocation of the power of attorney;
  4             (2) impose any restrictions upon the exercise of the power agreed
  5       upon by the subscribers;
  6             (3) provide for the exercise of any right reserved to the subscribers
  7       directly or through the board of directors; or
  8             (4) contain other lawful provisions deemed to be advisable.
  9             New Sec.  5. Any modification of the terms of the power of attorney
10       and subscriber's agreement of a domestic reciprocal shall be made jointly
11       by the attorney-in-fact and the board of directors. Any such modification
12       shall be filed with the attorney-in-fact and the commissioner of insurance.
13       By operation of law any such filing shall bind all subscribers the same as
14       if each subscriber individually had adopted and executed the modified,
15       altered or amended subscriber's agreement and power of attorney. No
16       modification shall be effective retroactively, nor shall such modification
17       affect any insurance contract issued prior to the date of such modification.
18             New Sec.  6. A reciprocal may return to its subscribers any savings or
19       credit which accrues to such subscriber's accounts.
20             New Sec.  7. Upon the liquidation of a domestic reciprocal, the assets
21       remaining after discharge of its indebtedness and policy obligations, the
22       return of any contributions of the attorney-in-fact or any other person
23       made as provided in K.S.A. 40-1606, and amendments thereto, and the
24       return of any unused deposits, savings or credits, shall be distributed. The
25       distribution shall be made to the persons who were its subscribers within
26       the 12 months prior to the final termination of such reciprocal's license
27       in accordance with a formula approved by the commissioner of insurance
28       or the court.
29             New Sec.  8. No reciprocal shall issue any assessable insurance policies.
30       The subscribers of a reciprocal shall not be personally liable for the pay-
31       ment of the reciprocal's debts or obligations. Any judgment against a
32       reciprocal shall be binding only upon the reciprocal and not upon each
33       of the reciprocal's subscribers.
34             Sec.  9. K.S.A. 40-1601 is hereby amended to read as follows: 40-
35       1601. Individuals, partnerships and corporations Persons of this state,
36       hereby designated subscribers, are hereby authorized to exchange recip-
37       rocal or interinsurance contracts with each other, or with individuals,
38       partnerships and corporations persons of other states and countries, pro-
39       viding indemnity among themselves from any loss which may be the sub-
40       ject of legal insurance, excepting life insurance.
41             Sec.  10. K.S.A. 40-1602 is hereby amended to read as follows: 40-
42       1602. Such Reciprocal insurance contracts may be executed by an attor-
43       ney in fact, herein designated attorney attorney-in-fact, duly authorized


  1       and acting for such the subscribers of a reciprocal, and such attorney
  2       attorney-in-fact may be a corporation. The office or offices of such attor-
  3       ney attorney-in-fact may be maintained at such place or places as may be
  4       designated by the subscribers in the power of attorney. Such contracts
  5       and the exchange thereof and such subscribers, their attorneys and rep-
  6       resentatives shall be regulated by this article and by no other law relating
  7       to insurance unless such law is referred to in this article, and no law
  8       hereafter enacted shall apply to them unless they be expressly designated
  9       therein.
10             Sec.  11. K.S.A. 40-1603 is hereby amended to read as follows: 40-
11       1603. Such attorney (a) The attorney-in-fact of a domestic reciprocal
12       shall file with the commissioner of insurance of this state a declaration
13       verified by the oath of such attorney attorney-in-fact, or when such at-
14       torney attorney-in-fact is a corporation by the oath of a chief officer
15       thereof, setting forth:
16             (a) (1) The name of the attorney attorney-in-fact, and the name or
17       title of the office under which such contracts are to be issued. Said name
18       or title shall not be so similar to any other name or title previously adopted
19       by a similar organization, or by any insurance company or association, as
20       in the opinion of the commissioner of insurance is calculated to result in
21       confusion or deception. The office or offices through which such indem-
22       nity contracts shall be exchanged shall be classified as reciprocal or in-
23       terinsurance exchanges of the domestic reciprocal.
24             (b) (2) The kind or kinds of insurance to be effected or exchanged.
25             (c) A copy of the form of policy contract or agreement under or by
26       which such insurance is to be effected or exchanged and which comprises
27       the standard provisions, as provided in the law of this state. Such contract
28       or agreement shall, in lieu of complying with the language and form pre-
29       scribed, be held to conform thereto in substance if such contract or agree-
30       ment includes a provision or endorsement reciting that the policy shall
31       be construed as if in the language and form prescribed by law. The at-
32       torney may insert in the policy prescribed by the laws of this state any
33       provision or condition which is required by the plan of reciprocal or
34       interinsurance.
35             (d) (3) A copy of the form of power of attorney and subscriber's agree-
36       ment or other authority of such attorney attorney-in-fact under which
37       such insurance is to be effected or exchanged.
38             (e) (4) The location of the office or offices from which such contracts
39       or agreements are to be issued.
40             (f) (5) That except as to the kinds of insurance hereinafter specifically
41       mentioned in this subdivision, applications shall have been made for in-
42       demnity upon at least one hundred 100 separate risks aggregating not
43       less than one and one-half million dollars $1,500,000, represented by


  1       executed contracts or bona fide applications to become concurrently ef-
  2       fective. In the case of employers' liability or workmen's workers compen-
  3       sation insurance, applications shall have been made for indemnity upon
  4       at least one hundred 100 separate risks, covering a total annual payroll of
  5       not less than two and one-half million dollars $2,500,000, as represented
  6       by executed contracts or bona fide applications to become concurrently
  7       effective. In the case of automobile insurance, applications shall have
  8       been made for indemnity upon at least one thousand 1,000 motor vehi-
  9       cles, represented by executed contracts or bona fide applications to be-
10       come concurrently effective on any or all classes of automobile insurance
11       effected by such subscribers through said attorney such attorney-in-fact.
12             (g) (6) That there is in the possession of such attorney attorney-in-
13       fact, and available for the payment of losses, assets conforming to the
14       requirements of section 40-1605 hereof K.S.A. 40-1605 and amendments
15       thereto.
16             (h) (7) A financial statement in form prescribed for the annual
17       statement.
18             (i) (8) An instrument authorizing service of process as provided in
19       this article.
20             (b) No declaration shall be required under this section for any recip-
21       rocal organized in this state as a result of a conversion under the provi-
22       sions of K.S.A. 40-1620 and amendments thereto.
23             Sec.  12. K.S.A. 40-1604 is hereby amended to read as follows: 40-
24       1604. There shall be filed with the commissioner of insurance of this state
25       a statement under oath by the attorney attorney-in-fact giving the maxi-
26       mum amount of indemnity upon any single risk, and such attorney shall
27       attorney-in-fact, whenever and as often as he such attorney-in-fact shall
28       be required, shall file with the commissioner of insurance a statement
29       verified by his such attorney-in-fact's oath, to the effect that the exchange
30       reciprocal has not assumed on any one risk an amount greater than ten
31       (10) percentum 10% of its surplus, unless the excess shall be reinsured
32       (1) in some other insurance company duly authorized to transact similar
33       business in this state or as otherwise provided in the insurance code; or
34       (2) as provided by the laws of the state in which the principal office of
35       the attorney reciprocal is located.
36             Sec.  13. K.S.A. 40-1605 is hereby amended to read as follows: 40-
37       1605. There shall be maintained at all times, unearned premiums or (a)
38       At all times, each reciprocal shall maintain the same unearned premium
39       and loss or claim reserves, in cash or securities authorized by the laws of
40       the state in which the principal office of the attorney is located, for the
41       investment of similar funds of insurance companies doing the same kind
42       of business, in an amount equal to a pro rata amount of the premium or
43       deposits collected from subscribers on all unexpired risks. In addition to


  1       the assets previously provided in this section there shall also be main-
  2       tained as a claim or loss reserve, cash or such securities sufficient to
  3       discharge all liability on all outstanding losses arising under policies is-
  4       sued, the same to be calculated in accordance with the laws of the state
  5       relating to similar reserves for companies insuring similar risks. Any re-
  6       ciprocal exchange the reciprocal is domiciled, as required for domestic
  7       stock and mutual companies writing the same classes of insurance.
  8             (b) No reciprocal shall be licensed to transact the business of insur-
  9       ance in this state unless such reciprocal shall have and maintain a surplus
10       equal to the capital and surplus required of a domestic stock insurance
11       company transacting the same kinds of insurance and may provide for the
12       issuance of a nonassessable policy. Any reciprocal exchange issuing non-
13       assessable policies
14             (c) Each reciprocal shall have lawful securities on deposit, for the
15       protection of all subscribers or creditors, or both, of the exchange recip-
16       rocal, with the department of insurance of this or any other state in the
17       United States in an amount equal to the minimum capital stock required
18       of a domestic stock insurance company transacting the same kinds of
19       insurance. Until May 1, 1989, companies which were authorized to do
20       business in Kansas after January 1, 1969, but before January 1, 1984, shall
21       be required to have surplus and deposit equal to that which was required
22       by this section prior to the passage of this act. After May 1, 1989, such
23       companies shall comply with the paid-up capital stock, surplus and deposit
24       requirements provided by this act.
25             Until May 1, 1989, companies doing business in this state on January
26       1, 1969, shall be required to have a surplus and deposit equal to that
27       required of such companies prior to the passage of this act. On and after
28       May 1, 1989, companies doing business in this state on January 1, 1969,
29       shall be required to have a surplus and deposit equal to that required of
30       all other companies to whom this section applies immediately prior to the
31       passage of this act.
32             On and after May 1, 1994, companies doing business in this state on
33       January 1, 1969, shall comply with the surplus and deposit requirements
34       provided by this act.
35             No reciprocal exchange shall issue any assessable insurance policies.
36             Sec.  14. K.S.A. 40-1606 is hereby amended to read as follows: 40-
37       1606. If at any time it appears that the amount of funds required in section
38       40-1605 K.S.A. 40-1605, and amendments thereto, has not been accu-
39       mulated or maintained, then the subscribers or their attorney for them
40       shall immediately advance such sums as are needed to comply with the
41       provisions of this section, and the attorney-in-fact or any other interested
42       party may advance to a reciprocal any funds required in such reciprocal's
43       operations. The funds so advanced shall not be treated as a liability at the


  1       exchange, and shall not be withdrawn of the reciprocal and interest shall
  2       not be paid or funds repaid except with the approval of the supervising
  3       insurance official of the state wherein the exchange is domiciled, and such
  4       advances in which the reciprocal is domiciled. Any such advance and
  5       interest shall be repaid only out of the surplus funds of the exchange
  6       reciprocal.
  7             Sec.  15. K.S.A. 40-1607 is hereby amended to read as follows: 40-
  8       1607. Concurrently with the filing of the declaration provided for by the
  9       terms of K.S.A. 40-1603 and any amendments thereto, the attorney at-
10       torney-in-fact shall file with the commissioner of insurance an instrument
11       in writing, executed by him such attorney-in-fact for the subscribers re-
12       ciprocal conditioned that upon the issuance of the certificate of authority
13       provided for in K.S.A. 40-1610, and amendments thereto, service of pro-
14       cess may be had upon the commissioner of insurance in all suits in this
15       state arising out of such policies, contracts or agreements, which service
16       shall be valid and binding upon all subscribers exchanging at any time
17       reciprocal or interinsurance contracts through such attorney. Three cop-
18       ies of such process shall be served, accompanied by a fee of three dollars,
19       and shall require the defendant to answer by a certain day, not less than
20       forty days from its date, and the commissioner of insurance shall file one
21       copy, forward one copy to the said attorney, and return one copy with his
22       admission of service. Subscribers of any reciprocal or interinsurance
23       exchange the reciprocal. Such service of process shall be executed in ac-
24       cordance with the provisions of K.S.A. 40-218 and amendments thereto.
25       Any reciprocal operating under the laws of this state may sue or be sued
26       in the declared name of such exchange the reciprocal.
27             Sec.  16. K.S.A. 40-1608 is hereby amended to read as follows: 40-
28       1608. The attorney in fact attorney-in-fact of a domestic reciprocal, or
29       any employee having the care and handling of the funds and securities of
30       any reciprocal exchange a domestic reciprocal, shall give maintain a good
31       and sufficient bond running to the governing committee board of direc-
32       tors of the reciprocal conditioned for the faithful accounting and dis-
33       bursement of all money that may come into his such attorney-in-fact's or
34       employee's hands; such bond may be executed by a surety company or
35       may be a personal bond approved by the commissioner of insurance of
36       the state where such exchange is domiciled; and such bond to. Such bond
37       shall be in an amount fixed in an amount and to be approved by the
38       advisory committee board of directors or other governing body of such
39       exchange reciprocal. In lieu of filing the bond, the attorney-in-fact may
40       maintain on deposit with the commissioner an equivalent amount in ap-
41       proved securities which are subject to the same conditions as the bond.
42             Sec.  17. K.S.A. 40-1610 is hereby amended to read as follows: 40-
43       1610. Each attorney by whom or through whom are issued any policies


  1       of or contracts for indemnity of the character specified in this article
  2       reciprocal shall procure from the commissioner of insurance annually a
  3       certificate of authority, stating that all of the requirements of this article
  4       have been complied with, and upon. Upon such compliance and the pay-
  5       ment of the fees required by this article, the commissioner of insurance
  6       shall issue such certificate of authority. The commissioner of insurance
  7       may revoke or suspend any certificate of authority issued hereunder in
  8       case of breach of any of the conditions imposed by this article after rea-
  9       sonable notice has been given said attorney, to the reciprocal in writing,
10       so that he such reciprocal may appear and show cause why such action
11       should not be taken. Any attorney who may have procured a certificate
12       of authority hereunder may renew such certificate annually thereafter:
13       Provided, however, That any The certificate of authority shall continue in
14       full force and effect until such certificate is suspended or revoked or the
15       a new certificate of authority be is issued or specifically refused.
16             Sec.  18. K.S.A. 40-1611 is hereby amended to read as follows: 40-
17       1611. Such attorney Each reciprocal shall pay to the commissioner of
18       insurance levies and taxes in the amount and as specified in K.S.A. 40-
19       252, 40-1703, 40-1704 and 75-1508, and amendments thereto. The pre-
20       mium taxes which are set out in subsection 3, of subsection B, paragraph
21       (3), of subsection (D) of K.S.A. 40-252 and amendments thereto, for mu-
22       tual insurance companies organized under the laws of any other state,
23       territory or country writing similar lines of insurance, shall be applicable
24       to such attorney-in-fact of a reciprocal or interinsurance exchange any
25       reciprocal doing business or seeking authority to do business in this state.
26       All such levies and taxes on premiums shall be applicable to premiums
27       received on or after January 1, 1957. The above fees, levies and taxes shall
28       be in lieu of all license fees and taxes of whatever character in this state
29       and such attorney-in-fact in calculating all such levies and taxes such re-
30       ciprocal shall be permitted to deduct therefrom premiums returned on
31       account of cancellations, all premiums received for reinsurance from any
32       other company authorized to do business in this state, and savings paid
33       or credited to subscriber policyholders.
34             Sec.  19. K.S.A. 40-1612 is hereby amended to read as follows: 40-
35       1612. In addition to the laws hereinbefore referred to in provisions of
36       this article, the requirements and provisions set out forth in the following
37       sections of articles 2 and 20 of the Kansas Statutes Annotated, or any and
38       amendments thereto, which govern other types of insurance companies
39       shall apply to reciprocal or interinsurance exchanges reciprocals to the
40       extent that such provisions do not conflict with the provisions of this
41       article: Sections 40-208, 40-209, 40-214, 40-215, 40-216, 40-218, 40-220,
42       40-221 40-221a, 40-222, 40-223, 40-224, 40-225, 40-226, 40-227, 40-228,
43       40-229, 40-229a, 40-231, 40-233, 40-234, 40-234a, 40-235, 40-236, 40-


  1       237, 40-238, 40-239, 40-240, 40-241, 40-242, 40-243, 40-244, 40-245, 40-
  2       246 except as to contracts written through traveling salaried representa-
  3       tives to whom no commissions are paid, 40-246a, 40-247, 40-248, 40-249,
  4       40-250, 40-251, 40-253, 40-254, 40-256, 40-281, 40-2,125, 40-2,126, 40-
  5       2,127, 40-2,128, 40-2,156, 40-2,156a, 40-2,157, 40-2,159, 40-952, 40-
  6       2001, 40-2002, 40-2003, 40-2004, 40-2005 and 40-2006. All of the
  7       requirements, provisions and regulations set out in the foregoing sections
  8       of articles 2 and 20 and which apply to insurance companies are hereby
  9       made to apply to reciprocal or interinsurance exchanges and such recip-
10       rocal or interinsurance exchanges shall comply with and be governed and
11       regulated by the provisions of such foregoing sections, 40-2006 and 40-
12       2404 and article 2a of the Kansas statutes annotated, and amendments
13       thereto, and any other provision of law pertaining to insurance which
14       specifically refers to reciprocals.
15             Sec.  20. K.S.A. 40-1613 is hereby amended to read as follows: 40-
16       1613. Reciprocal or interinsurance exchanges may, pursuant to Under
17       authority given by the commissioner of insurance, a reciprocal may en-
18       gage in the business of writing fidelity and surety bonds but only upon
19       the condition that such reciprocal or interinsurance exchange shall have
20       and maintain a an amount of surplus equal to the total of capital and
21       surplus required of domestic stock insurance companies transacting the
22       same kind of business and any such reciprocal or interinsurance exchange
23       shall be deemed a stock insurance company for the purposes of sections
24       K.S.A. 40-214, 40-239 to 40-247, both sections inclusive, 40-252, 40-1107
25       and 40-1108 of the Kansas Statutes Annotated or any and amendments
26       thereto. No fidelity or surety bond shall be issued by any such reciprocal
27       or interinsurance exchange until the form thereof of such bond shall have
28       been submitted to and accepted by the commissioner of insurance. Any
29       fidelity or surety bonds executed pursuant to this act shall be received
30       and accepted as company, corporation or corporate bonds.
31             Sec.  21. K.S.A. 1999 Supp. 40-1620 is hereby amended to read as
32       follows: 40-1620. (a) Any insurance company may convert to a Kansas
33       insurance reciprocal in accordance with a plan for the conversion of the
34       insurance company into an insurance reciprocal filed with and approved
35       by the commissioner.
36             (b) The commissioner may establish reasonable requirements and
37       procedures for the submission and approval of a conversion plan author-
38       ized by subsection (a).
39             (c) No conversion plan shall be approved under this section unless
40       such conversion plan includes:
41             (1) A provision for the conversion of existing stockholder or policy-
42       holder interests in the insurance company into reciprocal or exchange
43       subscriber interests in the insurance reciprocal so that each subscriber's


  1       interest in the resulting Kansas insurance reciprocal shall be fairly pro-
  2       portionate to such subscriber's interest in the insurance company;
  3             (2) a provision for the amendment of the insurance company's exist-
  4       ing articles of incorporation or other chartering document to a sub-
  5       scriber's agreement which complies with the provisions of K.S.A. 40-1602
  6       and 40-1603, 40-1603 and section 4 and amendments thereto;
  7             (3) a copy of the proposed subscriber's agreement;
  8             (4) proof of the approval or adoption of the conversion plan by not
  9       less than 75% 2/3 of the shares or policyholders entitled to vote, repre-
10       sented either in person or by proxy, at a duly called regular or special
11       meeting of the stockholders or policyholders of the insurance company
12       at which a quorum, as determined by the bylaws or other chartering
13       documents of the insurance company, is present:;
14             (5) a transition plan for the change of governance of the insurance
15       company from the board of directors and officer structure of the insur-
16       ance company to the insurance reciprocal which shall be governed by
17       article 16 of chapter 40 of the Kansas Statutes Annotated and amend-
18       ments thereto; and
19             (6) any other information required by the commissioner.
20             (d) The commissioner shall approve the conversion plan if the com-
21       missioner finds that the proposed conversion will:
22             (1) Not be detrimental to the interests of the stockholders or poli-
23       cyholders of the insurance company;
24             (2) not be detrimental to the interests of the state of Kansas; and
25             (3) not render the insurer incapable of fulfilling the insurer's con-
26       tractual obligations.
27             (e) Upon approval of a conversion plan under this section, the com-
28       missioner shall issue a new or amended certificate of authority, which
29       shall be deemed to be the final act of conversion at which time the in-
30       surance company shall concurrently become an insurance reciprocal. The
31       insurance reciprocal shall be deemed to be a continuation of the insurance
32       company and deemed to have been organized at the time the converted
33       insurance company was organized.
34             (f) Each insurance reciprocal created pursuant to this section shall
35       comply with all provisions of K.S.A. 40-1612, and amendments thereto.
36             (g) Any conversion of an insurance company to a reciprocal shall not
37       be subject to the provisions of K.S.A. 40-3304, and amendments thereto.
38             (h) For the purposes of this section:
39             (1) ``Commissioner'' means the commissioner of insurance.
40             (2), ``insurance company'' means a stock or mutual insurance company.
41             (3) ``Insurance reciprocal'' means a reciprocal or interinsurance
42       exchange established to exchange reciprocal or interinsurance contracts
43       with subscribers to provide indemnity among themselves.


  1             Sec.  22. K.S.A. 1999 Supp. 40-1622 is hereby amended to read as
  2       follows: 40-1622. The provisions of K.S.A. 1999 Supp. 40-1620 and 40-
  3       1621, and sections 1, 2, 3, 4, 5, 6, 7 and 8 and amendments thereto, shall
  4       be supplemental to article 16 of chapter 40 of the Kansas Statutes An-
  5       notated and amendments thereto. 
  6       Sec.  23. K.S.A. 40-1601, 40-1602, 40-1603, 40-1604, 40-1605, 40-
  7       1606, 40-1607, 40-1608, 40-1610, 40-1611, 40-1612, 40-1613 and 40-1614
  8       and K.S.A. 1999 Supp. 40-1620 and 40-1622 are hereby repealed.
  9        Sec.  24. This act shall take effect and be in force from and after its
10       publication in the statute book.