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AN ACT relating to insurance companies; concerning agents and brokers;
  concerning fines and penalties assessed by the commissioner of insur-
  ance; amending K.S.A. 40-2,125, 40-755, 40-938, 40-1119, 40-2407
  and 40-3311 and repealing the existing sections; also repealing K.S.A.
  40-226, 40-939, 40-1120, 40-1705, 40-2214, 40-2236, 40-3205, 40-
  3206, 40-3811, 40-4113, 40-4210 and 40-4511.
Be it enacted by the Legislature of the State of Kansas:
  Section 1.  K.S.A. 40-2,125 is hereby amended to read as follows: 40-
2,125. (a) If the commissioner determines after notice and opportunity
for a hearing that any person has engaged or is engaging in any act or
practice constituting a violation of any provision of Kansas insurance stat-
utes or any rule and regulation or order thereunder, the commissioner,
by order, may require that such person cease and desist from the unlawful
act or practice and take such affirmative action as in the judgment of the
commissioner will carry out the purposes of the violated or potentially
violated provision. in the exercise of discretion, order any one or more of
the following:
  (1)  Payment of a monetary penalty of not more than $1,000 for each
and every act or violation, unless the person knew or reasonably should
have known such person was in violation of the Kansas insurance statutes
or any rule and regulation or order thereunder, in which case the penalty
shall be not more than $2,000 for each and every act or violation;
  (2)  suspension or revocation of the person's license or certificate if
such person knew or reasonably should have known that such person was
in violation of the Kansas insurance statutes or any rule and regulation
or order thereunder; or
  (3)  that such person cease and desist from the unlawful act or practice
and take such affirmative action as in the judgment of the commissioner
will carry out the purposes of the violated or potentially violated provi-
sion.
  (b)  If any person fails to file any report or other information with the
commissioner as required by statute or fails to respond to any proper
inquiry of the commissioner, the commissioner, after notice and oppor-
tunity for hearing, may impose a penalty of up to $500 for each violation
or act, along with an additional penalty of up to $100 for each week
thereafter that such report or other information is not provided to the
commissioner.
  (b) (c)  If the commissioner makes written findings of fact that there
is a situation involving an immediate danger to the public health, safety
or welfare or the public interest will be irreparably harmed by delay in
issuing an order under subsection (a)(3), the commissioner may issue an
emergency temporary cease and desist order. Such order, even when not
an order within the meaning of K.S.A. 77-502 and amendments thereto,
shall be subject to the same procedures as an emergency order issued
under K.S.A. 77-536 and amendments thereto. Upon the entry of such
an order, the commissioner shall promptly notify the person subject to
the order that: (1) It has been entered, (2) the reasons therefor and (3)
that upon written request within 15 days after service of the order the
matter will be set for a hearing which shall be conducted in accordance
with the provisions of the Kansas administrative procedure act. If no hear-
ing is requested and none is ordered by the commissioner, the order will
remain in effect until it is modified or vacated by the commissioner. If a
hearing is requested or ordered, the commissioner, after notice of and
opportunity for hearing to the person subject to the order, shall by written
findings of fact and conclusions of law vacate, modify or make permanent
the order.
  (c)  If, after notice and an opportunity for hearing, the commissioner
finds that a person has violated the insurance laws of this state or a rule
and regulation of the commissioner, the commissioner, in addition to any
specific power applicable to such violation, may:
  (1)  Censure the person; or
  (2)  issue an order against any person who violates the insurance laws
of this state, or a rule and regulation, or order of the commissioner, im-
posing an administrative penalty up to a maximum of $5,000 for each
violation but not to exceed $25,000 for the same violation occurring within
any six consecutive calendar months unless such person knew or reason-
ably should have known the act was a violation of the insurance laws, rules
and regulations or order of the commissioner. If the person knew or
reasonably should have known the act was a violation as aforementioned,
the commissioner may impose a penalty up to a maximum of $10,000 for
each violation but not to exceed $50,000 for the same violation occurring
within any six consecutive calendar months.
  (d)  For purposes of this section:
  (1)  ``Person'' means any individual, corporation, association, partner-
ship, reciprocal exchange, inter-insurer, Lloyd's insurer, fraternal benefit
society and any other legal entity engaged in the business of insurance,
but or any person purchasing an interest in a life insurance policy which
is licensed pursuant to K.S.A. 40-2,141 and amendments thereto, rating
organization, third party administrator, nonprofit dental service corpo-
ration, nonprofit medical and hospital service corporation, automobile
club, premium financing company, health maintenance organization, in-
surance holding company, mortgage guaranty insurance company, risk
retention or purchasing group, prepaid legal and dental service plan, cap-
tive insurance company, automobile self-insurer or reinsurance interme-
diary. The term ``person'' shall not include insurance agents licensed pur-
suant to K.S.A. 40-241 or 40-246, and amendments thereto, insurance
brokers licensed pursuant to K.S.A. 40-3701 et seq., and amendments
thereto, or employees of licensed agents or brokers. Person also means
mutual nonprofit hospital service organizations, nonprofit medical service
corporations, nonprofit medical and hospital service corporations, as de-
fined in articles 18, 19 and 19c of chapter 40 of the Kansas Statutes
Annotated and amendments thereto; administrators, as defined in article
38 of chapter 40 of the Kansas Statutes Annotated and amendments
thereto; and health maintenance organizations, as defined in article 32 of
chapter 40 of the Kansas Statutes Annotated and amendments thereto
and prepaid service plans as defined in article 42 of chapter 40 of the
Kansas Statutes Annotated and amendments thereto.
  (2)  ``Commissioner'' means the commissioner of insurance of this
state.
  Sec. 2.  K.S.A. 40-755 is hereby amended to read as follows: 40-755.
(a) Reports shall be filed in accordance with K.S.A. 40-225, and amend-
ments thereto, subject to penalty as provided in K.S.A. 40-226, and
amendments thereto, for failure to file. (b) As part of the annual statement
herein required, each society shall, on or before the first day of March,
file with the commissioner of insurance a valuation of its certificates in
force on December 31 last preceding, providing the commissioner of
insurance may, in the exercise of discretion for cause shown, extend the
time for filing such valuation for not more than two calendar months.
Such valuation shall be done in accordance with the standards specified
in K.S.A. 40-754. Such valuation and underlying data shall be certified by
a qualified actuary or, at the expense of the society, verified by the actuary
of the department of insurance of the state of domicile of the society.
  Sec. 3.  K.S.A. 40-938 is hereby amended to read as follows: 40-938.
No person or organization shall willfully withhold information from, or
knowingly give false or misleading information to, the commissioner, any
statistical agency designated by the commissioner, any rating organization,
or any insurer, which will affect the rates or premiums chargeable under
this act. A violation of this section shall subject the one guilty of such
violation to the penalties provided in K.S.A. 40-939. If the commissioner
finds that any person or organization has violated this section, the com-
missioner, after notice and the opportunity for hearing, may impose a
penalty of not more than $500 for each such violation. If the commissioner
determines that such violation was willful, the commissioner may impose
a penalty of not more than $2,000 for each such violation. Such penalties
may be in addition to any other penalty provided by law.
  Sec. 4.  K.S.A. 40-1119 is hereby amended to read as follows: 40-
1119. No person or organization shall willfully withhold information from,
or knowingly give false or misleading information to the commissioner,
any statistical agency designated by the commissioner, any rating organ-
ization, or any insurer, which will affect the rates or premiums chargeable
under this act. A violation of this section shall subject the one guilty of
such violation to the penalties provided in K.S.A. 40-1120. If the com-
missioner finds that any person or organization has violated this section,
the commissioner, after notice and the opportunity for hearing, may im-
pose a penalty of not more than $500 for each such violation. If the com-
missioner determines that such violation was willful, the commissioner
may impose a penalty of not more than $2,000 for each such violation.
Such penalties may be in addition to any other penalty provided by law.
  Sec. 5.  K.S.A. 40-2407 is hereby amended to read as follows: 40-
2407. (a) If, after such hearing, the commissioner shall determine that
the person charged has engaged in an unfair method of competition or
an unfair or deceptive act or practice, the commissioner shall render an
order requiring such person to cease and desist from engaging in such
method of competition, act or practice and if the act or practice is a
violation of K.S.A. 40-2404 and amendments thereto, the commissioner
may in the exercise of discretion order any one or more of the following:
  (1)  Payment of a monetary penalty of not more than $100 $1,000 for
each and every act or violation;, but not to exceed an aggregate penalty
of $2,500 $10,000, unless the person knew or reasonably should have
known such person was in violation of this act, in which case the penalty
shall be not more than $1,000 $5,000 for each and every act or violation,
but not to exceed an aggregate of $10,000 $50,000 in any six-month pe-
riod;
  (2)  suspension or revocation of the person's license if such person
knew or reasonably should have known such person was in violation of
this act; or
  (3)  redress of the injury by requiring the refund of any premiums
paid by, the payment of any moneys withheld from, any consumer and
appropriate public notification of the violation. In applying this penalty
any requirement for the payment of moneys may include reasonable in-
terest at a rate not to exceed the rate specified in K.S.A. 40-2,126 and
amendments thereto, with such interest commencing no earlier than the
date the consumer's complaint was received by the commissioner and
actual costs incurred by the consumer in effecting the payment associated
directly with the injury.
  (b)  After the expiration of the time allowed for filing a petition for
review if no such petition has been duly filed within such time, the com-
missioner may at any time, after notice and opportunity for hearing in
accordance with the provisions of the Kansas administrative procedure
act, reopen and alter, modify or set aside, in whole or in part, any order
issued under this section, whenever in the commissioner's opinion con-
ditions of fact or of law have so changed as to require such action or if
the public interest shall so require.
  Sec. 6.  K.S.A. 40-3311 is hereby amended to read as follows: 40-
3311. (a) Any insurer, without just cause, failing to file any registration
statement within the time prescribed in subsections (a) and (d) of K.S.A.
40-3305 and amendments thereto shall be subject to a penalty of $100
for each day's delay. The maximum penalty under this section is $10,000.
The commissioner may reduce the penalty if the insurer demonstrates to
the commissioner that the imposition of the penalty would constitute a
financial hardship to the insurer. (b) Every director or officer of an in-
surance holding company system who knowingly violates, participates in,
or assents to, or who knowingly shall permit any of the officers or agents
of the insurer to engage in transactions or make investments which have
not been properly reported or submitted pursuant to subsection (a) of
K.S.A. 40-3305 or subsections (c) or (d) of K.S.A. 40-3306 and amend-
ments thereto, or which otherwise violates this act, shall pay, in such
directors' or officers' individual capacity, a civil forfeiture of not more
than $5,000 per violation, after notice and hearing before the commis-
sioner. In determining the amount of the civil forfeiture, the commis-
sioner shall take into account the appropriateness of the forfeiture with
respect to the gravity of the violation, the history of previous violations,
and such other matters as justice may require.
  (c) (b)  Whenever it appears to the commissioner that any insurer
subject to this act or any director, officer, employee or agent thereof has
engaged in any transaction or entered into a contract which is subject to
K.S.A. 40-3306 and amendments thereto and which would not have been
approved had such approval been requested, the commissioner may order
the insurer to cease and desist immediately any further activity under that
transaction or contract. After notice and hearing the commissioner may
also order the insurer to void any such contracts and restore the status
quo if such action is in the best interest of the policyholders, creditors or
the public.
  (d) (c)  Whenever it appears to the commissioner that any insurer or
any director, officer, employee or agent thereof has committed a willful
violation of this act, the commissioner may cause criminal proceedings to
be instituted by the district court for the county in which the principal
office of the insurer is located or if such insurer has no such office in this
state, then by the district court for Shawnee county against such insurer
or the responsible director, officer, employee or agent thereof. Any in-
surer which willfully violates this act may be fined not more than $50,000.
Any individual who willfully violates this act may be fined in individual
capacity not more than $10,000 or, be imprisoned for not more than one
to three years, or both.
  (e) (d)  Any officer, director or employee of an insurance holding com-
pany system who knew or reasonably should have known they were sub-
scribing to or making or causing to be made any false statements, false
reports or false filings with the intent to deceive the commissioner in the
performance of duties under this act, upon conviction thereof, shall be
imprisoned for not more than five to 10 years or fined $100,000, or both.
Any fines imposed shall be paid by the officer, director or employee in
such person's individual capacity.
  Sec. 7.  K.S.A. 40-226, 40-2,125, 40-755, 40-938, 40,939, 40-1119, 40-
1120, 40-1705, 40-2214, 40-2236, 40-2407, 40-3205, 40-3206, 40-3311,
40-3811, 40-4113, 40-4210 and 40-4511 are hereby repealed.
  Sec. 8.  This act shall take effect and be in force from and after its
publication in the statute book.