Session of 1999
         
HOUSE Substitute for SENATE BILL No. 60
         
By Committee on Insurance
         
3-17
         
  9             AN  ACT concerning the insurance department; insurance department
10             service regulation fund; amending K.S.A. 1998 Supp. 40-112 and re-
11             pealing the existing section; also repealing K.S.A. 1998 Supp. 40-112a.
12      
13       Be it enacted by the Legislature of the State of Kansas:
14             Section  1. K.S.A. 1998 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 1% of taxes re-
26       ceived pursuant to K.S.A. 40-252 and amendments thereto shall be re-
27       mitted to the state treasurer for deposit in the state treasury and credited
28       to the insurance department service regulation fund.
29             (c) Except as otherwise provided by this section, the commissioner
30       of insurance shall make an annual assessment on each group of affiliated
31       insurers whose certificates of authority to do business in this state are in
32       good standing at the time of the assessment. The total amount of all such
33       assessments for a fiscal year shall be equal to the amount sufficient which,
34       when combined with the total amount to be credited to the insurance
35       department service regulation fund pursuant to subsection (b) is equal to
36       the amount approved by the legislature to fund the insurance company
37       regulation program. With respect to each group of affiliated insurers, such
38       assessment shall be in proportion to the amount of total assets of the
39       group of affiliated insurers as reported to the commissioner of insurance
40       pursuant to K.S.A. 40-225 and amendments thereto for the immediately
41       preceding calendar year, shall not be less than $500 and shall not be more
42       than the amount equal to .0000015 of the amount of total assets of the
43       group of affiliated insurers or $25,000, whichever is less. The total as-

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  1       sessment for any fiscal year shall not increase by any amount greater than
  2       15% of the total budget approved by the legislature to fund the insurance
  3       company regulation program for the fiscal year immediately preceding
  4       the fiscal year for which the assessment is made. In the event the total
  5       amount of the assessment would be less than the aggregate amount re-
  6       sulting by assessing the $500 minimum on each insurer, the commissioner
  7       may establish a lower minimum to be assessed equally on each insurer.
  8             (d) If, by the laws of any state other than Kansas or by the retaliatory
  9       laws of any state other than Kansas, any insurer domiciled in Kansas shall
10       be required to pay any fee or tax in such other state of licensure, and the
11       fee or tax is due and payable either because the insurance department
12       service regulation fee imposed by this section on insurers licensed in Kan-
13       sas and organized or domiciled in such other state is greater than the
14       comparable fee or tax assessed in such other state, or such other state has
15       no comparable fee or tax but requires payment on a retaliatory basis, then
16       to the extent such fee or tax amounts are legally due and are paid in such
17       other state, any insurer domiciled in Kansas may claim a dollar-for-dollar
18       credit for such fees paid against insurer's annual premium taxes due the
19       state of Kansas under K.S.A. 40-252 and amendments thereto or privilege
20       fee due the state of Kansas under K.S.A. 40-3213 and amendments thereto,
21       but such credit shall only be calculated on the amount which would not
22       have been required to be paid in such other state of licensure in the ab-
23       sence of the existence of the insurance department service regulation fee
24       imposed by this section, and in no event shall the credit permitted by this
25       section exceed 90% of the insurer's annual premium tax or privilege fee
26       due the state of Kansas. The insurance commissioner shall prescribe the
27       forms for reporting such credits.
28             (d) (e) Assessments payable under this section shall be past due if not
29       paid to the insurance department within 45 days of the billing date of
30       such assessment. A penalty equal to 10% of the amount assessed shall be
31       imposed upon any past due payment and the total amount of the assess-
32       ment and penalty shall bear interest at the rate of 1.5% per month or any
33       portion thereof.
34             (e) (f)  When there exists in the insurance department service regu-
35       lation fund a deficiency which would render such fund temporarily in-
36       sufficient during any fiscal year to meet the insurance department's fund-
37       ing requirements, the commissioner of insurance shall certify the amount
38       of the insufficiency. Upon receipt of any such certification, the director
39       of accounts and reports shall transfer an amount of moneys equal to the
40       amount so certified from the state general fund to the insurance depart-
41       ment service regulation fund. On June 30 of any fiscal year during which
42       an amount or amounts are certified and transferred under this subsection,
43       the director of accounts and reports shall provide for the repayment of

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  1       the amounts so transferred and shall transfer the amount equal to the
  2       total of all such amounts transferred during the fiscal year from the in-
  3       surance department service regulation fund to the state general fund.
  4             (f) (g) Any unexpended balance in the insurance department service
  5       regulation fund at the close of a fiscal year shall remain credited to the
  6       insurance department service regulation fund for use in the succeeding
  7       fiscal year and shall be used to reduce future assessments or to accom-
  8       modate cash flow demands on the fund.
  9             (g) (h) The commissioner of insurance shall exempt the assessment
10       of any insurer which, as of December 31 of the calendar year preceding
11       the assessment, has a surplus of less than two times the minimum amount
12       of surplus required for a certificate of authority on and after May 1, 1994,
13       and which is subject to the premium tax or privilege fee liability imposed
14       on insurers organized under the laws of this state. The commissioner of
15       insurance may also exempt or defer, in whole or in part, the assessment
16       of any other insurer if, in the opinion of the commissioner of insurance,
17       immediate payment of the total assessment would be detrimental to the
18       solvency of the insurer.
19             (h) (i) As used in this section:
20             (1) "Affiliates" or "affiliated" has the meaning ascribed by K.S.A. 40-
21       3302 and amendments thereto;
22             (2) "group" or "group of affiliated insurers" means the affiliated in-
23       surers of a group and also includes an individual, unaffiliated insurer; and
24             (3) "insurer" means any insurance company, as defined by K.S.A. 40-
25       201 and amendments thereto, any fraternal benefit society, as defined by
26       K.S.A. 40-738 and amendments thereto, any reciprocal or interinsurance
27       exchange under K.S.A. 40-1601 through 40-1614 and amendments
28       thereto, any mutual insurance company organized to provide health care
29       provider liability insurance under K.S.A. 40-12a01 through 40-12a09 and
30       amendments thereto, any nonprofit dental service corporation under
31       K.S.A. 40-19a01 through 40-19a14 and amendments thereto, any non-
32       profit medical and hospital service corporation under K.S.A. 40-19c01
33       through 40-19c11 and amendments thereto, any health maintenance or-
34       ganization, as defined by K.S.A. 40-3202 and amendments thereto, or any
35       captive insurance company, as defined by K.S.A. 40-4301 and amend-
36       ments thereto, which is authorized to do business in Kansas. 
37       Sec.  2. K.S.A. 1998 Supp. 40-112 and 40-112a are hereby repealed.
38        Sec.  3. This act shall take effect and be in force from and after its
39       publication in the statute book.