Session of 1999
SENATE BILL No. 121
An Act relating to insurance; concerning rate
filings; amending K.S.A. 40-216 and K.S.A.
1998 Supp. 40-955 and repealing the existing
sections.
Be it enacted by the Legislature of the State of Kansas:
Section 1. K.S.A. 40-216 is hereby
amended to read as follows: 40-
216. (a) No insurance company shall hereafter transact
business in this
state until certified copies of its charter and amendments thereto
shall
have been filed with and approved by the commissioner of insurance.
A
copy of the bylaws and amendments thereto of insurance companies
or-
ganized under the laws of this state shall also be filed with and
approved
by the commissioner of insurance. The commissioner may also
require
the filing of such other documents and papers as are necessary to
deter-
mine compliance with the laws of this state. No contract of
insurance or
indemnity shall be issued or delivered in this state until the form
of the
same has been filed with the commissioner of insurance, nor if the
com-
missioner of insurance gives written notice within thirty
(30) 30 days of
such filing, to the company proposing to issue such contract,
showing
wherein the form of such contract does not comply with the
requirements
of the laws of this state; but the failure of any insurance company
to
comply with this section shall not constitute a defense to any
action
brought on its contracts. An insurer may satisfy its obligation to
file its
contracts of insurance or indemnity either individually or by
authorizing
the commissioner to accept on its behalf the filings made by a
licensed
rating organization or another insurer.
Under such rules and regulations as he
or she the commissioner of
insurance shall adopt, the commissioner may, by written
order, suspend
or modify the requirement of filing forms of contracts of insurance
or
indemnity, which cannot practicably be filed before they are used.
Such
orders, rules and regulations shall be made known to insurers and
rating
organizations affected thereby. The commissioner may make an
exami-
nation to ascertain whether any forms affected by such order meet
the
standards of this code.
(b) Prior to the 2000 legislative
session, the Kansas insurance de-
partment shall conduct a study and report to the Kansas
legislature on
the laws of other states governing rate filings and policy or
contract forms
for personal and commercial, including large commercial risks.
The study
shall also identify recent trends in regulation and the
potential impact on
consumers, carriers and agents.
Sec. 2. K.S.A. 1998 Supp. 40-955 is
hereby amended to read as fol-
lows: 40-955. (a) Every insurer shall file with the commissioner,
except
as to inland marine risks where general custom of the industry is
not to
use manual rates or rating plans, every manual of classifications,
rules and
rates, every rating plan, policy form and every modification of any
of the
foregoing which it proposes to use. Every such filing shall
indicate the
proposed effective date and the character and extent of the
coverage
contemplated and shall be accompanied by the information upon
which
the insurer supports the filings. A filing and any supporting
information
shall be open to public inspection after it is filed with the
commissioner.
An insurer may satisfy its obligations to make such filings by
authorizing
the commissioner to accept on its behalf the filings made by a
licensed
rating organization or another insurer. Nothing contained in this
act shall
be construed to require any insurer to become a member or
subscriber
of any rating organization.
(b) Any rate filing for personal
lines, small business owners insurance,
the basic coverage required by K.S.A. 40-3401 et seq. and
amendments
thereto and, loss costs filings for workers
compensation, and rates for
assigned risk plans established by article 21 of chapter 40 of
the Kansas
Statutes Annotated or rules and regulations established by the
commis-
sioner shall require approval by the commissioner before its
use by the
insurer in this state. Policy forms shall require approval by the
commis-
sioner before use by insurers in this state, consistent with the
require-
ments of K.S.A. 40-216 and amendments thereto. As soon as
reasonably
possible after such filing has been made, the commissioner shall in
writing
approve or disapprove the same, except that any filing shall be
deemed
approved unless disapproved within 30 days of receipt of the
filing. The
term ``personal lines and small business owners insurance''
shall mean
insurance for noncommercial automobile, homeowners,
dwelling fire,
renters, farmowner's and business owner's package insurance
policies, as
defined by the commissioner by rules and
regulations.
(c) Any other rate filing, except
personal lines filings, shall be on file
for a waiting period of 30 days before it becomes
effective, except for
inland marine rates which shall be become
effective on filing or any pro-
spective date selected by the insurer, subject to the
commissioner disap-
proving the same if the rates are determined to be inadequate,
excessive,
unfairly discriminatory or otherwise fails to meet the requirements
of this
act. Upon written application by the insurer or rating
organization, the
commissioner may authorize a filing to become effective
before the ex-
piration of the waiting period. Personal lines
rate filings shall be on file
for a waiting period of 30 days before becoming effective,
subject to the
commissioner disapproving the same if the rates are determined
to be
inadequate, excessive, unfairly discriminatory or otherwise fail
to meet
requirements of this act. The term ``personal lines'' shall mean
insurance
for noncommercial automobile, homeowners, dwelling
fire-and-renters in-
surance policies, as defined by the commissioner by rules and
regulations.
A filing complies with this act unless it is disapproved by the
commissioner
within the waiting period or pursuant to subsection (e).
(d) Any filing with respect to
fidelity, surety or guarantee bond shall
be deemed approved from the date of
filing.
(e) In reviewing any rate
filing the commissioner may require the in-
surer or rating organization to provide, at the insurer's or rating
organi-
zation's expense, all information necessary to evaluate the
reasonableness
of the filing, to include payment of the cost of an actuary
selected by the
commissioner to review any rate filing, if the department of
insurance
does not have a staff actuary in its employ.
(f) (e) If a
filing is not accompanied by the information required by
this act, the commissioner shall promptly inform the company or
organ-
ization making the filing. The filing shall be deemed to be
complete when
the required information is received by the commissioner or the
company
or organization certifies to the commissioner the information
requested
is not maintained by the company or organization and cannot be
obtained.
If within the waiting period provided in subsection
(c), the commissioner
finds a filing does not meet the requirements of this act, the
commissioner
shall send to the insurer or rating organization that made the
filing, writ-
ten notice of disapproval of the filing, specifying in what
respects the
filing fails to comply and stating the filing shall not become
effective. If
at any time after the expiration of any waiting
period after a filing becomes
effective, the commissioner finds a filing does not comply
with this act,
the commissioner shall after a hearing held on not less than
ten 10 days'
written notice to every insurer and rating organization that made
the filing
issue an order specifying in what respects the filing failed to
comply with
the act, and stating when, within a reasonable period thereafter,
the filing
shall be no longer effective. Copies of the order shall be sent to
such
insurer or rating organization. The order shall not affect any
contract or
policy made or issued prior to the expiration of the period set
forth in
the order.
In the event an insurer or organization has no
legally effective rate
because of an order disapproving rates, the commissioner shall
specify an
interim rate at the time the order is issued. The interim rate may
be
modified by the commissioner on his or her the
commissioner's own mo-
tion or upon motion of an insurer or organization. The interim rate
or
any modification thereof shall take effect prospectively in
contracts of
insurance written or renewed fifteen 15
days after the commissioner's
decision setting interim rates. When the rates are finally
determined, the
commissioner shall order any overcharge in the interim rates to be
dis-
tributed appropriately, except refunds to policyholders the
commissioner
determines are de minimis may not be required.
Any person or organization aggrieved with
respect to any filing that is
in effect may make written application to the commissioner for a
hearing
thereon, provided the insurer or rating organization that made the
filing
may not proceed under this subsection. The application shall
specify the
grounds to be relied on by the applicant. If the commissioner finds
the
application is made in good faith, that the applicant would be so
aggrieved
if the applicant's grounds are established, and that such grounds
otherwise
justify holding such a hearing, the commissioner shall, within 30
days after
receipt of the application, hold a hearing on not less than 10
days' written
notice to the applicant and every insurer and rating organization
that
made such filing.
Every rating organization receiving a notice
of hearing or copy of an
order under this section, shall promptly notify all its members or
sub-
scribers affected by the hearing or order. Notice to a rating
organization
of a hearing or order shall be deemed notice to its members or
subscrib-
ers.
(g)(f) No insurer
shall make or issue a contract or policy except in
accordance with filings which have been filed or approved for such
insurer
as provided in this act.
(h)(g) The
commissioner may adopt rules and regulations to allow
suspension or modification of the requirement of filing and
approval of
rates as to any kind of insurance, subdivision or combination
thereof, or
as to classes of risks, the rates for which cannot practicably be
filed before
they are used.
(h) Except for workers compensation
and employer's liability line, the
following categories of commercial lines risks are considered
special risks
which are exempt from the filing requirements in this section:
(1) Risks
that are written on an excess or umbrella basis; (2) commercial
risks, or
portions thereof, that are not rated according to manuals,
rating plans,
or schedules including ``a'' rates; (3) large risks; and (4)
special risks des-
ignated by the commissioner, including but not limited to risks
insured
under highly protected risks rating plans, commercial aviation,
credit in-
surance, boiler and machinery, inland marine, fidelity, surety
and guar-
antee bond insurance risks.
(i) For the purposes of this
subsection, ``large risk'' means: (1) An
insured that has total insured property values of $5,000,000 or
more; (2)
an insured that has total annual gross revenues of $10,000,000
or more;
or (3) an insured that has in the preceding calendar year a
total paid
premium of $50,000 or more for property insurance, $50,000 or
more for
general liability insurance, or $100,000 or more for multiple
lines policies.
(j) The exemption for any large risk
contained in subsection (h) shall
not apply to workers compensation and employer's liability
insurance,
insurance purchasing groups, and the basic coverage required by
K.S.A.
40-3401 et seq. and amendments
thereto.
(k) Underwriting files, premium, loss
and expense statistics, financial
and other records pertaining to special risks written by any
insurer shall
be maintained by the insurer and shall be subject to examination
by the
commissioner.
Sec. 3. K.S.A. 40-216 and K.S.A. 1998 Supp. 40-955 are
hereby re-
pealed.
Sec. 4. This act shall take effect and be in force
from and after its
publication in the statute book.
I hereby certify that the above BILL originated in the
SENATE, and passed that body
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Passed the HOUSE ______________________________
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APPROVED ______________________________
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