As Amended by Senate Committee
Session of 2000
SENATE BILL No. 651
By Committee on Federal and State Affairs
2-29
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.
16
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
2
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.
3
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
4
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
5
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
6
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
7
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
8
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-
9
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
10
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.
11
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.