Brief⁽¹⁾

S.B. 121, as amended, concerns the filing of rates and forms by certain insurance companies with the Insurance Commissioner.

The bill:

• maintains the file and approve process for rates on basic medical malpractice insurance, loss costs filings for workers compensation, and assigned risk plans (rates must be filed and approved before they can be used);



• moves rates filed on other commercial lines of insurance from a process of file and wait (wait 30 days then use) to file and use (no waiting period prior to use);



• moves rate filing for personal lines from file and approve to the process of file and wait (personal lines include noncommercial auto, homeowners, dwelling, fire, and renters policies);



• creates a category of commercial lines risks considered "special risks" that are exempt from filing requirements and includes risks written on an excess or umbrella basis; commercial risks not rated by manuals or plans; large risks-- meaning an insured with total insured property values of $5 million or more, an insured with annual gross revenues of $10 million or more, or an insured who paid premiums of $50,000 or more for property, $50,000 or more for general liability, or $100,000 or more for multiple lines policies; and other special risks designated by the Commissioner (the large risk exemption does not include workers compensation and employers liability, insurance purchasing groups, or basic medical malpractice insurance); and



• directs the Insurance Department, prior to the 2000 Legislative Session, to conduct a study of other states' laws governing rate filings and policy or contract forms for personal and commercial risks, including large commercial risks, and report on recent trends in regulation and the potential impact on consumers, carriers, and agents.

Background

S.B. 121, as amended, was requested by the Insurance Commissioner whose Assistant Commissioner explained that the bill completes the process of modernization of the rate-making process in Kansas for commercial lines of insurance and begins the same process for rates in personal lines insurance. The bill also responds to the request of a 1997 Task Force on the Insurance Industry which encouraged the rapid implementation of file and use for form and rate approval and asked the Commissioner to report to the standing insurance committees of the 1999 Legislature on the progress made in this area.

The bill, as amended, was supported by the American Insurance Association, the Farmers Insurance Group, State Farm Insurance Companies, and the Kansas Association of Insurance Agents.

The fiscal note on the original bill reflected no impact.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/bill_search.html.