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TABLE OF CONTENTS

• CITATION
• STATUS
• WHAT'S NEW
• ENACTED TEXT

CITATION
2005 KS S 539


STATUS
This legislation was assigned the status of Enacted - Final
 on 04/17/2006.

Author: Senate Committee on Financial Institutions and Insurance
Session: Kansas 81st Legislature -- 2006 Regular Session
StateNet Processing Date: 04/26/2006


ENACTED TEXT
                      Substitute for SENATE BILL No. 539
AN ACT concerning casualty insurance companies; relating to certain
   requirements regarding filing rates, forms and premiums; amending
   K.S.A.  40-955 and K.S.A. 2005 Supp. 40-216 and repealing the existing
   sections.
Be it enacted by the Legislature of the State of Kansas:

    Section 1. K.S.A. 2005 Supp. 40-216 is hereby amended to read as follows:
40-216. (a)  (1)  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
organized 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 determine
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
commissioner of insurance gives written notice within 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. 

     (2) (A) Except as provided in subparagraph (B), each contract of
insurance or indemnity issued or delivered in this state shall be effective
on filing, or any subsequent date selected by the insurer, unless the
commissioner disapproves such contract of insurance within 30 days after
filing because the rates are determined to be inadequate, excessive, unfairly
discriminatory or otherwise fail to meet the requirements of this act. 

     (B) The following contracts of insurance or indemnity shall not be
subject to the provisions of subsection (A): 

     (i) Contracts pertaining to large risks as defined in K.S.A.
40-955(i), and amendments thereto, which are exempt from the filing
requirements of this section; 

     (ii) personal lines contracts filed in accordance with paragraph (3)
of this section; 

     (iii) any form filing for the basic coverage required by K.S.A.
40-3401 et seq., and amendments thereto; and 

     (iv) form filing for workers compensation. 

     No form filing listed in clauses (iii) and (iv) of this subparagraph
shall be used in this state by any insurer until such form filing has been
approved by the commissioner.  

     (3) Each personal lines contract of insurance or indemnity issued or
delivered in this state shall be on file for a period of 30 days before
becoming effective unless the commissioner disapproves such personal lines
contract if the rates are determined by the commissioner to be inadequate,
excessive, unfairly discriminatory or otherwise fail to meet the requirements
of this act. For the purposes of this paragraph, the term "personal lines"
shall mean insurance for noncommercial automobile, homeowners, dwelling, fire
and renters insurance policies as defined by the commissioner by rules and
regulations. 

     (4)  Under such rules and regulations as 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 examination to
ascertain whether any forms affected by such order meet the standards of this
code.

     (5) 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. 

    (b) The commissioner of insurance shall allow any insurance company
authorized to transact business in this state to deliver to any person in
this state any contract of insurance or indemnity, including any explanatory
materials, written in any language other than the English language under the
following conditions:

    (1) The insured or applicant for insurance who is given a copy of the
same contract of insurance or indemnity or explanatory materials written in
the English language;

    (2) the English language version of the contract for insurance or
indemnity or explanatory materials delivered shall be the controlling
version; and

    (3) any contract of insurance or indemnity or explanatory materials
written in any language other than English shall contain a disclosure
statement in 10 point boldface type, printed in both the English language and
the other language used, stating the English version of the contract of
insurance or indemnity is the official or controlling version and that the
version is written in any language other than English is furnished for
informational purposes only.

    (c) All contracts of insurance or indemnity that are required to be filed
with the commissioner of insurance shall be accompanied by any version of
such contract of insurance or indemnity written in any language other than
the English language.

    (d) Any insurance company or insurer, including any agent or employee
thereof, who knowingly misrepresents the content of a contract of insurance
or indemnity or explanatory materials written in a language other than the
English language shall be deemed to have violated the unfair trade practice
law.

    (e) For the purposes of this section, the term "contract of insurance or
indemnity" shall include any rider, endorsement or application pertaining to
such contract of insurance or indemnity.

     (f) (1) If at any time after a filing becomes effective, the
commissioner finds that such filing does not comply with this act, after the
commissioner shall send written notice to every insurer and rating
organization making such filing that a hearing concerning such filing will be
held in not less than 10 days. 

     (2) After the hearing, the commissioner shall issue an order stating:


     (A) The reasons why such filing failed to comply with the act; and


     (B) the date, within a reasonable time after the date the order is
issued, upon which such filing shall no longer be effective. 

     (3) A copy of the commissioner's order shall be sent to every insurer
and rating organization that made such filing. 

     (4) No order issued pursuant to this subsection shall affect any
contract or policy made or issued under such filing prior to the date
specified upon which such filing shall no longer be effective. 

    Sec. 2. K.S.A. 40-955 is hereby amended to read as follows: 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 the basic coverage required by K.S.A. 40-3401 
et seq.  and amendments thereto, 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 commissioner shall require approval by the commissioner
before its use by the insurer in this state.  Policy forms shall require
approval by the commissioner before use by insurers in this state, consistent
with the requirements 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.

    (c) Any other rate filing, except personal lines filings, shall become
effective on filing or any prospective date selected by the insurer, subject
to the commissioner disapproving the same if the rates are determined to be
inadequate, excessive, unfairly discriminatory or otherwise fails to meet the
requirements of this act. 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 insurance
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) In reviewing any rate filing the commissioner may require the insurer
or rating organization to provide, at the insurer's or rating organization'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.

    (e)  (1) (A)  If a filing is not accompanied by the information
required by this act, the commissioner shall promptly inform the company or
organization 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.

     (B)  If 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, written notice of disapproval of
the filing, specifying in what respects the filing fails to comply and
stating the filing shall not become effective.

     (C)  If at any time 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 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.

     (2) (A)  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.

     (B)  The interim rate may be modified by the commissioner on the
commissioner's own motion 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 15 days after the commissioner's
decision setting interim rates.

     (C)  When the rates are finally determined, the commissioner shall
order any overcharge in the interim rates to be distributed appropriately,
except refunds to policy-holders the commissioner determines are de minimis
may not be required.

     (3) (A)  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   except that  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.

     (B)  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.

     (C)  Every rating organization receiving a notice of hearing or
copy of an order under this section, shall promptly notify all its members or
subscribers affected by the hearing or order. Notice to a rating organization
of a hearing or order shall be deemed notice to its members or
subscribers.

    (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.

    (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 designated by the commissioner, including but not
limited to risks insured under highly protected risks rating plans,
commercial aviation, credit insurance, boiler and machinery, inland marine,
fidelity, surety and guarantee 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.

    New Sec. 3. (a) Insurers may increase or decrease premiums on a given
risk basis without documentation up to 40% based on any factor, except the
rate adjustment made pursuant to this section cannot:

    (1) Be based upon the race, creed, national origin or religion of the
insured.

    (2) Apply to insurance covering:

    (A) Risks of a personal nature, including insurance for homeowners,
tenants, private passenger nonfleet automobiles, mobile homes and other
property and casualty insurance for personal, family or household needs;

    (B) farms and ranches, including crop insurance;

    (C) workers compensation; or

    (D) coverage required by K.S.A. 40-3401 et seq., and amendments thereto.

    (b) By rules and regulations adopted in accordance with the rules and
regulations filing act, the commissioner of insurance may broaden the range
of plus or minus 40% for any line or type of insurance subject to K.S.A.
40-955, and amendments thereto, if the commissioner of insurance finds that
the:

    (1) Utilization of this section by the insurance industry has produced a
significant number of rate modifications at or near the upper limit and at
the lower limit of the allowable range of modification; and

    (2) modifiers at and near the upper and lower limits of the allowable
range of modification appear to be predominantly correlated with individual
risk factors that relate to expected losses and expenses.

    (c) By rules and regulations adopted in accordance with the rules and
regulations filing act, the commissioner of insurance may reduce the range of
plus or minus 40% for any line or type of insurance subject to K.S.A. 40-955,
and amendments thereto, if the commissioner of insurance finds that modifiers
at or near the upper or lower limits of the allowable range of modification
are not predominantly correlated with individual risk factors that relate to
expected losses and expenses, but such reduction shall not reduce the range
to less than plus or minus 25%.

    (d) Any insurer aggrieved by the commissioner's findings pursuant to this
section may appeal the same pursuant to the Kansas administrative procedure
act.

    Sec. 4. K.S.A. 40-955 and K.S.A. 2005 Supp. 40-216 are hereby repealed.

    Sec. 5. This act shall take effect and be in force from and after its
publication in the statute book.

WHAT'S NEW
Description of Changes
There are no recorded changes for this document.

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