Kansas 2023-2024 Regular Session

Kansas Senate Bill SB224 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	Session of 2023
2	2	SENATE BILL No. 224
3	3	By Committee on Federal and State Affairs
4	4	2-9
5	5	AN ACT concerning environmental, social and governance standards
6	6	involving contracts, investments and business practices; relating to
7	7	ideological boycotts or other discriminatory conduct; enacting the
8	8	Kansas protection of pensions and businesses against ideological
9	9	interference act; directing the board of trustees of the Kansas public
10	10	employees retirement system to divest from investments with entities
11	11	engaged in ideological boycotts; establishing conditions and procedures
12	12	for divestment; requiring the state treasurer to publish a list of financial
13	13	companies and financial institutions engaged in ideological boycotts;
14	14	authorizing the state treasurer to disqualify listed financial institutions
15	15	from receiving deposit of state moneys; prohibiting governmental
16	16	contracts without written verification that a contractor is not engaged in
17	17	ideological boycotts; directing fiduciaries of governmental plans that
18	18	provide retirement benefits, defer employee income or invest taxpayer
19	19	moneys to act only in the financial interest of such plans; requiring
20	20	registered investment advisers to make certain disclosures to clients and
21	21	obtain written consent of clients prior to investing client funds in
22	22	investments engaged in ideological boycotts; providing for civil and
23	23	criminal penalties; amending K.S.A. 75-4208 and K.S.A. 2022 Supp.
24	24	40-2404 and repealing the existing sections.
25	25	Be it enacted by the Legislature of the State of Kansas:
26	26	New Section 1. (a) The provisions of sections 1 through 29, and
27	27	amendments thereto, shall be known and may be cited as the Kansas
28	28	protection of pensions and businesses against ideological interference act.
29	29	(b) As used in this act:
30	30	(1) "Act" means the Kansas protection of pensions and businesses
31	31	against ideological interference act.
32	32	(2) "Banking contract" means a contract entered into by the treasurer
33	33	or the pooled money investment board and a financial institution pursuant
34	34	to article 42 of chapter 75 of the Kansas Statutes Annotated, and
35	35	amendments thereto, to receive deposit of state moneys in operating
36	36	accounts or investment accounts.
37	37	(3) "Board" means the board of trustees of the Kansas public
38	38	employees retirement system.
39	39	(4) "Company" means any organization, association, corporation,
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76	76	partnership, joint venture, limited partnership, limited liability partnership,
77	77	limited liability company or other entity of business association, including
78	78	a wholly owned subsidiary, majority-owned subsidiary, parent company or
79	79	affiliate of such entities or business associations that exists for the purpose
80	80	of making a profit.
81	81	(5) "Direct holdings" means, with respect to a financial company, all
82	82	securities of that financial company held directly by the system in an
83	83	account or fund in which the system owns all shares or interests.
84	84	(6) "Financial company" means a publicly traded financial services,
85	85	banking or investment company.
86	86	(7) "Financial institution" means a bank, national banking
87	87	association, trust company, savings and loan association, building and
88	88	loan association, mutual savings bank, credit union, payment processor or
89	89	savings bank.
90	90	(8) "Financial services company" means a financial institution,
91	91	insurance company or other company that provides investment services.
92	92	(9) "Fossil fuels" means coal, natural gas or oil.
93	93	(10) "Governmental entity" means:
94	94	(A) The state of Kansas or any political subdivision thereof,
95	95	including, but not limited to, any county, city, municipality, agency, airport
96	96	authority, community mental health center, drainage district, groundwater
97	97	management district, hospital district, housing authority, metropolitan
98	98	transit authority, port authority, public building commission, rural water
99	99	district, school district or township; or
100	100	(B) any school, college, university, administration, authority or other
101	101	enterprise operated by the state or any political subdivision thereof.
102	102	(11) "Governmental plan" means any plan, fund or program that is
103	103	established, provided or maintained by a governmental entity to:
104	104	(A) Provide retirement income or other retirement benefits to
105	105	employees or former employees;
106	106	(B) defer income by employees for a period of time extending to the
107	107	termination of covered employment or beyond; or
108	108	(C) invest taxpayer money for any purpose.
109	109	(12) "Ideological boycott" means, without an ordinary business
110	110	purpose, refusing to deal with, refusing or limiting investment in,
111	111	terminating business activities with or otherwise taking any commercial
112	112	action that is intended to penalize, inflict economic harm on, limit
113	113	commercial relations with or change or limit the activities of a company
114	114	because the company, without violating controlling state or federal law:
115	115	(A) Engages in the exploration, production, utilization, transportation,
116	116	sale or manufacturing of fossil fuel-based energy and does not commit or
117	117	pledge to meet environmental standards beyond applicable federal and
118	118	state law;
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162	162	(B) engages in the exploration, production, utilization, transportation,
163	163	sale or manufacturing of nuclear energy and does not commit or pledge to
164	164	meet environmental standards beyond applicable federal and state law;
165	165	(C) engages in production of agriculture;
166	166	(D) engages in production of lumber;
167	167	(E) engages in mining;
168	168	(F) engages in the exploration, production, utilization, transportation,
169	169	sale or manufacturing of any other natural resource;
170	170	(G) emits greenhouse gases or does not disclose or offset such
171	171	greenhouse gas emissions;
172	172	(H) engages, facilitates or supports the manufacture, import,
173	173	distribution, marketing, advertising, lawful use or sale of firearms,
174	174	ammunition or component parts and accessories of firearms or
175	175	ammunition;
176	176	(I) does not meet, is not expected to meet or does not commit to meet
177	177	environmental standards or disclosure criteria, in particular to eliminate,
178	178	reduce, offset or disclose greenhouse gas emissions;
179	179	(J) is governed by a corporate board or other officers whose race,
180	180	ethnicity, sex or sexual orientation meets or does not meet any criterion;
181	181	(K) does not facilitate or assist employees in obtaining abortions,
182	182	assisted suicide or gender reassignment services; or
183	183	(L) engages with, facilitates, employs, supports, does business with,
184	184	represents or advocates for any company described by any of
185	185	subparagraphs (A) through (K).
186	186	(13) "Indirect holdings" means, with respect to a financial company,
187	187	all securities of that financial company held in an account or fund, such as
188	188	a mutual fund, managed by one or more persons not employed by the
189	189	system, which owns shares or interests together with other investors not
190	190	subject to the provisions of this act. "Indirect holdings" does not include
191	191	money invested under a plan described by sections 401(k) or 457 of the
192	192	federal internal revenue code.
193	193	(14) "Insurance company" means the same as defined in K.S.A. 40-
194	194	201, and amendments thereto.
195	195	(15) "Listed financial company" means a financial company listed by
196	196	the treasurer pursuant to section 7, and amendments thereto.
197	197	(16) "Natural resources" means fossil fuels, minerals, metal ores or
198	198	any other nonrenewable or finite resource that cannot be readily replaced
199	199	by natural means with the speed at which it is consumed.
200	200	(17) "Nonpecuniary factor" means any factor intended to further or
201	201	promote any environmental, governance, ideological, political, social or
202	202	other nontraditional goal or standard.
203	203	(18) (A) "Ordinary business purpose" means any purpose directly
204	204	related to:
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248	248	(i) Promoting the financial success or stability of a financial
249	249	institution;
250	250	(ii) mitigating risk to a financial institution;
251	251	(iii) complying with legal or regulatory requirements; or
252	252	(iv) limiting liability of a financial institution.
253	253	(B) "Ordinary business purpose" does not mean any purpose to
254	254	further social, political or ideological interests. A company may reasonably
255	255	be determined to have taken an action or considered a factor with the
256	256	purpose to further social, political or ideological interests based upon
257	257	evidence indicating that such a purpose is included in, but not limited to:
258	258	(i) Branding, advertising, statements, explanations, reports, letters to
259	259	clients, communications with portfolio companies, statements of principles
260	260	or commitments; or
261	261	(ii) participating in, affiliation with or status as a signatory to any
262	262	coalition, initiative, joint statement of principles or agreement.
263	263	(19) "Person" means any natural person, partnership, association,
264	264	joint stock company, trust or corporation.
265	265	(20) "Registered investment adviser" means an investment adviser
266	266	that provides financial or investment advice to clients and is registered
267	267	either with the United States securities and exchange commission or with
268	268	the state of Kansas under the Kansas uniform securities act, or both.
269	269	(21) "Restricted financial institution" means a financial institution
270	270	included in the most recently updated restricted financial institution list.
271	271	(22) "Restricted financial institution list" means the list of financial
272	272	institutions prepared, maintained and published by the treasurer pursuant
273	273	to section 15, and amendments thereto.
274	274	(23) "Security" means any note, stock, treasury stock, security future,
275	275	bond, debenture, evidence of indebtedness, certificate of interest or
276	276	participation in any profit-sharing agreement, collateral-trust certificate,
277	277	preorganization certificate or subscription, transferable share, investment
278	278	contract, voting-trust certificate, certificate of deposit for a security,
279	279	fractional undivided interest in oil, gas or other mineral rights, any put,
280	280	call, straddle, option or privilege on any security, including a certificate of
281	281	deposit, or on any group or index of securities, including any interest
282	282	therein or based on the value thereof, or any put, call, straddle, option or
283	283	privilege entered into on a national securities exchange relating to foreign
284	284	currency or, in general, any interest or instrument commonly known as a
285	285	"security," or any certificate of interest or participation in, temporary or
286	286	interim certificate for, receipt for, guarantee of, or warrant or right to
287	287	subscribe to or purchase any of the foregoing.
288	288	(24) "Social credit score" means any rating, scoring, analysis,
289	289	assessment, list, standard, guidance, criterion or tabulation that includes,
290	290	without violating controlling state or federal law, a negative assessment of
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334	334	whether a person is engaging in any of the following lawful activities
335	335	within this state:
336	336	(A) Not committing or pledging to meet environmental standards
337	337	beyond applicable state or federal law in the exploration, production,
338	338	utilization, transportation, sale or manufacturing of fossil fuel-based
339	339	energy, nuclear energy, agriculture, timber, mining or any other natural
340	340	resource;
341	341	(B) the emitting of greenhouse gases or refusing to disclose, reduce
342	342	or offset such greenhouse gas emissions;
343	343	(C) not meeting, not expecting to meet or not committing to meet any
344	344	environmental goals, including emissions, standards or disclosures;
345	345	(D) not meeting, not expecting to meet or not committing to meet any
346	346	corporate board or company employment composition goals, including
347	347	standards or disclosures based upon characteristics protected under K.S.A.
348	348	44-1001 et seq., and amendments thereto;
349	349	(E) the manufacturing, distribution or sale of firearms, firearms
350	350	accessories, ammunition or ammunition components;
351	351	(F) the governing of a corporate board or other officers whose race,
352	352	ethnicity, sex or sexual orientation meets or does not meet any criterion;
353	353	(G) refusing to facilitate or assist employees in obtaining abortions,
354	354	assisted suicide or gender reassignment services;
355	355	(H) exercising such person's freedom of speech as protected by either
356	356	the first amendment to the constitution of the United States or section 11 of
357	357	the Kansas bill of rights, if the financial services company were considered
358	358	to be a state actor, including the person's political opinions, political
359	359	speech, political donations, political affiliations or other expressive
360	360	activities;
361	361	(I) exercising such person's free exercise of religion as protected by
362	362	any of the first amendment to the constitution of the United States, the
363	363	federal religious freedom restoration act of 1993, section 7 of the Kansas
364	364	bill of rights or the Kansas preservation of religious freedom act, if the
365	365	financial services company were considered to be a state actor, including
366	366	all aspects of the person's religious observance and practice, as well as
367	367	belief and affiliation; or
368	368	(J) engaging with, facilitating of, employing by, supporting of, doing
369	369	business with, representing of or advocating for any person who does
370	370	business with a person described by subparagraphs (A) through (I).
371	371	(25) "System" means the Kansas public employees retirement system.
372	372	(26) "Treasurer" means the state treasurer.
373	373	New Sec. 2. With respect to actions taken in compliance with this act,
374	374	including all good faith determinations regarding financial companies as
375	375	required by this act and any reliance on such good faith determinations, the
376	376	state, the board, the system and the treasurer are exempt from any
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420	420	conflicting statutory or common law obligations, including any obligations
421	421	with respect to making investments, divesting from any investment,
422	422	preparing or maintaining any list of financial companies or choosing asset
423	423	managers, investment funds or investments for the system's securities
424	424	portfolios.
425	425	New Sec. 3. In a cause of action based on an action, inaction,
426	426	decision, divestment, investment, financial company communication,
427	427	report or other determination made or taken in compliance with this act,
428	428	without regard to whether the person performed services for
429	429	compensation, the state shall indemnify and hold harmless for actual
430	430	damages, court costs and attorney fees adjudged against, and defend:
431	431	(a) An employee, a member of the board or any other officer of the
432	432	system;
433	433	(b) a contractor of the system;
434	434	(c) a former employee, a former member of the board or any other
435	435	former officer of the system who was an employee, member of the board
436	436	or other officer when the act or omission occurred on which the damages
437	437	are based;
438	438	(d) a former contractor of the system who was a contractor when the
439	439	act or omission occurred on which the damages are based; and
440	440	(e) the system.
441	441	New Sec. 4. (a) A person, including a member, retiree or beneficiary
442	442	of the system, an association, a research firm, a financial company or any
443	443	other person may not sue or pursue a private cause of action against the
444	444	state, the board, the system or the treasurer for any claim or cause of
445	445	action, including breach of fiduciary duty, or for violation of any
446	446	constitutional, statutory or regulatory requirement in connection with any
447	447	action, inaction, decision, divestment, investment, financial company
448	448	communication, report or other determination made or taken in
449	449	compliance with this act.
450	450	(b) A person who files suit against the state, the board, the system or
451	451	the treasurer in violation of this section is liable for paying the costs and
452	452	attorney fees of the party sued in violation of this section.
453	453	New Sec. 5. (a) No person, company or governmental entity shall
454	454	take action to penalize or threaten to penalize any financial institution or
455	455	financial company for complying with this act.
456	456	(b) Any party taking such action shall have caused harm to the state
457	457	by interfering with the state's sovereign interests in administering the
458	458	state's programs, the state's commercial relationship with financial
459	459	institutions and the financial companies of this state.
460	460	New Sec. 6. The treasurer and the board may rely on a financial
461	461	company's response to a notice or communication made under this act
462	462	without conducting any further investigation, research or inquiry.
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506	506	New Sec. 7. (a) The treasurer shall prepare, maintain and provide to
507	507	the board a list of all financial companies that engage in ideological
508	508	boycotts. Such list shall be known as the restricted financial company list.
509	509	In maintaining the list, the treasurer may:
510	510	(1) Review and rely on publicly available information regarding
511	511	financial companies, as appropriate in the treasurer's sole discretion,
512	512	including information provided by the state, nonprofit organizations,
513	513	research firms, international organizations and governmental entities; and
514	514	(2) request written verification from a financial company that such
515	515	company does not engage in ideological boycotts.
516	516	(b) A financial company that fails to provide to the treasurer a written
517	517	verification under subsection (a)(2) before the 31
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519	519	day after receiving the
520	520	request from the treasurer is presumed to be engaged in an ideological
521	521	boycott.
522	522	(c) In determining whether to include a financial company on the
523	523	restricted financial company list, the treasurer shall consider, but not be
524	524	limited to, the following:
525	525	(1) A financial company's certification that it is not engaged in
526	526	ideological boycotts;
527	527	(2) publicly available statements or information made by the financial
528	528	company, including statements by a member of such financial company's
529	529	governing body, an executive director of the financial company or any
530	530	other officer or employee of the financial company with the authority to
531	531	issue policy statements on behalf of such financial company; and
532	532	(3) information published by a state or federal governmental entity.
533	533	(d) In determining whether to include a financial company on the
534	534	restricted financial company list, the treasurer shall not rely solely on the
535	535	following:
536	536	(1) Statements or complaints by a boycotted company; or
537	537	(2) media reports of a financial company's ideological boycott.
538	538	(e) A financial company shall not be compelled to produce or disclose
539	539	any data or information deemed confidential, privileged or otherwise
540	540	protected from disclosure by state or federal law.
541	541	(f) For any financial company that the treasurer determines is
542	542	engaged in an ideological boycott, the treasurer shall send a written notice
543	543	to such financial company at least 45 days prior to including such financial
544	544	company on the restricted financial company list. Such written notice shall
545	545	state that:
546	546	(1) The treasurer has determined that the financial company is a
547	547	restricted financial company;
548	548	(2) the financial company will be placed on the restricted financial
549	549	company list in 45 days unless, within 30 days following receipt of the
550	550	written notice, the restricted financial company demonstrates that such
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594	594	financial company is not engaged in an ideological boycott; and
595	595	(3) such restricted financial list is published on the treasurer's website
596	596	and sent to the board, the president of the senate, the speaker of the house
597	597	of representatives and the attorney general.
598	598	(g) Following a restricted financial company's inclusion on the
599	599	restricted financial company list, the treasurer shall remove such financial
600	600	company from such list if the financial company demonstrates that such
601	601	financial company has ceased all ideological boycotts.
602	602	(h) The treasurer shall update the list annually or more often as the
603	603	treasurer considers necessary, but not more often than quarterly, based on
604	604	information from sources listed in subsection (a), among other sources.
605	605	(i) Not later than the 30
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607	607	day after the date the list of financial
608	608	companies that engage in ideological boycotts is first provided to the board
609	609	or updated, the treasurer shall file the list with the president of the senate,
610	610	the speaker of the house of representatives and the attorney general and
611	611	post the list on the treasurer's website in a location that is easily accessible
612	612	to the public. The treasurer shall include at the top of such list a citation to
613	613	this section, a brief summary of the purpose of the list and a statement that
614	614	inclusion on the list is not an indication of unsafe or unsound operating
615	615	conditions of any financial institution or any risk of consumer deposits.
616	616	New Sec. 8. Not later than the 30
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618	618	day after the date the board
619	619	receives the list provided under section 7, and amendments thereto, the
620	620	board shall notify the treasurer of the listed financial companies in which
621	621	the system owns direct holdings or indirect holdings.
622	622	New Sec. 9. (a) For each listed financial company identified under
623	623	section 8, and amendments thereto, the board shall send a written notice:
624	624	(1) Informing the financial company of its status as a listed financial
625	625	company;
626	626	(2) warning the financial company that it may become subject to
627	627	divestment by the board after the expiration of the period prescribed by
628	628	subsection (b); and
629	629	(3) offering the financial company the opportunity to clarify its
630	630	activities related to companies prescribed by section 1(b)(4), and
631	631	amendments thereto.
632	632	(b) Not later than the 90
633	633	th
634	634	day after the date the financial company
635	635	receives notice under subsection (a), the financial company shall cease
636	636	engaging in ideological boycotts in order to avoid divestment by the board.
637	637	(c) If, during the time provided by subsection (b), the financial
638	638	company ceases engaging in ideological boycotts, the treasurer shall
639	639	remove the financial company from the list maintained under section 7,
640	640	and amendments thereto. In which case, the provisions of this act shall no
641	641	longer apply to such financial company unless such financial company
642	642	resumes engaging in ideological boycotts.
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686	686	(d) If, after the time provided by subsection (b) expires, the financial
687	687	company continues to engage in ideological boycotts, the board shall sell,
688	688	redeem, divest or withdraw all publicly traded securities of the financial
689	689	company, except securities described by section 11, and amendments
690	690	thereto, according to the schedule provided by section 10, and
691	691	amendments thereto.
692	692	New Sec. 10. (a) When the board is required to sell, redeem, divest or
693	693	withdraw all publicly traded securities of a listed financial company, the
694	694	board shall comply with the following schedule:
695	695	(1) At least 50% of those assets shall be removed from the system's
696	696	assets under management not later than the 180
697	697	th
698	698	day after the date the
699	699	financial company receives notice under section 9, and amendments
700	700	thereto, or subsection (b) unless the board determines that a later date is
701	701	more prudent, based on a good faith exercise of the board's fiduciary
702	702	discretion and subject to paragraph (2); and
703	703	(2) 100% of such assets shall be removed from the system's assets
704	704	under management not later than the 360
705	705	th
706	706	day after the date the financial
707	707	company receives notice under section 9, and amendments thereto, or
708	708	subsection (b).
709	709	(b) If a financial company that ceased engaging in ideological
710	710	boycotts after receiving notice under section 9, and amendments thereto,
711	711	resumes such financial company's boycott, the board shall send a written
712	712	notice to the financial company informing such financial company that the
713	713	board will sell, redeem, divest or withdraw all publicly traded securities of
714	714	the financial company according to the schedule in subsection (a).
715	715	(c) Except as provided by subsection (a), the board may delay the
716	716	schedule for divestment under such subsection only to the extent that the
717	717	board determines, in the board's good faith judgment and consistent with
718	718	the board's fiduciary duty, that divestment from listed financial companies
719	719	will likely result in a loss in value or a benchmark deviation as provided
720	720	by section 12(b), and amendments thereto. If the board delays the schedule
721	721	for divestment, the board shall submit a report to the treasurer, the
722	722	president of the senate, the speaker of the house of representatives and the
723	723	attorney general stating the reasons and justification for the board's delay
724	724	in divestment from listed financial companies. The report shall include
725	725	documentation supporting the board's determination that the divestment
726	726	would result in a loss in value or a benchmark deviation as provided by
727	727	section 12(b), and amendments thereto, including objective numerical
728	728	estimates. The board shall update the report every six months.
729	729	New Sec. 11. The board is also required to divest from any indirect
730	730	holdings in actively or passively managed investment funds or private
731	731	equity funds containing listed financial companies. The board shall submit
732	732	letters to the managers of each investment fund containing listed financial
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776	776	companies requesting that they remove such financial companies from the
777	777	fund or create a similar actively or passively managed fund with indirect
778	778	holdings devoid of listed financial companies. If a manager creates a
779	779	similar fund with substantially the same management fees and
780	780	substantially the same level of investment risk and anticipated return, the
781	781	board may replace all applicable investments with investments in the
782	782	similar fund in a time frame consistent with prudent fiduciary standards
783	783	but not later than the 450
784	784	th
785	785	day after the date the fund is created. If a
786	786	manager does not create such similar fund, the board shall divest from
787	787	such indirect holdings in actively or passively managed investment funds
788	788	or private equity funds.
789	789	New Sec. 12. (a) Except as provided by this section, the system may
790	790	not acquire securities of a listed financial company.
791	791	(b) The board may cease divesting from one or more listed financial
792	792	companies only if clear and convincing evidence shows that:
793	793	(1) The system has suffered or will suffer a greater than 25% loss in
794	794	the hypothetical value of all assets under management by the system as a
795	795	result of having to divest from listed financial companies under this act; or
796	796	(2) an individual portfolio that uses a benchmark-aware strategy
797	797	would be subject to an aggregate expected deviation from its benchmark of
798	798	greater than 25% as a result of having to divest from listed financial
799	799	companies under this act.
800	800	(c) The board may cease divesting from a listed financial company as
801	801	provided by this section only to the extent necessary to ensure that the
802	802	system does not suffer a loss in value or deviate from its benchmark as
803	803	described by subsection (b).
804	804	(d) Before the board may cease divesting from a listed financial
805	805	company under this section, the board shall provide a written report to the
806	806	treasurer, the president of the senate, the speaker of the house of
807	807	representatives and the attorney general stating the reason and
808	808	justification, supported by clear and convincing evidence, for deciding to
809	809	cease divestment or to remain invested in a listed financial company.
810	810	(e) The board shall update the report required by subsection (d)
811	811	semiannually, as applicable.
812	812	(f) This section does not apply to reinvestment in a financial company
813	813	that is no longer a listed financial company.
814	814	New Sec. 13. Not later than the first day of the regular session of the
815	815	legislature, each year, the board shall file a report with the treasurer, the
816	816	president of the senate, the speaker of the house of representatives and the
817	817	attorney general that:
818	818	(a) Identifies all securities sold, redeemed, divested or withdrawn in
819	819	compliance with section 10, and amendments thereto;
820	820	(b) identifies all prohibited investments under section 12, and
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864	864	amendments thereto; and
865	865	(c) summarizes any changes made under section 11, and amendments
866	866	thereto.
867	867	New Sec. 14. The attorney general may bring any action necessary to
868	868	enforce the provisions of sections 1 through 14, and amendments thereto,
869	869	and to investigate potential violations of sections 1 through 14, and
870	870	amendments thereto.
871	871	New Sec. 15. (a) On or before July 1, 2024, the treasurer shall
872	872	prepare and maintain a list of financial institutions that are engaged
873	873	ideological boycotts.
874	874	(b) The treasurer shall post the list, designated as a restricted financial
875	875	institutions list, on the treasurer's website and submit a copy of such list to
876	876	the governor, the attorney general, the president of the senate and the
877	877	speaker of the house of representatives.
878	878	(c) The treasurer shall include a citation to this section and a brief
879	879	summary of the purpose of the list at the top of such list, including a
880	880	statement that inclusion on the list is not an indication of unsafe or
881	881	unsound operating conditions of any financial institution or any risk of
882	882	consumer deposits.
883	883	(d) The treasurer shall update the restricted financial institution list
884	884	annually and may update such list more frequently as the treasurer deems
885	885	necessary.
886	886	New Sec. 16. (a) The treasurer shall send a written notice to a
887	887	financial institution 45 days prior to including such financial institution on
888	888	the restricted financial institution list. Such written notice shall provide
889	889	that:
890	890	(1) The treasurer has determined that the financial institution is a
891	891	restricted financial institution;
892	892	(2) the financial institution will be placed on the restricted financial
893	893	institution list in 45 days unless, within 30 days following receipt of the
894	894	written notice, the restricted financial institution demonstrates that such
895	895	financial institution is not engaged in ideological boycotts;
896	896	(3) such restricted financial institution list is published on the
897	897	treasurer's website; and
898	898	(4) the financial institution's placement on the list may render such
899	899	financial institution ineligible to enter into or renew any banking contracts
900	900	with the state of Kansas.
901	901	(b) Following a restricted financial institution's inclusion on the
902	902	restricted financial institution list, the treasurer shall remove such financial
903	903	institution from such list if the financial institution demonstrates that such
904	904	financial institution has ceased engaging in ideological boycotts.
905	905	New Sec. 17. (a) In determining whether to include a financial
906	906	institution on the restricted financial institution list, the treasurer shall
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949	949	43 SB 224 12
950	950	consider, but not be limited to, the following:
951	951	(1) A financial institution's certification that it is not engaged in
952	952	ideological boycotts;
953	953	(2) publicly available statements or information made by the financial
954	954	institution, including statements by a member of such financial institution's
955	955	governing body, an executive director of the financial institution or any
956	956	other officer or employee of the financial institution with the authority to
957	957	issue policy statements on behalf of such financial institution; or
958	958	(3) information published by a state or federal governmental entity.
959	959	(b) In determining whether to include a financial institution on the
960	960	restricted financial institution list, the treasurer shall not rely solely on the
961	961	following:
962	962	(1) Statements or complaints by a boycotted company; or
963	963	(2) media reports of a financial institution's engaging in ideological
964	964	boycotts.
965	965	(c) A financial institution shall not be compelled to produce or
966	966	disclose any data or information deemed confidential, privileged or
967	967	otherwise protected from disclosure by state or federal law.
968	968	New Sec. 18. Notwithstanding any provision of article 42 of chapter
969	969	75 of the Kansas Statutes Annotated, and amendments thereto, to the
970	970	contrary, the treasurer is authorized to: (a) Disqualify a financial
971	971	institution on the restricted financial institution list from the awarding of
972	972	an agreement to receive deposit of state moneys in operating accounts or
973	973	investment accounts in accordance with K.S.A. 75-4205 or 75-4209, and
974	974	amendments thereto, or from any other official selection process to enter
975	975	into a banking contract with the state;
976	976	(b) refuse to enter into a banking contract with a restricted financial
977	977	institution based on such financial institution's inclusion on the restricted
978	978	financial institution list; and
979	979	(c) require, as a provision of any banking contract commencing on or
980	980	after July 1, 2024, an agreement by the financial institution not to engage
981	981	in ideological boycotts for the duration of the contract.
982	982	New Sec. 19. A public agency, public official, public employee or
983	983	member or employee of a financial institution shall be immune from
984	984	liability with respect to actions taken in compliance with this act.
985	985	New Sec. 20. (a) Except as provided in subsection (b), the provisions
986	986	of this act shall apply to all contracts for deposit of state moneys for terms
987	987	commencing on or after July 1, 2024, and shall not apply to contracts for
988	988	terms ending prior to July 1, 2024.
989	989	(b) The provisions of sections 15 through 19, and amendments
990	990	thereto, shall apply only to financial institutions with total assets of
991	991	$20,000,000,000 or greater.
992	992	New Sec. 21. (a) This section shall apply only to a contract that:
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1035	1035	43 SB 224 13
1036	1036	(1) Is between a governmental entity and a company with 10 or more
1037	1037	full-time employees; and
1038	1038	(2) has a value of $100,000 or more that is to be paid wholly or partly
1039	1039	from public funds of the governmental entity.
1040	1040	(b) Except as provided in subsection (c), a governmental entity shall
1041	1041	not enter into a contract with a company for goods or services unless the
1042	1042	contract contains a written verification from the company that such
1043	1043	company:
1044	1044	(1) Does not engage in ideological boycotts; and
1045	1045	(2) will not engage in ideological boycotts during the term of the
1046	1046	contract.
1047	1047	(c) The provisions of subsection (b) shall not apply to a contract if the
1048	1048	governmental entity determines and documents that the goods or services
1049	1049	are not otherwise available on commercially reasonable terms or if
1050	1050	subsection (b) is determined to be inconsistent with the governmental
1051	1051	entity's constitutional or statutory duties.
1052	1052	(d) The provisions of this section shall apply to all contracts entered
1053	1053	into on or after July 1, 2023. A contract entered into before such date is
1054	1054	governed by the law in effect on the date the contract was entered into, and
1055	1055	the former law is continued in effect for that purpose.
1056	1056	New Sec. 22. (a) A fiduciary shall discharge the fiduciary's duties
1057	1057	with respect to a governmental plan solely in the financial interest of the
1058	1058	participants and beneficiaries of the governmental plan for the exclusive
1059	1059	purpose of providing financial benefit to the participants and beneficiaries,
1060	1060	defraying reasonable expenses of administering the governmental plan.
1061	1061	(b) A fiduciary shall only consider pecuniary factors when evaluating
1062	1062	an investment or otherwise discharging such fiduciary's duties with respect
1063	1063	to a governmental plan. A fiduciary shall not consider any nonpecuniary
1064	1064	factors when evaluating an investment or discharging such fiduciary's
1065	1065	duties with respect to a governmental plan.
1066	1066	(c) A fiduciary may reasonably be determined to have considered
1067	1067	nonpecuniary factors based upon evidence indicating an intent to further
1068	1068	an ideological boycott through portfolio company engagement, board or
1069	1069	shareholder votes or otherwise as a fiduciary. Such evidence may include,
1070	1070	but not be limited to:
1071	1071	(1) Branding, advertising, statements, explanations, reports, letters to
1072	1072	clients, communications with portfolio companies, statements of principles
1073	1073	or commitments; or
1074	1074	(2) participation in, affiliation with or status as a signatory to, any
1075	1075	coalition, initiative, joint statement of principles or agreement.
1076	1076	New Sec. 23. (a) A governmental entity that establishes, maintains or
1077	1077	manages a governmental plan shall not grant proxy voting authority to any
1078	1078	person who is not a part of the governmental entity, unless such person
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1122	1122	follows guidelines consistent with the governmental entity's obligation to
1123	1123	consider only pecuniary factors.
1124	1124	(b) Any shares held directly or indirectly by a governmental plan
1125	1125	shall be voted only in the financial interest of the governmental plan. Such
1126	1126	shares shall not be voted to further nonpecuniary factors. No governmental
1127	1127	plan assets shall be entrusted to any fiduciary that engages with companies
1128	1128	or commits voting shares based upon nonpecuniary factors.
1129	1129	(c) A fiduciary or governmental entity administering a governmental
1130	1130	plan shall not adopt a practice of following the recommendations of a
1131	1131	proxy advisory firm or other service provider unless the proxy advisory
1132	1132	firm's or the service provider's voting guidelines are consistent with the
1133	1133	fiduciary's or governmental entity's obligation to act only on pecuniary
1134	1134	factors.
1135	1135	(d) Unless no economically practicable alternative is available,
1136	1136	governmental plan public retirement system assets shall not be entrusted to
1137	1137	a fiduciary, unless that fiduciary has a practice of, and in writing commits
1138	1138	to, following guidelines when engaging with portfolio companies and
1139	1139	voting shares or proxies that match the governmental entity's obligation to
1140	1140	act solely upon pecuniary factors.
1141	1141	(e) All proxy votes shall be tabulated and reported annually to the
1142	1142	board. For each vote, the report shall contain a vote caption, the plan's
1143	1143	vote, the recommendation of company management and, if applicable, the
1144	1144	proxy advisor's recommendation. Such reports shall be posted on the
1145	1145	system's website for review by the public.
1146	1146	(f) The provisions of sections 21 through 23, and amendments
1147	1147	thereto, or any contract subject to the provisions of sections 21 through 23,
1148	1148	and amendments thereto, may be enforced by the attorney general. The
1149	1149	attorney general may investigate possible violations of sections 21 through
1150	1150	23, and amendments thereto, according to the investigative authority
1151	1151	provided in K.S.A. 50-631, and amendments thereto.
1152	1152	(g) In addition to any other remedies available at law or equity, a
1153	1153	company who serves as a fiduciary and who violates the provisions of
1154	1154	sections 21 through 23, and amendments thereto, shall be obligated to pay
1155	1155	damages to the governmental entity in an amount equal to three times all
1156	1156	moneys paid to the company by the governmental entity for the company's
1157	1157	services.
1158	1158	New Sec. 24. (a) To provide fair access to financial services, a
1159	1159	financial services company shall not:
1160	1160	(1) Discriminate in the provision of financial services against a
1161	1161	person based on the person's social credit score, including by refusing to
1162	1162	provide a person new or ongoing financial services of any kind, refraining
1163	1163	from continuing to provide a person existing financial services,
1164	1164	terminating a person's existing financial services or refusing to make each
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1207	1207	43 SB 224 15
1208	1208	financial service such financial services company offers to all persons in
1209	1209	the geographic market served by the financial services company on a
1210	1210	nondiscriminatory basis;
1211	1211	(2) agree, conspire or coordinate, directly or indirectly, including
1212	1212	through any intermediary or third party, with another company or group of
1213	1213	companies, to discriminate in the provision of financial services against a
1214	1214	person based on the person's social credit score, including by refusing to
1215	1215	provide a person new or ongoing financial services of any kind, refraining
1216	1216	from continuing to provide a person existing financial services,
1217	1217	terminating a person's existing financial services, or deny any person a
1218	1218	financial service such financial services company offers except to the
1219	1219	extent justified by such person's documented failure to meet quantitative,
1220	1220	impartial risk-based financial standards established in advance by such
1221	1221	financial services company;
1222	1222	(3) deny any person a financial service such financial services
1223	1223	company offers, other than as provided by paragraph (2), when the effect
1224	1224	of the denial is to prevent, limit or otherwise disadvantage the person:
1225	1225	(A) From entering or competing in a market or business segment; or
1226	1226	(B) in such a way that benefits another person or business activity in
1227	1227	which the financial services company has a financial interest; and
1228	1228	(4) deny, in coordination with others, any person a financial service
1229	1229	such financial services company offers.
1230	1230	New Sec. 25. (a) A financial services company shall not utilize
1231	1231	standards or guidelines based on nonfinancial or ideological criteria,
1232	1232	including the criteria constituting an ideological boycott as defined in
1233	1233	section 1, and amendments thereto, in determining whether or not to
1234	1234	provide any financial service to a person or company.
1235	1235	(b) A financial services company shall disclose to any person or
1236	1236	company denied a financial service with the specific data, information,
1237	1237	criteria and standard used to support such denial. Such disclosure shall be
1238	1238	provided in writing in bold 14-point font.
1239	1239	New Sec. 26. (a) (1) Except as provided in paragraph (2), a financial
1240	1240	services company that violates the provisions of sections 24 through 27,
1241	1241	and amendments thereto, commits a deceptive act or practice and shall be
1242	1242	subject to enforcement by the attorney general pursuant to K.S.A. 50-626,
1243	1243	and amendments thereto.
1244	1244	(2) A financial services company that is a credit union that violates
1245	1245	the provisions of sections 24 through 27, and amendments thereto,
1246	1246	commits an unsound practice and shall be subject to civil enforcement by
1247	1247	the credit union administrator pursuant to K.S.A. 17-2206, and
1248	1248	amendments thereto.
1249	1249	(b) An insurance company that violates the provisions of sections 24
1250	1250	through 27, and amendments thereto, commits an unfair or deceptive act or
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1294	1294	practice under K.S.A. 40-2404, and amendments thereto, and shall be
1295	1295	subject to the penalties contained under K.S.A. 40-2401 et seq., and
1296	1296	amendments thereto.
1297	1297	(c) Notwithstanding enforcement under subsection (a) or (b), upon
1298	1298	conviction of five or more violations of this act, a financial services
1299	1299	company shall be guilty of a class C nonperson misdemeanor.
1300	1300	New Sec. 27. The state bank commissioner, the commissioner of
1301	1301	insurance and the credit union administrator shall adopt rules and
1302	1302	regulations for the enforcement of sections 24 through 27, and
1303	1303	amendments thereto. Such rules and regulations shall be adopted on or
1304	1304	before July 1, 2024.
1305	1305	New Sec. 28. (a) A registered investment adviser shall disclose to
1306	1306	such registered investment adviser's clients, prior to the investment of any
1307	1307	moneys owned by the client in or through any mutual fund, actively or
1308	1308	passively managed equity fund, company or financial institution that is
1309	1309	engaged in ideological boycotts, is a listed financial company or is on the
1310	1310	restricted financial institutions list prepared, maintained and published by
1311	1311	the treasurer pursuant to section 15, and amendments thereto, that such
1312	1312	mutual fund, actively or passively managed equity fund, company or
1313	1313	financial institution is engaged in ideological boycotts and that such
1314	1314	ideological boycotts may limit the client's return on investment.
1315	1315	(b) Prior to the investment of a client's funds, a registered investment
1316	1316	adviser shall obtain written consent from such registered investment
1317	1317	adviser's client stating that the client is fully aware of and consents to the
1318	1318	investment of funds owned by the client or through any mutual fund,
1319	1319	actively or passively managed equity fund, company or financial
1320	1320	institution that is engaged in ideological boycotts. Such written consent
1321	1321	shall consist of the following disclosure:
1322	1322	"The institution managing this fund is engaged in ideological boycotts.
1323	1323	If such boycotts are used in managing your fund, these boycotts may
1324	1324	reduce the fund's returns compared to the fund's historical performance or
1325	1325	the performance of funds that do not use ideological boycotts. You may
1326	1326	have the option to chose a similar fund that does not use ideological
1327	1327	boycotts. By signing below, you consent to have your investment managed
1328	1328	by this institution even if the institution engages in ideological boycott
1329	1329	investment practices that may reduce your returns compared to historical
1330	1330	performance or other funds."
1331	1331	(c) Conduct prohibited by this section shall be considered an act,
1332	1332	practice or course of business that operates or would operate as a fraud or
1333	1333	deceit in accordance with K.S.A. 17-12a502, and amendments thereto.
1334	1334	(d) Nothing in this section shall be construed to establish any
1335	1335	requirements for registration, capital, custody, margin, financial
1336	1336	responsibility, making and keeping of records, bonding or financial or
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1380	1380	operational reporting for a registered investment adviser that differ from
1381	1381	the requirements established under federal law to the extent that such
1382	1382	requirements are applicable to the registered investment adviser.
1383	1383	(e) The provisions of this section, or any contract or practice subject
1384	1384	to this section, may be enforced by the attorney general. The attorney
1385	1385	general may investigate possible violations of this section in accordance
1386	1386	with the provisions of K.S.A. 50-631, and amendments thereto.
1387	1387	New Sec. 29. The provisions of this act are severable. If any portion
1388	1388	of the act is declared unconstitutional or invalid, or the application of any
1389	1389	portion of the act to any person or circumstance is held unconstitutional or
1390	1390	invalid, the invalidity shall not affect other portions of the act that can be
1391	1391	given effect without the invalid portion or application, and the
1392	1392	applicability of such other portions of the act to any person or
1393	1393	circumstance shall remain valid and enforceable.
1394	1394	Sec. 30. K.S.A. 40-2404 is hereby amended to read as follows: 40-
1395	1395	2404. The following are hereby defined as unfair methods of competition
1396	1396	and unfair or deceptive acts or practices in the business of insurance:
1397	1397	(1) Misrepresentations and false advertising of insurance policies.
1398	1398	Making, issuing, circulating or causing to be made, issued or circulated,
1399	1399	any estimate, illustration, circular, statement, sales presentation, omission
1400	1400	or comparison that:
1401	1401	(a) Misrepresents the benefits, advantages, conditions or terms of any
1402	1402	insurance policy;
1403	1403	(b) misrepresents the dividends or share of the surplus to be received
1404	1404	on any insurance policy;
1405	1405	(c) makes any false or misleading statements as to the dividends or
1406	1406	share of surplus previously paid on any insurance policy;
1407	1407	(d) is misleading or is a misrepresentation as to the financial
1408	1408	condition of any person, or as to the legal reserve system upon which any
1409	1409	life insurer operates;
1410	1410	(e) uses any name or title of any insurance policy or class of
1411	1411	insurance policies misrepresenting the true nature thereof;
1412	1412	(f) is a misrepresentation for the purpose of inducing or tending to
1413	1413	induce the lapse, forfeiture, exchange, conversion or surrender of any
1414	1414	insurance policy;
1415	1415	(g) is a misrepresentation for the purpose of effecting a pledge or
1416	1416	assignment of or effecting a loan against any insurance policy; or
1417	1417	(h) misrepresents any insurance policy as being shares of stock.
1418	1418	(2) False information and advertising generally. Making, publishing,
1419	1419	disseminating, circulating or placing before the public, or causing, directly
1420	1420	or indirectly, to be made, published, disseminated, circulated or placed
1421	1421	before the public, in a newspaper, magazine or other publication, or in the
1422	1422	form of a notice, circular, pamphlet, letter or poster, or over any radio or
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1466	1466	television station, or in any other way, an advertisement, announcement or
1467	1467	statement containing any assertion, misrepresentation or statement with
1468	1468	respect to the business of insurance or with respect to any person in the
1469	1469	conduct of such person's insurance business, that is untrue, deceptive or
1470	1470	misleading.
1471	1471	(3) Defamation. Making, publishing, disseminating or circulating,
1472	1472	directly or indirectly, or aiding, abetting or encouraging the making,
1473	1473	publishing, disseminating or circulating of any oral or written statement or
1474	1474	any pamphlet, circular, article or literature that is false, or maliciously
1475	1475	critical of or derogatory to the financial condition of any person, and that
1476	1476	is calculated to injure such person.
1477	1477	(4) Boycott, coercion and intimidation. Entering into any agreement
1478	1478	to commit, or by any concerted action committing, any act of boycott,
1479	1479	coercion or intimidation resulting in or tending to result in unreasonable
1480	1480	restraint of the business of insurance, or by any act of boycott, coercion or
1481	1481	intimidation monopolizing or attempting to monopolize any part of the
1482	1482	business of insurance.
1483	1483	(5) False statements and entries. (a) Knowingly filing with any
1484	1484	supervisory or other public official, or knowingly making, publishing,
1485	1485	disseminating, circulating or delivering to any person, or placing before
1486	1486	the public, or knowingly causing directly or indirectly, to be made,
1487	1487	published, disseminated, circulated, delivered to any person, or placed
1488	1488	before the public, any false material statement of fact as to the financial
1489	1489	condition of a person.
1490	1490	(b) Knowingly making any false entry of a material fact in any book,
1491	1491	report or statement of any person or knowingly omitting to make a true
1492	1492	entry of any material fact pertaining to the business of such person in any
1493	1493	book, report or statement of such person.
1494	1494	(6) Stock operations and advisory board contracts. Issuing or
1495	1495	delivering or permitting agents, officers or employees to issue or deliver,
1496	1496	agency company stock or other capital stock, or benefit certificates or
1497	1497	shares in any common-law corporation, or securities or any special or
1498	1498	advisory board contracts or other contracts of any kind promising returns
1499	1499	and profits as an inducement to insurance. Nothing herein shall prohibit
1500	1500	the acts permitted by K.S.A. 40-232, and amendments thereto.
1501	1501	(7) Unfair discrimination. (a) Making or permitting any unfair
1502	1502	discrimination between individuals of the same class and equal expectation
1503	1503	of life in the rates charged for any contract of life insurance or life annuity
1504	1504	or in the dividends or other benefits payable thereon, or in any other of the
1505	1505	terms and conditions of such contract.
1506	1506	(b) Making or permitting any unfair discrimination between
1507	1507	individuals of the same class and of essentially the same hazard in the
1508	1508	amount of premium, policy fees or rates charged for any policy or contract
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1552	1552	of accident or health insurance or in the benefits payable thereunder, or in
1553	1553	any of the terms or conditions of such contract, or in any other manner
1554	1554	whatever.
1555	1555	(c) Refusing to insure, or refusing to continue to insure, or limiting
1556	1556	the amount, extent or kind of coverage available to an individual, or
1557	1557	charging an individual a different rate for the same coverage solely
1558	1558	because of blindness or partial blindness. With respect to all other
1559	1559	conditions, including the underlying cause of the blindness or partial
1560	1560	blindness, persons who are blind or partially blind shall be subject to the
1561	1561	same standards of sound actuarial principles or actual or reasonably
1562	1562	anticipated experience as are sighted persons. Refusal to insure includes
1563	1563	denial by an insurer of disability insurance coverage on the grounds that
1564	1564	the policy defines "disability" as being presumed in the event that the
1565	1565	insured loses such person's eyesight. However, an insurer may exclude
1566	1566	from coverage disabilities consisting solely of blindness or partial
1567	1567	blindness when such condition existed at the time the policy was issued.
1568	1568	(d) Refusing to insure, or refusing to continue to insure, or limiting
1569	1569	the amount, extent or kind of coverage available for accident and health
1570	1570	and life insurance to an applicant who is the proposed insured or charge a
1571	1571	different rate for the same coverage or excluding or limiting coverage for
1572	1572	losses or denying a claim incurred by an insured as a result of abuse based
1573	1573	on the fact that the applicant who is the proposed insured is, has been, or
1574	1574	may be the subject of domestic abuse, except as provided in subsection (7)
1575	1575	(d)(v). "Abuse" as used in this paragraph means one or more acts defined
1576	1576	in K.S.A. 60-3102, and amendments thereto, between family members,
1577	1577	current or former household members, or current or former intimate
1578	1578	partners.
1579	1579	(i) An insurer may not ask an applicant for life or accident and health
1580	1580	insurance who is the proposed insured if the individual is, has been or may
1581	1581	be the subject of domestic abuse or seeks, has sought or had reason to seek
1582	1582	medical or psychological treatment or counseling specifically for abuse,
1583	1583	protection from abuse or shelter from abuse.
1584	1584	(ii) Nothing in this section shall be construed to prohibit a person
1585	1585	from declining to issue an insurance policy insuring the life of an
1586	1586	individual who is, has been or has the potential to be the subject of abuse if
1587	1587	the perpetrator of the abuse is the applicant or would be the owner of the
1588	1588	insurance policy.
1589	1589	(iii) No insurer that issues a life or accident and health policy to an
1590	1590	individual who is, has been or may be the subject of domestic abuse shall
1591	1591	be subject to civil or criminal liability for the death or any injuries suffered
1592	1592	by that individual as a result of domestic abuse.
1593	1593	(iv) No person shall refuse to insure, refuse to continue to insure,
1594	1594	limit the amount, extent or kind of coverage available to an individual or
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1638	1638	charge a different rate for the same coverage solely because of physical or
1639	1639	mental condition, except where the refusal, limitation or rate differential is
1640	1640	based on sound actuarial principles.
1641	1641	(v) Nothing in this section shall be construed to prohibit a person
1642	1642	from underwriting or rating a risk on the basis of a preexisting physical or
1643	1643	mental condition, even if such condition has been caused by abuse,
1644	1644	provided that:
1645	1645	(A) The person routinely underwrites or rates such condition in the
1646	1646	same manner with respect to an insured or an applicant who is not a victim
1647	1647	of abuse;
1648	1648	(B) the fact that an individual is, has been or may be the subject of
1649	1649	abuse may not be considered a physical or mental condition; and
1650	1650	(C) such underwriting or rating is not used to evade the intent of this
1651	1651	section or any other provision of the Kansas insurance code.
1652	1652	(vi) Any person who underwrites or rates a risk on the basis of
1653	1653	preexisting physical or mental condition as set forth in subsection (7)(d)
1654	1654	(v), shall treat such underwriting or rating as an adverse underwriting
1655	1655	decision pursuant to K.S.A. 40-2,112, and amendments thereto.
1656	1656	(vii) The provisions of this paragraph shall apply to all policies of life
1657	1657	and accident and health insurance issued in this state after the effective
1658	1658	date of this act and all existing contracts that are renewed on or after the
1659	1659	effective date of this act.
1660	1660	(e) Refusing to insure, or refusing to continue to insure, or limiting
1661	1661	the amount, extent or kind of coverage available for life insurance to an
1662	1662	individual, or charging an individual a different rate for the same coverage,
1663	1663	solely because of such individual's status as a living organ donor. With
1664	1664	respect to all other conditions, persons who are living organ donors shall
1665	1665	be subject to the same standards of sound actuarial principles or actual or
1666	1666	reasonably anticipated experience as are persons who are not organ
1667	1667	donors.
1668	1668	(8) Rebates. (a) Except as otherwise expressly provided by law,
1669	1669	knowingly permitting, offering to make or making any contract of life
1670	1670	insurance, life annuity or accident and health insurance, or agreement as to
1671	1671	such contract other than as plainly expressed in the insurance contract
1672	1672	issued thereon; paying, allowing, giving or offering to pay, allow or give,
1673	1673	directly or indirectly, as inducement to such insurance, or annuity, any
1674	1674	rebate of premiums payable on the contract, any special favor or advantage
1675	1675	in the dividends or other benefits thereon, or any valuable consideration or
1676	1676	inducement whatever not specified in the contract; or giving, selling,
1677	1677	purchasing or offering to give, sell or purchase as inducement to such
1678	1678	insurance contract or annuity or in connection therewith, any stocks, bonds
1679	1679	or other securities of any insurance company or other corporation,
1680	1680	association or partnership, or any dividends or profits accrued thereon, or
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1724	1724	anything of value whatsoever not specified in the contract.
1725	1725	(b) Nothing in subsection (7) or (8)(a) shall be construed as including
1726	1726	within the definition of discrimination or rebates any of the following
1727	1727	practices:
1728	1728	(i) In the case of any contract of life insurance or life annuity, paying
1729	1729	bonuses to policyholders or otherwise abating their premiums in whole or
1730	1730	in part out of surplus accumulated from nonparticipating insurance. Any
1731	1731	such bonuses or abatement of premiums shall be fair and equitable to
1732	1732	policyholders and for the best interests of the company and its
1733	1733	policyholders;
1734	1734	(ii) in the case of life insurance policies issued on the industrial debit
1735	1735	plan, making allowance to policyholders who have continuously for a
1736	1736	specified period made premium payments directly to an office of the
1737	1737	insurer in an amount that fairly represents the saving in collection
1738	1738	expenses; or
1739	1739	(iii) readjustment of the rate of premium for a group insurance policy
1740	1740	based on the loss or expense experience thereunder, at the end of the first
1741	1741	or any subsequent policy year of insurance thereunder, which may be
1742	1742	made retroactive only for such policy year.
1743	1743	(9) Unfair claim settlement practices. It is an unfair claim settlement
1744	1744	practice if any of the following or any rules and regulations pertaining
1745	1745	thereto are either committed flagrantly and in conscious disregard of such
1746	1746	provisions, or committed with such frequency as to indicate a general
1747	1747	business practice:
1748	1748	(a) Misrepresenting pertinent facts or insurance policy provisions
1749	1749	relating to coverages at issue;
1750	1750	(b) failing to acknowledge and act reasonably promptly upon
1751	1751	communications with respect to claims arising under insurance policies;
1752	1752	(c) failing to adopt and implement reasonable standards for the
1753	1753	prompt investigation of claims arising under insurance policies;
1754	1754	(d) refusing to pay claims without conducting a reasonable
1755	1755	investigation based upon all available information;
1756	1756	(e) failing to affirm or deny coverage of claims within a reasonable
1757	1757	time after proof of loss statements have been completed;
1758	1758	(f) not attempting in good faith to effectuate prompt, fair and
1759	1759	equitable settlements of claims in which liability has become reasonably
1760	1760	clear;
1761	1761	(g) compelling insureds to institute litigation to recover amounts due
1762	1762	under an insurance policy by offering substantially less than the amounts
1763	1763	ultimately recovered in actions brought by such insureds;
1764	1764	(h) attempting to settle a claim for less than the amount to which a
1765	1765	reasonable person would have believed that such person was entitled by
1766	1766	reference to written or printed advertising material accompanying or made
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1810	1810	part of an application;
1811	1811	(i) attempting to settle claims on the basis of an application that was
1812	1812	altered without notice to, or knowledge or consent of the insured;
1813	1813	(j) making claims payments to insureds or beneficiaries not
1814	1814	accompanied by a statement setting forth the coverage under which
1815	1815	payments are being made;
1816	1816	(k) making known to insureds or claimants a policy of appealing from
1817	1817	arbitration awards in favor of insureds or claimants for the purpose of
1818	1818	compelling them to accept settlements or compromises less than the
1819	1819	amount awarded in arbitration;
1820	1820	(l) delaying the investigation or payment of claims by requiring an
1821	1821	insured, claimant or the physician of either to submit a preliminary claim
1822	1822	report and then requiring the subsequent submission of formal proof of
1823	1823	loss forms, both of which submissions contain substantially the same
1824	1824	information;
1825	1825	(m) failing to promptly settle claims, where liability has become
1826	1826	reasonably clear, under one portion of the insurance policy coverage in
1827	1827	order to influence settlements under other portions of the insurance policy
1828	1828	coverage; or
1829	1829	(n) failing to promptly provide a reasonable explanation of the basis
1830	1830	in the insurance policy in relation to the facts or applicable law for denial
1831	1831	of a claim or for the offer of a compromise settlement.
1832	1832	(10) Failure to maintain complaint handling procedures. Failure of
1833	1833	any person, who is an insurer on an insurance policy, to maintain a
1834	1834	complete record of all the complaints that it has received since the date of
1835	1835	its last examination under K.S.A. 40-222, and amendments thereto; but no
1836	1836	such records shall be required for complaints received prior to the effective
1837	1837	date of this act. The record shall indicate the total number of complaints,
1838	1838	their classification by line of insurance, the nature of each complaint, the
1839	1839	disposition of the complaints, the date each complaint was originally
1840	1840	received by the insurer and the date of final disposition of each complaint.
1841	1841	For purposes of this subsection, "complaint" means any written
1842	1842	communication primarily expressing a grievance related to the acts and
1843	1843	practices set out in this section.
1844	1844	(11) Misrepresentation in insurance applications. Making false or
1845	1845	fraudulent statements or representations on or relative to an application for
1846	1846	an insurance policy, for the purpose of obtaining a fee, commission,
1847	1847	money or other benefit from any insurer, agent, broker or individual.
1848	1848	(12) Statutory violations. (a) Any violation of any of the provisions of
1849	1849	K.S.A. 40-216, 40-276a, 40-2,155 or 40-1515, and amendments thereto.
1850	1850	(b) Any violation of the provisions of sections 24 through 27, and
1851	1851	amendments thereto.
1852	1852	(13) Disclosure of information relating to adverse underwriting
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1896	1896	decisions and refund of premiums. Failing to comply with the provisions of
1897	1897	K.S.A. 40-2,112, and amendments thereto, within the time prescribed in
1898	1898	such section.
1899	1899	(14) Rebates and other inducements in title insurance. (a) No title
1900	1900	insurance company or title insurance agent, or any officer, employee,
1901	1901	attorney, agent or solicitor thereof, may pay, allow or give, or offer to pay,
1902	1902	allow or give, directly or indirectly, as an inducement to obtaining any title
1903	1903	insurance business, any rebate, reduction or abatement of any rate or
1904	1904	charge made incident to the issuance of such insurance, any special favor
1905	1905	or advantage not generally available to others of the same classification, or
1906	1906	any money, thing of value or other consideration or material inducement.
1907	1907	The words "charge made incident to the issuance of such insurance"
1908	1908	includes, without limitations, escrow, settlement and closing charges.
1909	1909	(b) No insured named in a title insurance policy or contract nor any
1910	1910	other person directly or indirectly connected with the transaction involving
1911	1911	the issuance of the policy or contract, including, but not limited to,
1912	1912	mortgage lender, real estate broker, builder, attorney or any officer,
1913	1913	employee, agent representative or solicitor thereof, or any other person
1914	1914	may knowingly receive or accept, directly or indirectly, any rebate,
1915	1915	reduction or abatement of any charge, or any special favor or advantage or
1916	1916	any monetary consideration or inducement referred to in subsection (14)
1917	1917	(a).
1918	1918	(c) Nothing in this section shall be construed as prohibiting:
1919	1919	(i) The payment of reasonable fees for services actually rendered to a
1920	1920	title insurance agent in connection with a title insurance transaction;
1921	1921	(ii) the payment of an earned commission to a duly appointed title
1922	1922	insurance agent for services actually performed in the issuance of the
1923	1923	policy of title insurance; or
1924	1924	(iii) the payment of reasonable entertainment and advertising
1925	1925	expenses.
1926	1926	(d) Nothing in this section prohibits the division of rates and charges
1927	1927	between or among a title insurance company and its agent, or one or more
1928	1928	title insurance companies and one or more title insurance agents, if such
1929	1929	division of rates and charges does not constitute an unlawful rebate under
1930	1930	the provisions of this section and is not in payment of a forwarding fee or a
1931	1931	finder's fee.
1932	1932	(e) As used in subsections (14)(e) through (14)(i), unless the context
1933	1933	otherwise requires:
1934	1934	(i) "Associate" means any firm, association, organization, partnership,
1935	1935	business trust, corporation or other legal entity organized for profit in
1936	1936	which a producer of title business is a director, officer or partner thereof,
1937	1937	or owner of a financial interest; the spouse or any relative within the
1938	1938	second degree by blood or marriage of a producer of title business who is a
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1982	1982	natural person; any director, officer or employee of a producer of title
1983	1983	business or associate; any legal entity that controls, is controlled by, or is
1984	1984	under common control with a producer of title business or associate; and
1985	1985	any natural person or legal entity with whom a producer of title business or
1986	1986	associate has any agreement, arrangement or understanding or pursues any
1987	1987	course of conduct, the purpose or effect of which is to evade the provisions
1988	1988	of this section.
1989	1989	(ii) "Financial interest" means any direct or indirect interest, legal or
1990	1990	beneficial, where the holder thereof is or will be entitled to 1% or more of
1991	1991	the net profits or net worth of the entity in which such interest is held.
1992	1992	Notwithstanding the foregoing, an interest of less than 1% or any other
1993	1993	type of interest shall constitute a "financial interest" if the primary purpose
1994	1994	of the acquisition or retention of that interest is the financial benefit to be
1995	1995	obtained as a consequence of that interest from the referral of title
1996	1996	business.
1997	1997	(iii) "Person" means any natural person, partnership, association,
1998	1998	cooperative, corporation, trust or other legal entity.
1999	1999	(iv) "Producer of title business" or "producer" means any person,
2000	2000	including any officer, director or owner of 5% or more of the equity or
2001	2001	capital or both of any person, engaged in this state in the trade, business,
2002	2002	occupation or profession of:
2003	2003	(A) Buying or selling interests in real property;
2004	2004	(B) making loans secured by interests in real property; or
2005	2005	(C) acting as broker, agent, representative or attorney for a person
2006	2006	who buys or sells any interest in real property or who lends or borrows
2007	2007	money with such interest as security.
2008	2008	(v) "Refer" means to direct or cause to be directed or to exercise any
2009	2009	power or influence over the direction of title insurance business, whether
2010	2010	or not the consent or approval of any other person is sought or obtained
2011	2011	with respect to the referral.
2012	2012	(f) No title insurer or title agent may accept any order for, issue a title
2013	2013	insurance policy to, or provide services to, an applicant if it knows or has
2014	2014	reason to believe that the applicant was referred to it by any producer of
2015	2015	title business or by any associate of such producer, where the producer, the
2016	2016	associate, or both, have a financial interest in the title insurer or title agent
2017	2017	to which business is referred unless the producer has disclosed to the
2018	2018	buyer, seller and lender the financial interest of the producer of title
2019	2019	business or associate referring the title insurance business.
2020	2020	(g) No title insurer or title agent may accept an order for title
2021	2021	insurance business, issue a title insurance policy, or receive or retain any
2022	2022	premium, or charge in connection with any transaction if: (i) The title
2023	2023	insurer or title agent knows or has reason to believe that the transaction
2024	2024	will constitute controlled business for that title insurer or title agent; and
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2068	2068	(ii) 70% or more of the closed title orders of that title insurer or title agent
2069	2069	during the 12 full calendar months immediately preceding the month in
2070	2070	which the transaction takes place is derived from controlled business. The
2071	2071	prohibitions contained in this paragraph shall not apply to transactions
2072	2072	involving real estate located in a county that has a population, as shown by
2073	2073	the last preceding decennial census, of 10,000 or less.
2074	2074	(h) Within 90 days following the end of each business year, as
2075	2075	established by the title insurer or title agent, each title insurer or title agent
2076	2076	shall file with the department of insurance and any title insurer with which
2077	2077	the title agent maintains an underwriting agreement, a report executed by
2078	2078	the title insurer's or title agent's chief executive officer or designee, under
2079	2079	penalty of perjury, stating the percent of closed title orders originating
2080	2080	from controlled business. The failure of a title insurer or title agent to
2081	2081	comply with the requirements of this section, at the discretion of the
2082	2082	commissioner, shall be grounds for the suspension or revocation of a
2083	2083	license or other disciplinary action, with the commissioner able to mitigate
2084	2084	any such disciplinary action if the title insurer or title agent is found to be
2085	2085	in substantial compliance with competitive behavior as defined by federal
2086	2086	housing and urban development statement of policy 1996-2.
2087	2087	(i) (1) No title insurer or title agent may accept any title insurance
2088	2088	order or issue a title insurance policy to any person if it knows or has
2089	2089	reason to believe that such person was referred to it by any producer of
2090	2090	title business or by any associate of such producer, where the producer, the
2091	2091	associate, or both, have a financial interest in the title insurer or title agent
2092	2092	to which business is referred unless the producer has disclosed in writing
2093	2093	to the person so referred the fact that such producer or associate has a
2094	2094	financial interest in the title insurer or title agent, the nature of the
2095	2095	financial interest and a written estimate of the charge or range of charges
2096	2096	generally made by the title insurer or agent for the title services. Such
2097	2097	disclosure shall include language stating that the consumer is not obligated
2098	2098	to use the title insurer or agent in which the referring producer or associate
2099	2099	has a financial interest and shall include the names and telephone numbers
2100	2100	of not less than three other title insurers or agents that operate in the
2101	2101	county in which the property is located. If fewer than three insurers or
2102	2102	agents operate in that county, the disclosure shall include all title insurers
2103	2103	or agents operating in that county. Such written disclosure shall be signed
2104	2104	by the person so referred and must have occurred prior to any commitment
2105	2105	having been made to such title insurer or agent.
2106	2106	(2) No producer of title business or associate of such producer shall
2107	2107	require, directly or indirectly, as a condition to selling or furnishing any
2108	2108	other person any loan or extension thereof, credit, sale, property, contract,
2109	2109	lease or service, that such other person shall purchase title insurance of any
2110	2110	kind through any title agent or title insurer if such producer has a financial
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2153	2153	43 SB 224 26
2154	2154	interest in such title agent or title insurer.
2155	2155	(3) No title insurer or title agent may accept any title insurance order
2156	2156	or issue a title insurance policy to any person it knows or has reason to
2157	2157	believe that the name of the title company was pre-printed in the sales
2158	2158	contract, prior to the buyer or seller selecting that title company.
2159	2159	(4) Nothing in this paragraph shall prohibit any producer of title
2160	2160	business or associate of such producer from referring title business to any
2161	2161	title insurer or title agent of such producer's or associate's choice, and, if
2162	2162	such producer or associate of such producer has any financial interest in
2163	2163	the title insurer, from receiving income, profits or dividends produced or
2164	2164	realized from such financial interest, so long as:
2165	2165	(a) Such financial interest is disclosed to the purchaser of the title
2166	2166	insurance in accordance with paragraphs (i)(1) through (i)(4);
2167	2167	(b) the payment of income, profits or dividends is not in exchange for
2168	2168	the referral of business; and
2169	2169	(c) the receipt of income, profits or dividends constitutes only a return
2170	2170	on the investment of the producer or associate.
2171	2171	(5) Any producer of title business or associate of such producer who
2172	2172	violates the provisions of paragraphs (i)(2) through (i)(4), or any title
2173	2173	insurer or title agent who accepts an order for title insurance knowing that
2174	2174	it is in violation of paragraphs (i)(2) through (i)(4), in addition to any other
2175	2175	action that may be taken by the commissioner of insurance, shall be
2176	2176	subject to a fine by the commissioner in an amount equal to five times the
2177	2177	premium for the title insurance and, if licensed pursuant to K.S.A. 58-3034
2178	2178	et seq., and amendments thereto, shall be deemed to have committed a
2179	2179	prohibited act pursuant to K.S.A. 58-3602, and amendments thereto, and
2180	2180	shall be liable to the purchaser of such title insurance in an amount equal
2181	2181	to the premium for the title insurance.
2182	2182	(6) Any title insurer or title agent that is a competitor of any title
2183	2183	insurer or title agent that, subsequent to the effective date of this act, has
2184	2184	violated or is violating the provisions of this paragraph, shall have a cause
2185	2185	of action against such title insurer or title agent and, upon establishing the
2186	2186	existence of a violation of any such provision, shall be entitled, in addition
2187	2187	to any other damages or remedies provided by law, to such equitable or
2188	2188	injunctive relief as the court deems proper. In any such action under this
2189	2189	subsection, the court may award to the successful party the court costs of
2190	2190	the action together with reasonable attorney fees.
2191	2191	(7) The commissioner shall also require each title agent to provide
2192	2192	core title services as required by the real estate settlement procedures act.
2193	2193	(j) The commissioner shall adopt any regulations necessary to carry
2194	2194	out the provisions of this act.
2195	2195	(15) Disclosure of nonpublic personal information. (a) No person
2196	2196	shall disclose any nonpublic personal information contrary to the
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2240	2240	provisions of title V of the Gramm-Leach-Bliley act of 1999 (public law
2241	2241	106-102). The commissioner may adopt rules and regulations necessary to
2242	2242	carry out this subsection. Such rules and regulations shall be consistent
2243	2243	with and not more restrictive than the model regulation adopted on
2244	2244	September 26, 2000, by the national association of insurance
2245	2245	commissioners entitled "Privacy of consumer financial and health
2246	2246	information regulation".
2247	2247	(b) Nothing in this subsection shall be deemed or construed to
2248	2248	authorize the promulgation or adoption of any regulation that preempts,
2249	2249	supersedes or is inconsistent with any provision of Kansas law concerning
2250	2250	requirements for notification of, or obtaining consent from, a parent,
2251	2251	guardian or other legal custodian of a minor relating to any matter
2252	2252	pertaining to the health and medical treatment for such minor.
2253	2253	Sec. 31. K.S.A. 75-4208 is hereby amended to read as follows: 75-
2254	2254	4208. (a) Except as provided in subsection (b), the board shall follow the
2255	2255	procedure prescribed in rules and regulations adopted under the provisions
2256	2256	of K.S.A. 75-4232, and amendments thereto, in designating banks to
2257	2257	receive deposit of state moneys in operating accounts and investment
2258	2258	accounts. The board shall determine which banks shall receive state
2259	2259	operating and investment accounts and shall designate the types of
2260	2260	accounts to be awarded each such bank and the initial amount of each
2261	2261	award. Such initial awards which are operating accounts shall be made as
2262	2262	provided in K.S.A. 75-4205, and amendments thereto. Such initial awards
2263	2263	which are investment accounts shall be awarded as is provided in K.S.A.
2264	2264	75-4209, and amendments thereto. Upon making the awards provided for
2265	2265	above, the board shall notify each bank of its award, and that the same is
2266	2266	subject to approval of securities to be pledged as prescribed in this act.
2267	2267	(b) The board shall not designate a bank to receive deposit of state
2268	2268	moneys in operating accounts or investment accounts if such bank has
2269	2269	been listed by the state treasurer as a restricted financial institution as
2270	2270	provided in section 15, and amendments thereto. Any agreement awarding
2271	2271	the deposit of state moneys in operating accounts or investment accounts
2272	2272	for a term commencing on or after July 1, 2024, shall comply with the
2273	2273	provisions of section 18, and amendments thereto.
2274	2274	Sec. 32. K.S.A. 75-4208 and K.S.A. 2022 Supp. 40-2404 are hereby
2275	2275	repealed.
2276	2276	Sec. 33. This act shall take effect and be in force from and after its
2277	2277	publication in the statute book.
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