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Kansas House Bill HB2042

Kansas 2025-2026 Regular Session

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11 Session of 2025
22 HOUSE BILL No. 2042
33 By Committee on Insurance
44 Requested by Eric Turek, Kansas Insurance Department
55 1-21
66 AN ACT concerning insurance; relating to title insurance; requiring title
77 agents to make their audit reports available for inspection upon request
88 of the commissioner of insurance instead of submitting such reports
99 annually; requiring the amount of surety bonds filed with the
1010 commissioner to be $100,000; eliminating the controlled business
1111 exemption in certain counties; amending K.S.A. 40-1139 and K.S.A.
1212 2024 Supp. 40-1137 and 40-2404 and repealing the existing sections.
1313 Be it enacted by the Legislature of the State of Kansas:
1414 Section 1. K.S.A. 2024 Supp. 40-1137 is hereby amended to read as
1515 follows: 40-1137. A title insurance agent may operate as an escrow,
1616 settlement or closing agent, provided that:
1717 (a) All funds deposited with the title insurance agent in connection
1818 with an escrow, settlement or closing shall be submitted for collection to,
1919 invested in or deposited in a separate fiduciary trust account or accounts in
2020 a qualified financial institution no later than the close of the next business
2121 day, in accordance with the following requirements:
2222 (1) The funds shall be the property of the person or persons entitled to
2323 them under the provisions of the escrow, settlement or closing agreement
2424 and shall be segregated for each depository by escrow, settlement or
2525 closing in the records of the title insurance agent in a manner that permits
2626 the funds to be identified on an individual basis;
2727 (2) the funds shall be applied only in accordance with the terms of the
2828 individual instructions or agreements under which the funds were
2929 accepted; and
3030 (3) an agent shall not retain any interest on any money held in an
3131 interest-bearing account without the written consent of all parties to the
3232 transaction.
3333 (b) Funds held in an escrow account shall be disbursed only:
3434 (1) Pursuant to written authorization of buyer and seller;
3535 (2) pursuant to a court order; or
3636 (3) when a transaction is closed according to the agreement of the
3737 parties.
3838 (c) A title insurance agent shall not commingle the agent's personal
3939 funds or other moneys with escrow funds. In addition, the agent shall not
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7575 use escrow funds to pay or to indemnify against the debts of the agent or
7676 of any other party. The escrow funds shall be used only to fulfill the terms
7777 of the individual escrow and none of the funds shall be utilized until the
7878 necessary conditions of the escrow have been met. All funds deposited for
7979 real estate closings, including closings involving refinances of existing
8080 mortgage loans, which exceed $2,500 shall be in one of the following
8181 forms:
8282 (1) Lawful money of the United States;
8383 (2) wire transfers such that the funds are unconditionally received by
8484 the title insurance agent or the agent's depository;
8585 (3) cashier's checks, certified checks, teller's checks or bank money
8686 orders issued by a federally insured financial institution and
8787 unconditionally held by the title insurance agent;
8888 (4) funds received from governmental entities, federally chartered
8989 instrumentalities of the United States or drawn on an escrow account of a
9090 real estate broker licensed in the state or drawn on an escrow account of a
9191 title insurer or title insurance agent licensed to do business in the state;
9292 (5) other negotiable instruments that have been on deposit in the
9393 escrow account at least 10 days; or
9494 (6) a real-time or instant payment through the FedNow service
9595 operated by the federal reserve banks or the clearing house payment
9696 company's real-time payments (RTP) system.
9797 (d) Each title insurance agent shall have an annual audit made of its
9898 escrow, settlement and closing deposit accounts, conducted by a certified
9999 public accountant or by a title insurer for which the title insurance agent
100100 has a licensing agreement. The title insurance agent shall provide a copy of
101101 the audit report to the commissioner within 30 days after the close of the
102102 calendar year for which an audit is required upon request. Title insurance
103103 agents who are attorneys and who issue title insurance policies as part of
104104 their legal representation of clients are exempt from the requirements of
105105 this subsection. However, the title insurer, at its expense, may conduct or
106106 cause to be conducted an annual audit of the escrow, settlement and
107107 closing accounts of the attorney. Attorneys who are exclusively in the
108108 business of title insurance are not exempt from the requirements of this
109109 subsection.
110110 (e) The commissioner may promulgate rules and regulations setting
111111 forth the standards of the audit and the form of audit report required.
112112 (f) If the title insurance agent is appointed by two or more title
113113 insurers and maintains fiduciary trust accounts in connection with
114114 providing escrow and closing settlement services, the title insurance agent
115115 shall allow each title insurer reasonable access to the accounts and any or
116116 all of the supporting account information in order to ascertain the safety
117117 and security of the funds held by the title insurance agent.
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161161 (g) Nothing in this section is intended to amend, alter or supersede
162162 other laws of this state or the United States, regarding an escrow holder's
163163 duties and obligations.
164164 Sec. 2. K.S.A. 40-1139 is hereby amended to read as follows: 40-
165165 1139. (a) The A title insurance agent who that handles escrow, settlement
166166 or closing accounts shall file with the commissioner a $100,000 surety
167167 bond or irrevocable letter of credit in a form acceptable to the
168168 commissioner,. Such surety bond or irrevocable letter of credit shall be
169169 issued by an insurance company or financial institution that is authorized
170170 to conduct business in this state, securing the applicant's or the title
171171 insurance agent's faithful performance of all duties and obligations set out
172172 in K.S.A. 40-1135 through 40-1141, and amendments thereto.
173173 (b) The terms of the bond or irrevocable letter of credit shall be:
174174 (1) The surety bond shall provide that such bond may not be
175175 terminated without 30 days prior written notice to the commissioner.
176176 (2) An(c) The irrevocable letter of credit shall:
177177 (1) Be issued by a bank which that is insured by the federal deposit
178178 insurance corporation or its successor if such letter of credit is ; and
179179 (2) initially be issued for a term of at least one year and by its terms is
180180 automatically renewed at each expiration date for at least an additional
181181 one-year term unless at least 30 days prior written notice of intention not
182182 to renew is given provided to the commissioner of insurance.
183183 (c) The amount of the surety bond or irrevocable letter of credit for
184184 those agents servicing real estate transactions on property located in
185185 counties having a certain population shall be required as follows:
186186 (1) $100,000 surety bond or irrevocable letter of credit in counties
187187 having a population of 40,001 and over;
188188 (2) $50,000 surety bond or irrevocable letter of credit in counties
189189 having a population of 20,001 to 40,000; and
190190 (3) $25,000 surety bond or irrevocable letter of credit in counties
191191 having a population of 20,000 or under.
192192 (d) The surety bond or irrevocable letter of credit shall be for the
193193 benefit of any person suffering a loss if the title insurance agent converts
194194 or misappropriates money received or held in escrow, deposit or trust
195195 accounts while acting as a title insurance agent providing any escrow or
196196 settlement services.
197197 Sec. 3. K.S.A. 2024 Supp. 40-2404 is hereby amended to read as
198198 follows: 40-2404. The following are hereby defined as unfair methods of
199199 competition and unfair or deceptive acts or practices in the business of
200200 insurance:
201201 (1) Misrepresentations and false advertising of insurance policies.
202202 Making, issuing, circulating or causing to be made, issued or circulated,
203203 any estimate, illustration, circular, statement, sales presentation, omission
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247247 or comparison that:
248248 (a) Misrepresents the benefits, advantages, conditions or terms of any
249249 insurance policy;
250250 (b) misrepresents the dividends or share of the surplus to be received
251251 on any insurance policy;
252252 (c) makes any false or misleading statements as to the dividends or
253253 share of surplus previously paid on any insurance policy;
254254 (d) is misleading or is a misrepresentation as to the financial
255255 condition of any person, or as to the legal reserve system upon which any
256256 life insurer operates;
257257 (e) uses any name or title of any insurance policy or class of
258258 insurance policies misrepresenting the true nature thereof;
259259 (f) is a misrepresentation for the purpose of inducing or tending to
260260 induce the lapse, forfeiture, exchange, conversion or surrender of any
261261 insurance policy;
262262 (g) is a misrepresentation for the purpose of effecting a pledge or
263263 assignment of or effecting a loan against any insurance policy; or
264264 (h) misrepresents any insurance policy as being shares of stock.
265265 (2) False information and advertising generally. Making, publishing,
266266 disseminating, circulating or placing before the public, or causing, directly
267267 or indirectly, to be made, published, disseminated, circulated or placed
268268 before the public, in a newspaper, magazine or other publication, or in the
269269 form of a notice, circular, pamphlet, letter or poster, or over any radio or
270270 television station, or in any other way, an advertisement, announcement or
271271 statement containing any assertion, misrepresentation or statement with
272272 respect to the business of insurance or with respect to any person in the
273273 conduct of such person's insurance business, that is untrue, deceptive or
274274 misleading.
275275 (3) Defamation. Making, publishing, disseminating or circulating,
276276 directly or indirectly, or aiding, abetting or encouraging the making,
277277 publishing, disseminating or circulating of any oral or written statement or
278278 any pamphlet, circular, article or literature that is false, or maliciously
279279 critical of or derogatory to the financial condition of any person, and that
280280 is calculated to injure such person.
281281 (4) Boycott, coercion and intimidation. Entering into any agreement
282282 to commit, or by any concerted action committing, any act of boycott,
283283 coercion or intimidation resulting in or tending to result in unreasonable
284284 restraint of the business of insurance, or by any act of boycott, coercion or
285285 intimidation monopolizing or attempting to monopolize any part of the
286286 business of insurance.
287287 (5) False statements and entries. (a) Knowingly filing with any
288288 supervisory or other public official, or knowingly making, publishing,
289289 disseminating, circulating or delivering to any person, or placing before
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333333 the public, or knowingly causing directly or indirectly, to be made,
334334 published, disseminated, circulated, delivered to any person, or placed
335335 before the public, any false material statement of fact as to the financial
336336 condition of a person.
337337 (b) Knowingly making any false entry of a material fact in any book,
338338 report or statement of any person or knowingly omitting to make a true
339339 entry of any material fact pertaining to the business of such person in any
340340 book, report or statement of such person.
341341 (6) Stock operations and advisory board contracts. Issuing or
342342 delivering or permitting agents, officers or employees to issue or deliver,
343343 agency company stock or other capital stock, or benefit certificates or
344344 shares in any common-law corporation, or securities or any special or
345345 advisory board contracts or other contracts of any kind promising returns
346346 and profits as an inducement to insurance. Nothing herein shall prohibit
347347 the acts permitted by K.S.A. 40-232, and amendments thereto.
348348 (7) Unfair discrimination. (a) Making or permitting any unfair
349349 discrimination between individuals of the same class and equal expectation
350350 of life in the rates charged for any contract of life insurance or life annuity
351351 or in the dividends or other benefits payable thereon, or in any other of the
352352 terms and conditions of such contract.
353353 (b) Making or permitting any unfair discrimination between
354354 individuals of the same class and of essentially the same hazard in the
355355 amount of premium, policy fees or rates charged for any policy or contract
356356 of accident or health insurance or in the benefits payable thereunder, or in
357357 any of the terms or conditions of such contract, or in any other manner
358358 whatever.
359359 (c) Refusing to insure, or refusing to continue to insure, or limiting
360360 the amount, extent or kind of coverage available to an individual, or
361361 charging an individual a different rate for the same coverage solely
362362 because of blindness or partial blindness. With respect to all other
363363 conditions, including the underlying cause of the blindness or partial
364364 blindness, persons who are blind or partially blind shall be subject to the
365365 same standards of sound actuarial principles or actual or reasonably
366366 anticipated experience as are sighted persons. Refusal to insure includes
367367 denial by an insurer of disability insurance coverage on the grounds that
368368 the policy defines "disability" as being presumed in the event that the
369369 insured loses such person's eyesight. However, an insurer may exclude
370370 from coverage disabilities consisting solely of blindness or partial
371371 blindness when such condition existed at the time the policy was issued.
372372 (d) Refusing to insure, or refusing to continue to insure, or limiting
373373 the amount, extent or kind of coverage available for accident and health
374374 and life insurance to an applicant who is the proposed insured or charge,
375375 charging a different rate for the same coverage or, excluding or limiting
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419419 coverage for losses or denying a claim incurred by an insured as a result of
420420 abuse based on the fact that the applicant who, is the proposed insured, is,
421421 has been, or may be the subject of domestic abuse, except as provided in
422422 subsection (7)(d)(v). "Abuse" As used in this paragraph, "abuse" means
423423 one or more acts defined in K.S.A. 60-3102, and amendments thereto,
424424 between family members, current or former household members, or
425425 current or former intimate partners.
426426 (i) An insurer may shall not ask an applicant for life or accident and
427427 health insurance who is the proposed insured if the individual is, has been
428428 or may be the subject of domestic abuse, or seeks, has sought or had
429429 reason to seek medical or psychological treatment or counseling
430430 specifically for abuse, protection from abuse or shelter from abuse.
431431 (ii) Nothing in this section shall be construed to prohibit a person
432432 from declining to issue an insurance policy insuring the life of an
433433 individual who is, has been or has the potential to be the subject of abuse if
434434 the perpetrator of the abuse is the applicant or would be the owner of the
435435 insurance policy.
436436 (iii) No insurer that issues a life or accident and health policy to an
437437 individual who is, has been or may be the subject of domestic abuse shall
438438 be subject to civil or criminal liability for the death or any injuries suffered
439439 by that individual as a result of domestic abuse.
440440 (iv) No person shall refuse to insure, refuse to continue to insure,
441441 limit the amount, extent or kind of coverage available to an individual or
442442 charge a different rate for the same coverage solely because of physical or
443443 mental condition, except where the refusal, limitation or rate differential is
444444 based on sound actuarial principles.
445445 (v) Nothing in this section shall be construed to prohibit a person
446446 from underwriting or rating a risk on the basis of a preexisting physical or
447447 mental condition, even if such condition has been caused by abuse,
448448 provided that:
449449 (A) The person routinely underwrites or rates such condition in the
450450 same manner with respect to an insured or an applicant who is not a victim
451451 of abuse;
452452 (B) the fact that an individual is, has been or may be the subject of
453453 abuse may not be considered a physical or mental condition; and
454454 (C) such underwriting or rating is not used to evade the intent of this
455455 section or any other provision of the Kansas insurance code.
456456 (vi) Any person who underwrites or rates a risk on the basis of
457457 preexisting physical or mental condition as set forth in subsection (7)(d)
458458 (v), shall treat such underwriting or rating as an adverse underwriting
459459 decision pursuant to K.S.A. 40-2,112, and amendments thereto.
460460 (vii) The provisions of this paragraph shall apply to all policies of life
461461 and accident and health insurance issued in this state after the effective
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505505 date of this act and all existing contracts that are renewed on or after the
506506 effective date of this act.
507507 (e) Refusing to insure, or refusing to continue to insure, or limiting
508508 the amount, extent or kind of coverage available for life insurance to an
509509 individual, or charging an individual a different rate for the same coverage,
510510 solely because of such individual's status as a living organ donor. With
511511 respect to all other conditions, persons who are living organ donors shall
512512 be subject to the same standards of sound actuarial principles or actual or
513513 reasonably anticipated experience as are persons who are not organ
514514 donors.
515515 (8) Rebates. (a) Except as otherwise expressly provided by law,
516516 knowingly permitting, offering to make or making any contract of life
517517 insurance, life annuity or accident and health insurance, or agreement as to
518518 such contract other than as plainly expressed in the insurance contract
519519 issued thereon; paying, allowing, giving or offering to pay, allow or give,
520520 directly or indirectly, as inducement to such insurance, or annuity, any
521521 rebate of premiums payable on the contract, any special favor or advantage
522522 in the dividends or other benefits thereon, or any valuable consideration or
523523 inducement whatever not specified in the contract; or giving, selling,
524524 purchasing or offering to give, sell or purchase as inducement to such
525525 insurance contract or annuity or in connection therewith, any stocks, bonds
526526 or other securities of any insurance company or other corporation,
527527 association or partnership, or any dividends or profits accrued thereon, or
528528 anything of value whatsoever not specified in the contract.
529529 (b) Nothing in subsection (7)(a) or (8)(a) shall be construed as
530530 including within the definition of discrimination or rebates any of the
531531 following practices:
532532 (i) In the case of any contract of life insurance or life annuity, paying
533533 bonuses to policyholders or otherwise abating their premiums in whole or
534534 in part out of surplus accumulated from nonparticipating insurance. Any
535535 such bonuses or abatement of premiums shall be fair and equitable to
536536 policyholders and for the best interests of the company and its
537537 policyholders;
538538 (ii) in the case of life insurance policies issued on the industrial debit
539539 plan, making allowance to policyholders who have continuously for a
540540 specified period made premium payments directly to an office of the
541541 insurer in an amount that fairly represents the saving in collection
542542 expenses;
543543 (iii) readjustment of the rate of premium for a group insurance policy
544544 based on the loss or expense experience thereunder, at the end of the first
545545 or any subsequent policy year of insurance thereunder, which may be
546546 made retroactive only for such policy year;
547547 (iv) engaging in an arrangement that would not violate section 106 of
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591591 the bank holding company act amendments of 1972, as interpreted by the
592592 board of governors of the federal reserve system or section 5(q) of the
593593 home owners' loan act;
594594 (v) the offer or provision by insurers or producers, by or through
595595 employees, affiliates or third-party representatives, of value-added
596596 products or services at no or reduced cost when such products or services
597597 are not specified in the policy of insurance if the product or service:
598598 (A) Relates to the insurance coverage; and
599599 (B) is primarily designed to satisfy one or more of the following:
600600 (1) Provide loss mitigation or loss control;
601601 (2) reduce claim costs or claim settlement costs;
602602 (3) provide education about liability risks or risk of loss to persons or
603603 property;
604604 (4) monitor or assess risk, identify sources of risk or develop
605605 strategies for eliminating or reducing risk;
606606 (5) enhance health;
607607 (6) enhance financial wellness through items such as education or
608608 financial planning services;
609609 (7) provide post-loss services;
610610 (8) (a) incentivize behavioral changes to improve the health or reduce
611611 the risk of death or disability of a customer;
612612 (b) as used in this section, "customer" means a policyholder, potential
613613 policyholder, certificate holder, potential certificate holder, insured,
614614 potential insured or applicant; or
615615 (9) assist in the administration of the employee or retiree benefit
616616 insurance coverage.
617617 (C) The cost to the insurer or producer offering the product or service
618618 to any given customer shall be reasonable in comparison to such
619619 customer's premiums or insurance coverage for the policy class.
620620 (D) If the insurer or producer is providing the product or service
621621 offered, the insurer or producer shall ensure that the customer is provided
622622 with contact information, upon request, to assist the customer with
623623 questions regarding the product or service.
624624 (E) The commissioner may adopt rules and regulations when
625625 implementing the permitted practices set forth in this section to ensure
626626 consumer protection. Such rules and regulations, consistent with
627627 applicable law, may address, among other issues, consumer data
628628 protections and privacy, consumer disclosure and unfair discrimination.
629629 (F) The availability of the value-added product or service shall be
630630 based on documented objective criteria and offered in a manner that is not
631631 unfairly discriminatory. The documented criteria shall be maintained by
632632 the insurer or producer and produced upon request by the commissioner.
633633 (G) If an insurer or producer does not have sufficient evidence but
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677677 has a good-faith belief that the product or service meets the criteria in
678678 subsection (8)(b)(v)(B), the insurer or producer may provide the product or
679679 service in a manner that is not unfairly discriminatory as part of a pilot or
680680 testing program for not more than one year. An insurer or producer shall
681681 notify the commissioner of such a pilot or testing program offered to
682682 consumers in this state prior to launching and may proceed with the
683683 program unless the commissioner objects within 21 days of notice.
684684 (vi) An insurer or a producer may:
685685 (A) Offer or give non-cash gifts, items or services, including meals to
686686 or charitable donations on behalf of a customer, in connection with the
687687 marketing, sale, purchase or retention of contracts of insurance, as long as
688688 the cost does not exceed an amount determined to be reasonable by the
689689 commissioner per policy year per term. The offer shall be made in a
690690 manner that is not unfairly discriminatory. The customer shall not be
691691 required to purchase, continue to purchase or renew a policy in exchange
692692 for the gift, item or service.
693693 (B) Conduct raffles or drawings to the extent permitted by state law,
694694 as long as there is no financial cost to entrants to participate, the drawing
695695 or raffle does not obligate participants to purchase insurance, the prizes are
696696 not valued in excess of a reasonable amount determined by the
697697 commissioner and the drawing or raffle is open to the public. The raffle or
698698 drawing shall be offered in a manner that is not unfairly discriminatory.
699699 The customer shall not be required to purchase, continue to purchase or
700700 renew a policy in exchange for the gift, item or service.
701701 (c) An insurer, producer or representative of an insurer or producer
702702 shall not offer or provide insurance as an inducement to the purchase of
703703 another policy.
704704 (9) Unfair claim settlement practices. It is an unfair claim settlement
705705 practice if any of the following or any rules and regulations pertaining
706706 thereto are either committed flagrantly and in conscious disregard of such
707707 provisions, or committed with such frequency as to indicate a general
708708 business practice:
709709 (a) Misrepresenting pertinent facts or insurance policy provisions
710710 relating to coverages at issue;
711711 (b) failing to acknowledge and act reasonably promptly upon
712712 communications with respect to claims arising under insurance policies;
713713 (c) failing to adopt and implement reasonable standards for the
714714 prompt investigation of claims arising under insurance policies;
715715 (d) refusing to pay claims without conducting a reasonable
716716 investigation based upon all available information;
717717 (e) failing to affirm or deny coverage of claims within a reasonable
718718 time after proof of loss statements have been completed;
719719 (f) not attempting in good faith to effectuate prompt, fair and
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763763 equitable settlements of claims in which liability has become reasonably
764764 clear;
765765 (g) compelling insureds to institute litigation to recover amounts due
766766 under an insurance policy by offering substantially less than the amounts
767767 ultimately recovered in actions brought by such insureds;
768768 (h) attempting to settle a claim for less than the amount to which a
769769 reasonable person would have believed that such person was entitled by
770770 reference to written or printed advertising material accompanying or made
771771 part of an application;
772772 (i) attempting to settle claims on the basis of an application that was
773773 altered without notice to, or knowledge or consent of the insured;
774774 (j) making claims payments to insureds or beneficiaries not
775775 accompanied by a statement setting forth the coverage under which
776776 payments are being made;
777777 (k) making known to insureds or claimants a policy of appealing from
778778 arbitration awards in favor of insureds or claimants for the purpose of
779779 compelling them to accept settlements or compromises less than the
780780 amount awarded in arbitration;
781781 (l) delaying the investigation or payment of claims by requiring an
782782 insured, claimant or the physician of either to submit a preliminary claim
783783 report and then requiring the subsequent submission of formal proof of
784784 loss forms, both of which submissions contain substantially the same
785785 information;
786786 (m) failing to promptly settle claims, where liability has become
787787 reasonably clear, under one portion of the insurance policy coverage in
788788 order to influence settlements under other portions of the insurance policy
789789 coverage; or
790790 (n) failing to promptly provide a reasonable explanation of the basis
791791 in the insurance policy in relation to the facts or applicable law for denial
792792 of a claim or for the offer of a compromise settlement.
793793 (10) Failure to maintain complaint handling procedures. Failure of
794794 any person, who is an insurer on an insurance policy, to maintain a
795795 complete record of all the complaints that it has received since the date of
796796 its last examination under K.S.A. 40-222, and amendments thereto; but no
797797 such records shall be required for complaints received prior to the effective
798798 date of this act. The record shall indicate the total number of complaints,
799799 their classification by line of insurance, the nature of each complaint, the
800800 disposition of the complaints, the date each complaint was originally
801801 received by the insurer and the date of final disposition of each complaint.
802802 For purposes of this subsection, "complaint" means any written
803803 communication primarily expressing a grievance related to the acts and
804804 practices set out in this section.
805805 (11) Misrepresentation in insurance applications. Making false or
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849849 fraudulent statements or representations on or relative to an application for
850850 an insurance policy, for the purpose of obtaining a fee, commission,
851851 money or other benefit from any insurer, agent, broker or individual.
852852 (12) Statutory violations. Any violation of any of the provisions of
853853 K.S.A. 40-216, 40-276a, 40-2,155 or 40-1515, and amendments thereto.
854854 (13) Disclosure of information relating to adverse underwriting
855855 decisions and refund of premiums. Failing to comply with the provisions of
856856 K.S.A. 40-2,112, and amendments thereto, within the time prescribed in
857857 such section.
858858 (14) Rebates and other inducements in title insurance. (a) No title
859859 insurance company or title insurance agent, or any officer, employee,
860860 attorney, agent or solicitor thereof, may pay, allow or give, or offer to pay,
861861 allow or give, directly or indirectly, as an inducement to obtaining any title
862862 insurance business, any rebate, reduction or abatement of any rate or
863863 charge made incident to the issuance of such insurance, any special favor
864864 or advantage not generally available to others of the same classification, or
865865 any money, thing of value or other consideration or material inducement.
866866 The words "charge made incident to the issuance of such insurance"
867867 includes, without limitations, escrow, settlement and closing charges.
868868 (b) No insured named in a title insurance policy or contract nor any
869869 other person directly or indirectly connected with the transaction involving
870870 the issuance of the policy or contract, including, but not limited to,
871871 mortgage lender, real estate broker, builder, attorney or any officer,
872872 employee, agent representative or solicitor thereof, or any other person
873873 may knowingly receive or accept, directly or indirectly, any rebate,
874874 reduction or abatement of any charge, or any special favor or advantage or
875875 any monetary consideration or inducement referred to in subsection (14)
876876 (a).
877877 (c) Nothing in this section shall be construed as prohibiting:
878878 (i) The payment of reasonable fees for services actually rendered to a
879879 title insurance agent in connection with a title insurance transaction;
880880 (ii) the payment of an earned commission to a duly appointed title
881881 insurance agent for services actually performed in the issuance of the
882882 policy of title insurance; or
883883 (iii) the payment of reasonable entertainment and advertising
884884 expenses.
885885 (d) Nothing in this section prohibits the division of rates and charges
886886 between or among a title insurance company and its agent, or one or more
887887 title insurance companies and one or more title insurance agents, if such
888888 division of rates and charges does not constitute an unlawful rebate under
889889 the provisions of this section and is not in payment of a forwarding fee or a
890890 finder's fee.
891891 (e) As used in subsections (14)(e) through (14)(i), unless the context
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935935 otherwise requires:
936936 (i) "Associate" means any firm, association, organization, partnership,
937937 business trust, corporation or other legal entity organized for profit in
938938 which a producer of title business is a director, officer or partner thereof,
939939 or owner of a financial interest; the spouse or any relative within the
940940 second degree by blood or marriage of a producer of title business who is a
941941 natural person; any director, officer or employee of a producer of title
942942 business or associate; any legal entity that controls, is controlled by, or is
943943 under common control with a producer of title business or associate; and
944944 any natural person or legal entity with whom a producer of title business or
945945 associate has any agreement, arrangement or understanding or pursues any
946946 course of conduct, the purpose or effect of which is to evade the provisions
947947 of this section.
948948 (ii) "Financial interest" means any direct or indirect interest, legal or
949949 beneficial, where the holder thereof is or will be entitled to 1% or more of
950950 the net profits or net worth of the entity in which such interest is held.
951951 Notwithstanding the foregoing, an interest of less than 1% or any other
952952 type of interest shall constitute a "financial interest" if the primary purpose
953953 of the acquisition or retention of that interest is the financial benefit to be
954954 obtained as a consequence of that interest from the referral of title
955955 business.
956956 (iii) "Person" means any natural person, partnership, association,
957957 cooperative, corporation, trust or other legal entity.
958958 (iv) "Producer of title business" or "producer" means any person,
959959 including any officer, director or owner of 5% or more of the equity or
960960 capital or both of any person, engaged in this state in the trade, business,
961961 occupation or profession of:
962962 (A) Buying or selling interests in real property;
963963 (B) making loans secured by interests in real property; or
964964 (C) acting as broker, agent, representative or attorney for a person
965965 who buys or sells any interest in real property or who lends or borrows
966966 money with such interest as security.
967967 (v) "Refer" means to direct or cause to be directed or to exercise any
968968 power or influence over the direction of title insurance business, whether
969969 or not the consent or approval of any other person is sought or obtained
970970 with respect to the referral.
971971 (f) No title insurer or title agent may accept any order for, issue a title
972972 insurance policy to, or provide services to, an applicant if it knows or has
973973 reason to believe that the applicant was referred to it by any producer of
974974 title business or by any associate of such producer, where the producer, the
975975 associate, or both, have a financial interest in the title insurer or title agent
976976 to which business is referred unless the producer has disclosed to the
977977 buyer, seller and lender the financial interest of the producer of title
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10211021 business or associate referring the title insurance business.
10221022 (g) No title insurer or title agent may accept an order for title
10231023 insurance business, issue a title insurance policy, or receive or retain any
10241024 premium, or charge in connection with any transaction if: (i) The title
10251025 insurer or title agent knows or has reason to believe that the transaction
10261026 will constitute controlled business for that title insurer or title agent; and
10271027 (ii) 70% or more of the closed title orders of that title insurer or title agent
10281028 during the 12 full calendar months immediately preceding the month in
10291029 which the transaction takes place is derived from controlled business. The
10301030 prohibitions contained in this paragraph shall not apply to transactions
10311031 involving real estate located in a county that has a population, as shown by
10321032 the last preceding decennial census, of 10,000 or less.
10331033 (h) Within 90 days following the end of each business year, as
10341034 established by the title insurer or title agent, each title insurer or title agent
10351035 shall file with the department of insurance and any title insurer with which
10361036 the title agent maintains an underwriting agreement, a report executed by
10371037 the title insurer's or title agent's chief executive officer or designee, under
10381038 penalty of perjury, stating the percent of closed title orders originating
10391039 from controlled business. The failure of a title insurer or title agent to
10401040 comply with the requirements of this section, at the discretion of the
10411041 commissioner, shall be grounds for the suspension or revocation of a
10421042 license or other disciplinary action, with the commissioner able to mitigate
10431043 any such disciplinary action if the title insurer or title agent is found to be
10441044 in substantial compliance with competitive behavior as defined by federal
10451045 housing and urban development statement of policy 1996-2.
10461046 (i) (1) No title insurer or title agent may accept any title insurance
10471047 order or issue a title insurance policy to any person if it knows or has
10481048 reason to believe that such person was referred to it by any producer of
10491049 title business or by any associate of such producer, where the producer, the
10501050 associate, or both, have a financial interest in the title insurer or title agent
10511051 to which business is referred unless the producer has disclosed in writing
10521052 to the person so referred the fact that such producer or associate has a
10531053 financial interest in the title insurer or title agent, the nature of the
10541054 financial interest and a written estimate of the charge or range of charges
10551055 generally made by the title insurer or agent for the title services. Such
10561056 disclosure shall include language stating that the consumer is not obligated
10571057 to use the title insurer or agent in which the referring producer or associate
10581058 has a financial interest and shall include the names and telephone numbers
10591059 of not less than three other title insurers or agents that operate in the
10601060 county in which the property is located. If fewer than three insurers or
10611061 agents operate in that county, the disclosure shall include all title insurers
10621062 or agents operating in that county. Such written disclosure shall be signed
10631063 by the person so referred and must have occurred prior to any commitment
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11071107 having been made to such title insurer or agent.
11081108 (2) No producer of title business or associate of such producer shall
11091109 require, directly or indirectly, as a condition to selling or furnishing any
11101110 other person any loan or extension thereof, credit, sale, property, contract,
11111111 lease or service, that such other person shall purchase title insurance of any
11121112 kind through any title agent or title insurer if such producer has a financial
11131113 interest in such title agent or title insurer.
11141114 (3) No title insurer or title agent may accept any title insurance order
11151115 or issue a title insurance policy to any person it knows or has reason to
11161116 believe that the name of the title company was pre-printed in the sales
11171117 contract, prior to the buyer or seller selecting that title company.
11181118 (4) Nothing in this paragraph shall prohibit any producer of title
11191119 business or associate of such producer from referring title business to any
11201120 title insurer or title agent of such producer's or associate's choice, and, if
11211121 such producer or associate of such producer has any financial interest in
11221122 the title insurer, from receiving income, profits or dividends produced or
11231123 realized from such financial interest, so long as:
11241124 (a) Such financial interest is disclosed to the purchaser of the title
11251125 insurance in accordance with paragraphs (i)(1) through (i)(4);
11261126 (b) the payment of income, profits or dividends is not in exchange for
11271127 the referral of business; and
11281128 (c) the receipt of income, profits or dividends constitutes only a return
11291129 on the investment of the producer or associate.
11301130 (5) Any producer of title business or associate of such producer who
11311131 violates the provisions of paragraphs (i)(2) through (i)(4), or any title
11321132 insurer or title agent who accepts an order for title insurance knowing that
11331133 it is in violation of paragraphs (i)(2) through (i)(4), in addition to any other
11341134 action that may be taken by the commissioner of insurance, shall be
11351135 subject to a fine by the commissioner in an amount equal to five times the
11361136 premium for the title insurance and, if licensed pursuant to K.S.A. 58-3034
11371137 et seq., and amendments thereto, shall be deemed to have committed a
11381138 prohibited act pursuant to K.S.A. 58-3602, and amendments thereto, and
11391139 shall be liable to the purchaser of such title insurance in an amount equal
11401140 to the premium for the title insurance.
11411141 (6) Any title insurer or title agent that is a competitor of any title
11421142 insurer or title agent that, subsequent to the effective date of this act, has
11431143 violated or is violating the provisions of this paragraph, shall have a cause
11441144 of action against such title insurer or title agent and, upon establishing the
11451145 existence of a violation of any such provision, shall be entitled, in addition
11461146 to any other damages or remedies provided by law, to such equitable or
11471147 injunctive relief as the court deems proper. In any such action under this
11481148 subsection, the court may award to the successful party the court costs of
11491149 the action together with reasonable attorney fees.
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11931193 (7) The commissioner shall also require each title agent to provide
11941194 core title services as required by the real estate settlement procedures act.
11951195 (j) The commissioner shall adopt any rules and regulations necessary
11961196 to carry out the provisions of this act.
11971197 (15) Disclosure of nonpublic personal information. (a) No person
11981198 shall disclose any nonpublic personal information contrary to the
11991199 provisions of title V of the Gramm-Leach-Bliley act of 1999 (public law
12001200 106-102). The commissioner may adopt rules and regulations necessary to
12011201 carry out this subsection. Such rules and regulations shall be consistent
12021202 with and not more restrictive than the model regulation adopted on
12031203 September 26, 2000, by the national association of insurance
12041204 commissioners entitled "Privacy of consumer financial and health
12051205 information regulation".
12061206 (b) Nothing in this subsection shall be deemed or construed to
12071207 authorize the promulgation or adoption of any regulation that preempts,
12081208 supersedes or is inconsistent with any provision of Kansas law concerning
12091209 requirements for notification of, or obtaining consent from, a parent,
12101210 guardian or other legal custodian of a minor relating to any matter
12111211 pertaining to the health and medical treatment for such minor.
12121212 Sec. 4. K.S.A. 40-1139 and K.S.A. 2024 Supp. 40-1137 and 40-2404
12131213 are hereby repealed.
12141214 Sec. 5. This act shall take effect and be in force from and after its
12151215 publication in the statute book.
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