SESSION OF 2025
SUPPLEMENTAL NOTE ON HOUSE BILL NO. 2044
As Recommended by House Committee on
Insurance
Brief*
HB 2044 would amend the Third Party Administrators
Act to require third-party administrators (administrators) to
maintain a separate fiduciary account for each payor and
prohibit co-mingling of funds, either collected or held, in a
fiduciary account by the administrator on behalf of multiple
payors.
[Note: Continuing law requires all insurance charges,
premiums, collateral, and loss reimbursements collected by
an administrator on behalf of or for a payor, and the return of
premiums or collateral received from a payor, to be held by
the administrator in a fiduciary capacity. The funds are to be
immediately remitted to the person or persons who are
entitled to such funds or deposited promptly in a fiduciary
account established and maintained by the administrator in a
federally- or state-insured financial institution.]
The bill would require an administrator to immediately
disclose to the Commissioner of Insurance any bankruptcy
petition filed by or on behalf of the administrator pursuant to
Chapter 9 or Chapter 11 of the U.S. Bankruptcy Code.
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*Supplemental notes are prepared by the Legislative Research
Department and do not express legislative intent. The supplemental
note and fiscal note for this bill may be accessed on the Internet at
https://klrd.gov/ Background
The bill was introduced by the House Committee on
Insurance at the request of a representative of the Kansas
Insurance Department (Department).
[Note: A companion bill, SB 21, has been introduced in
the Senate.]
House Committee on Insurance
In the House Committee hearing, proponent testimony
was provided by a representative of the Department who
stated the bill would provide the Department, in cases where
an administrator files for bankruptcy, with tools to help
businesses move their funds to another administrator to avoid
disruptions in service to their employees. The representative
noted prohibiting the co-mingling of payor funds would
facilitate the return of funds to the appropriate payor.
No other testimony was provided.
Following discussion on the bill, the House Committee
recommended the bill be placed on the Consent Calendar.
Fiscal Information
According to the fiscal note prepared by the Division of
the Budget on the bill, the Department states enactment of
the bill would have no fiscal effect.
Insurance; Third Party Administrators Act; third-party administrator; fiduciary
accounts; bankruptcy; Commissioner of Insurance; U.S. Bankruptcy Code
2- 2044