SESSION OF 2025
SUPPLEMENTAL NOTE ON HOUSE BILL NO. 2044
As Amended by Senate Committee on Financial
Institutions and Insurance
Brief*
HB 2044, as amended, 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 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 at the time such
filing is made.
The bill would be in effect upon publication in the
Kansas Register.
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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 passed the House.
Senate and House conference committee members have
been appointed.]
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.
Senate Committee on Financial Institutions and
Insurance
In the Senate Committee hearing, proponent testimony
was provided by a representative of the Department who
stated the bill stems from a situation in 2024 where an
administrator filed for bankruptcy in Kansas. The
representative stated the Department had few tools to help
those businesses utilizing the administrator quickly move their
funds to another administrator to avoid disruptions in service
to their employees. The representative stated the bill would
ensure the Department is informed of any such bankruptcy,
2- 2044 ensure separate accounts for clients, and ease transition for
businesses.
No other testimony was provided.
The Senate Committee amended the bill to clarify that
an administrator would be required to disclose to the
Commissioner of Insurance any bankruptcy petition filed at
the time such filing is made. The Senate Committee also
amended the bill to change the effective date to be upon
publication in the Kansas Register.
Fiscal Information
According to the fiscal note prepared by the Division of
the Budget on the bill, as introduced, the Department states
enactment of the bill would have no fiscal effect.
Third Party Administrators Act; third-party administrator; fiduciary accounts;
bankruptcy; Commissioner of Insurance; U.S. Bankruptcy Code
3- 2044