Kansas 2025-2026 Regular Session

Kansas House Bill HB2044 Compare Versions

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Old	New	Differences
1	1	Session of 2025
2	2	HOUSE BILL No. 2044
3	3	By Committee on Insurance
4	4	Requested by Eric Turek, Kansas Insurance Department
5	5	1-21
6	6	AN ACT concerning insurance; requiring that third party administrators
7	7	maintain separate fiduciary accounts for individual payors and not
8	8	contain funds collected or held on behalf of multiple payors and
9	9	disclose to the commissioner of insurance any bankruptcy petition filed
10	10	by or on behalf of such administrator pursuant to chapter 9 or chapter
11	11	11 of the United States bankruptcy code; amending K.S.A. 40-3807 and
12	12	40-3809 and repealing the existing sections.
13	13	Be it enacted by the Legislature of the State of Kansas:
14	14	Section 1. K.S.A. 40-3807 is hereby amended to read as follows: 40-
15	15	3807. (a) All insurance charges, premiums, collateral and loss
16	16	reimbursements collected by an administrator on behalf of or for a payor,
17	17	and the return of premiums or collateral received from that payor, shall be
18	18	held by the administrator in a fiduciary capacity. Such funds shall be
19	19	immediately remitted to the person or persons entitled thereto, or shall be
20	20	deposited promptly in a fiduciary account established and maintained by
21	21	the administrator in a federally or state-insured financial institution. A
22	22	separate fiduciary account shall be maintained by the administrator for
23	23	each payor and shall not contain funds collected or held by the
24	24	administrator on behalf of multiple payors. The written agreement
25	25	between the administrator and the payor shall provide for the administrator
26	26	to periodically render an accounting to the payor detailing all transactions
27	27	performed by the administrator pertaining to the business of the payor, and
28	28	the written agreement between the payor and the administrator shall
29	29	include specifications of this reporting.
30	30	(b) The administrator shall keep copies of all records of any fiduciary
31	31	account maintained or controlled by the administrator, and, upon request
32	32	of a payor, shall furnish the payor with copies of such records pertaining to
33	33	deposits and withdrawals on behalf of the payor. If charges or premiums so
34	34	deposited have been collected on behalf of or for more than one payor, or
35	35	for the payment of claims associated with more than one policy, the
36	36	administrator shall keep records clearly recording the deposits in and
37	37	withdrawals from the account on behalf of each payor and relating to each
38	38	policyholder.
39	39	(c) The administrator shall not pay any claim by withdrawals from a
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74	74	35 HB 2044 2
75	75	fiduciary account in which premiums or charges are deposited.
76	76	Withdrawals from a fiduciary account shall be made as provided in the
77	77	written agreement between the administrator and the payor, and only for
78	78	the following purposes: (1) Remittance to an insurer entitled thereto; (2)
79	79	deposit in an account maintained in the name of the payor; (3) transfer to
80	80	and deposit in a claims paying account, with claims to be paid as provided
81	81	in subsection (d); (4) payment to a group policyholder for remittance to the
82	82	payor entitled thereto; (5) payment to the administrator of its earned
83	83	commissions, fees or charges; (6) remittance of return premiums to the
84	84	person or persons entitled thereto; or (7) payment to other service
85	85	providers as authorized by the payor.
86	86	(d) All claims paid by the administrator from funds collected on
87	87	behalf of or for a payor shall be paid only as authorized by the payor.
88	88	Payments from an account maintained or controlled by the administrator
89	89	may be made for the following purposes including the payment of claims:
90	90	(1) Payment of valid claims; (2) payment of expenses associated with the
91	91	handling of claims to the administrator or to other service providers
92	92	approved by the payor; (3) remittance to the payor, or transfer to a
93	93	successor administrator as directed by the payor, for the purpose of paying
94	94	claims and associated expenses; and (4) return of funds held as collateral
95	95	or prepayment, to the person entitled to those funds, upon a determination
96	96	by the payor that those funds are no longer necessary to secure or facilitate
97	97	the payment of claims and associated expenses.
98	98	Sec. 2. K.S.A. 40-3809 is hereby amended to read as follows: 40-
99	99	3809. (a) Where the services of an administrator are utilized, the
100	100	administrator shall provide a written notice, approved by the payor, to
101	101	covered individuals advising them of the identity of and relationship
102	102	among the administrator, the policyholder and the payor.
103	103	(b) When an administrator collects funds, the reason for collection of
104	104	each item shall be identified to the insured party and each item shall be
105	105	shown separately from any premium. Additional charges may not be made
106	106	for services to the extent the services have already been paid for by the
107	107	payor.
108	108	(c) The administrator shall disclose to the payor all charges, fees and
109	109	commissions that the administrator receives arising from services it
110	110	provides for the payor, including any fees or commissions paid by payors
111	111	providing reinsurance or stop-loss insurance.
112	112	(d) An administrator shall immediately disclose to the commissioner
113	113	any bankruptcy petition filed by or on behalf of such administrator
114	114	pursuant to chapter 9 or chapter 11 of the United States bankruptcy code.
115	115	Sec. 3. K.S.A. 40-3807 and 40-3809 are hereby repealed.
116	116	Sec. 4. This act shall take effect and be in force from and after its
117	117	publication in the statute book.
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