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Kansas House Bill HB2087

Kansas 2025-2026 Regular Session

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11 Session of 2025
22 HOUSE BILL No. 2087
33 By Committee on Insurance
44 Requested by Dan Murray on behalf of the Kansas Association of Insurance Agents
55 1-23
66 AN ACT concerning insurance; relating to nonadmitted insurers; requiring
77 the commissioner of insurance to maintain a list of eligible nonadmitted
88 insurers; authorizing certain nonadmitted insurers to transact business
99 in Kansas with vehicle dealers and to provide excess coverage
1010 insurance on Kansas risks; specifying requirements and conditions
1111 therefor; amending K.S.A. 8-2405, 40-246b and 40-246e and repealing
1212 the existing sections.
1313 Be it enacted by the Legislature of the State of Kansas:
1414 Section 1. K.S.A. 8-2405 is hereby amended to read as follows: 8-
1515 2405. No dealer's license shall be issued or renewed unless the applicant or
1616 holder of the license shall have on file with the division an approved
1717 insurance policy, issued by an insurance carrier authorized to transact
1818 business within the state of Kansas or issued by an eligible nonadmitted
1919 insurer pursuant to K.S.A. 40-246e, and amendments thereto. The term of
2020 the such policy shall be continuous and shall remain in full force and effect
2121 until canceled under proper notice. All policies must shall be issued in the
2222 name of the holder or applicant for the vehicle dealer's license and shall
2323 provide public liability and property damage insurance for the operation of
2424 any vehicle by prospective purchasers, owned or being offered for sale by
2525 the dealer when being operated by the owner or seller, the seller's agent,
2626 servants, employees, prospective customers or other persons. The limits of
2727 liability shall correspond to the amount required by law in this state for
2828 bodily injury or death of any one person, bodily injury or death in any one
2929 accident and property damage. Such insurance, when issued by an
3030 authorized insurer, may not be cancelled unless 30 days' notice by the
3131 insurance carrier has been given in writing to the director. Upon the
3232 effective date of cancellation of any insurance policy required under this
3333 section, the license to engage in business as a dealer shall be void.
3434 Sec. 2. K.S.A. 40-246b is hereby amended to read as follows: 40-
3535 246b. (a) Upon receipt of a proper application, the commissioner of
3636 insurance may issue an excess lines coverage license to any licensed
3737 property and casualty agent of this state or any other state. Any agent so
3838 licensed may negotiate for insureds whose home state is this state, the
3939 types of contracts of fire insurance enumerated in K.S.A. 40-901, and
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7575 amendments thereto, and the type of casualty insurance contracts
7676 enumerated in K.S.A. 40-1102, and amendments thereto, or reinsurance, or
7777 to place risks, or to effect insurance or reinsurance for persons or
7878 corporations other than such agent, with insurers not authorized to do
7979 business in this state nonadmitted insurers eligible pursuant to K.S.A. 40-
8080 246e, and amendments thereto. An agent, as defined in K.S.A. 40-4902,
8181 and amendments thereto, may place the kind or kinds of business specified
8282 in this act for which such agent is licensed pursuant to K.S.A. 40-4903 and
8383 subsection (d) of 40-4906, and amendments thereto, with an insurer not
8484 authorized to do business in this state eligible nonadmitted insurer by
8585 placing such business with a person licensed pursuant to the provisions of
8686 this act and may share in the applicable commissions on such business.
8787 Before any such license shall be issued, the applicant shall submit proper
8888 application on a form prescribed by the commissioner, which application
8989 shall be accompanied by a fee of $50. Such license shall be renewable
9090 each year on May 1, upon the payment of a $50 fee.
9191 (b) The agent so licensed shall on or before March 1 of each year, file
9292 with the insurance department of this state, a sworn affidavit or statement
9393 to the effect that, after diligent effort, such agent has been unable to secure
9494 the amount of insurance required to protect the property, person, or firm
9595 described in such agent's affidavit or statement from loss or damage in
9696 regularly admitted companies during the preceding year. Mere rate
9797 differential shall not be grounds for placing a particular risk in with a
9898 nonadmitted carrier insurer when an admitted carrier insurer would accept
9999 such risk at a different rate. The licensed excess coverage agent must shall,
100100 prior to placing insurance with an eligible nonadmitted insurer not
101101 authorized to do business in this state, obtain the written consent of the
102102 prospective named insured and provide such insured the following
103103 information in a form promulgated by the commissioner:
104104 (1) A statement that the coverage will be obtained from an insurer not
105105 authorized to do business in this state eligible nonadmitted insurer;
106106 (2) a statement that the insurer's name appears on the list of
107107 companies maintained by the commissioner insurer is eligible pursuant to
108108 K.S.A. 40-246e, and amendments thereto;
109109 (3) a notice that the insurer's financial condition, policy forms, rates
110110 and trade practices are not subject to the review or jurisdiction of the
111111 commissioner;
112112 (4) a statement that the protection of the guaranty associations is not
113113 afforded to policyholders of the insurer; and
114114 (5) a statement or notice with respect to any other information
115115 deemed necessary by the commissioner pertinent to insuring with an
116116 insurer not authorized to do business in this state eligible nonadmitted
117117 insurer.
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161161 (c) In the event the insured desires that coverage be bound with an
162162 insurer not admitted to this state eligible nonadmitted insurer and it is not
163163 possible to obtain the written consent of the insured prior to binding the
164164 coverage, the excess lines agent may bind the coverage after advising the
165165 insured of the information set out above and shall obtain written
166166 confirmation that the insured desires that coverage be placed with an
167167 insurer not admitted to this state eligible nonadmitted insurer within 30
168168 days after binding coverage.
169169 (d) (1) When business comes to a licensed excess lines agent in which
170170 this state is the home state for placement with an insurer not authorized to
171171 do business in this state eligible nonadmitted insurer from an agent not
172172 licensed as an excess lines agent, it shall be the responsibility of the
173173 licensed excess lines agent to ascertain that the insured has been provided
174174 the preceding information and has consented to being insured with an
175175 insurer not authorized to do business in this state eligible nonadmitted
176176 insurer. Each excess lines agent shall keep a separate record book in such
177177 agent's office showing the transactions of fire and casualty insurance and
178178 reinsurance placed in companies not authorized to do business in this state
179179 eligible nonadmitted insurers, the amount of gross premiums charged
180180 thereon, the insurer with which the policy was placed, the date, term and
181181 number of the policy, the location and nature of the risk, the name of the
182182 insured and such other information as the commissioner may require and
183183 such record shall be available at all times for inspection by the
184184 commissioner of insurance or the commissioner's authorized
185185 representatives. The commissioner may revoke or suspend any license
186186 issued pursuant to the provisions of this act in the same manner and for the
187187 same reasons prescribed by K.S.A. 40-4909, and amendments thereto.
188188 (2) Any policy issued under the provisions of this statute shall have
189189 stamped or endorsed in a prominent manner thereon, the following: This
190190 policy is issued by an insurer not authorized to do business eligible
191191 nonadmitted insurer in Kansas and, as such, the form, financial condition
192192 and rates are not subject to review by the commissioner of insurance and
193193 the insured is not protected by any guaranty fund.
194194 (3) If business is placed with a nonadmitted company that is
195195 subsequently determined to be insolvent, the excess lines agent placing
196196 such business with such company is relieved of any responsibility to the
197197 insured as it relates to such insolvency, if the excess lines agent has
198198 satisfactorily complied with all requirements of this section pertaining to
199199 notification of the insured, has properly obtained the written consent of the
200200 insured and has used due diligence in selecting the insurer. It shall be
201201 presumed that due diligence was used in selecting the insurer if such
202202 insurer was on the list compiled pursuant to K.S.A. 40-246e, and
203203 amendments thereto, at the time coverage first became effective.
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247247 Sec. 3. K.S.A. 40-246e is hereby amended to read as follows: 40-
248248 246e. (a) The commissioner shall maintain a list of insurers not authorized
249249 to do business in this state eligible nonadmitted insurers for review by any
250250 interested person. Only those insurers who have filed a certified copy of
251251 their most recent annual statement with the commissioner in the form
252252 prescribed by K.S.A. 40-225, and amendments thereto, or, if domiciled
253253 outside the United States, have filed their most recent annual statement
254254 with the national association of insurance commissioners may appear on
255255 the list. No excess lines agent shall place insurance on a Kansas domiciled
256256 risk with an insurer whose name does not appear on this list. No company
257257 shall appear on the list whose capital or surplus as shown on the annual
258258 statement does not equal or exceed $4,500,000 $15,000,000. Individual
259259 unincorporated insurers not listed by the national association of insurance
260260 commissioners may appear on the list if they are authorized to transact an
261261 insurance business in at least one state of the United States, and possess
262262 assets which that are held in trust for the benefit of American
263263 policyholders in the sum of not less than $50,000,000 and pay the filing
264264 fee required by this section. Insurance exchanges who that issue contracts
265265 on behalf of their members and pay the filing fee required by this section
266266 may appear on the list if their individual members have a capital or surplus
267267 equal to or in excess of $1,500,000 and the aggregate capital or surplus of
268268 all members of the exchange is at least $15,000,000. A nonrefundable
269269 filing fee of $200 shall be required of any insurer submitting its annual
270270 statement for review by the commissioner for inclusion on such list.
271271 (b) The commissioner shall remove an insurer's name from the listing
272272 only when: (a) the:
273273 The (1) Insurer requests such removal;
274274 or (b) the(2) insurer fails to file its latest annual statement and
275275 required filing fee prior to May 1 of each year as required by this section;
276276 or (c) the
277277 (3) commissioner is notified by the insurance supervisory authority of
278278 any state of the United States that such insurer has had its authority to
279279 transact business restricted; or has been declared insolvent or placed in
280280 receivership, conservatorship, rehabilitation or any similar status wherein
281281 the business of the insurer is formally supervised by an insurance
282282 supervisory authority; or (d) the
283283 (4) commissioner is notified by the N.A.I.C. that any insurer
284284 domiciled outside the United States has been declared insolvent or placed
285285 in receivership, conservatorship, rehabilitation or any similar status
286286 wherein in which the business of the insurer is formally supervised by an
287287 insurance supervisory authority pursuant to an order by any court of
288288 competent jurisdiction; or (e) the
289289 (5) insurer has failed to effectuate reasonably prompt, fair and
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333333 equitable payment of just losses and claims in this state; or
334334 (f) the(6) insurer encourages, promotes or rewards an agent to violate
335335 the provisions of K.S.A. 40-246b, and amendments thereto.
336336 (c) Notwithstanding its inclusion on the list, a nonadmitted insurer
337337 shall be eligible to place insurance in accordance with K.S.A. 40-246b,
338338 and amendments thereto, if such insurer meets the eligibility requirements
339339 of 15 U.S.C. § 8204, as in effect on July 1, 2025.
340340 (d) There shall be no liability on the part of and no cause of action of
341341 any nature shall arise against the commissioner, the commissioner's
342342 employees, or the state of Kansas as a result of any insurer's name
343343 appearing or not appearing on the list required by this section if such list is
344344 constructed and maintained in good faith and without malice.
345345 Sec. 4. K.S.A. 8-2405, 40-246b and 40-246e are hereby repealed.
346346 Sec. 5. This act shall take effect and be in force from and after its
347347 publication in the statute book.
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