Enacting the Kansas protected cell captive insurance company act, providing for the redomestication of a foreign or alien captive insurance company and updating certain terms, requirements and conditions of the captive insurance act, reducing insurance company premium tax rates, creating parity between the insurance agent and public adjuster licensing requirements, authorizing insurers to file certain travel insurance policies under the accident and health line of insurance and authorizing the commissioner of insurance to select and announce the version of certain instructions, calculations and documents in effect for the upcoming calendar year and cause such announcement to be published in the Kansas register not later than December 1 of the current year.
Impact
The bill includes significant changes to state insurance laws, specifically reducing the premium tax rates for captive insurance companies, thus encouraging their establishment in Kansas. Additionally, it allows the redomestication of foreign and alien captive insurance companies, effectively bringing them under Kansas jurisdiction and regulations without imposing premium taxes for an initial period and simplifying the licensing process for insurance agents and public adjusters. This could enhance the state's attractiveness as a domicile for insurance businesses and facilitate industry growth and development in this sector.
Summary
House Bill 2334 enacts the Kansas Protected Cell Captive Insurance Company Act, which introduces provisions for establishing incorporated and protected cell captive insurance companies in Kansas. A captive insurance company is an insurance entity created by a parent company to insure its own risks. This bill expands the jurisdiction of such companies by allowing them to offer various types of insurance, including travel insurance, under the designated accident and health line. It aims to provide more options and create a favorable environment for captive insurance in the state, reflecting a trend toward diversifying insurance offerings including innovative structures for risk management.
Sentiment
The sentiment surrounding HB 2334 appears largely positive from the perspectives of proponents in the insurance industry who foresee economic benefits and opportunities for innovation in captive insurance. Supporters argue that the bill enhances the business environment by reducing regulatory burdens and tax liabilities, which could potentially increase competition and attract a wider range of insurance participants to the state. Conversely, some concerns might arise regarding oversight and risk management standards and whether adequate protections are in place for consumers. Overall, the enthusiasm for the bill signifies a broader movement towards leveraging captive insurance as a strategic tool within the business landscape.
Contention
Notable points of contention may stem from the debate over the implications of reducing premium taxes and the potential impacts those reductions could have on the state's general revenue from insurance taxes. There could also be discussions about safeguards relating to the creation of these captive insurance structures, including consumer protections and the need for rigorous oversight by the insurance commissioner to ensure that captive arrangements do not lead to unintended consequences or financial instability in the insurance market. Ensuring a balance between encouraging business development and maintaining adequate regulatory oversight will be critical as the bill progresses through legislative discussions.
Updating certain definitions, terms, conditions and provisions related to the Kansas insurance guaranty association act and Kansas life and health insurance guaranty association act.
Reducing the number of appointed board members on certain insurance-related governing boards and the frequency of meetings of the the committee on surety bonds and insurance.
Reducing the number of appointed board members on certain insurance-related governing boards and the frequency of meetings of the committee on surety bonds and insurance.
Updating certain statutory references contained in chapter 40 of the Kansas Statutes Annotated; specifying certain requirements of documents submitted by medicare provider organizations and health maintenance organizations to demonstrate fiscal soundness; removing the requirement of a documented written demand for premium as part of a prima facie case; adding certain legal entities to the definition of person for purposes of violations of insurance law; and updating the version of risk-based capital instructions in effect.
Authorizing the commissioner of insurance to set the amount of certain fees, specifying permissible uses of information obtained from background checks, fingerprinting and criminal history records checks; discontinuing annual registration fees for prepaid service plans and modifying reporting requirements related to such plans; and decreasing the premium tax rate imposed on surplus lines insurance.
Authorizing the commissioner of insurance to select and announce the version of certain instructions, calculations and documents in effect for the upcoming calendar year and cause such announcement to be published in the Kansas register, allowing certain life insurers to follow health financial reports and adopting certain provisions from the national association of insurance commissioners holding company system regulatory act relating to group capital calculations and liquidity stress testing.
Authorizing the commissioner of insurance to select and announce the version of certain instructions, calculations and documents in effect for the upcoming calendar year and cause such announcement to be published in the Kansas register, allowing certain life insurers to follow health financial reports and adopting certain provisions from the national association of insurance commissioners holding company system regulatory act relating to group capital calculations and liquidity stress testing.
The standards and management of an insurer with an insurance holding company system and the confidential treatment of investigation and examination records of insurance holding companies.
Data calls authorized, group capital calculations established for insurers, insurers required to complete a NAIC liquidity stress test, insurers required to file group capital calculations and results from the NAIC liquidity stress test, insurers required to secure a deposit or bond, limited long-term care insurance provided for and regulated, automobile insurance governing provisions modified, data classified, penalties provided, and technical changes made.