Division of the Budget
Landon State Office Building Phone: (785) 296-2436
900 SW Jackson Street, Room 504 adam.c.proffitt@ks.gov
Topeka, KS 66612 http://budget.kansas.gov
Adam C. Proffitt, Director Laura Kelly, Governor
Division of the Budget
February 14, 2025
The Honorable William Sutton, Chairperson
House Committee on Insurance
300 SW 10th Avenue, Room 218-N
Topeka, Kansas 66612
Dear Representative Sutton:
SUBJECT: Fiscal Note for HB 2334 by House Committee on Insurance
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2334 is
respectfully submitted to your committee.
HB 2334 would enact the Kansas Protected Cell Captive Insurance Company Act. One or
more sponsors could form a protected cell captive insurance company. A captive insurance
company would be incorporated as a stock insurer with its capital divided into shares and would
be held by the stockholders as a mutual corporation, as a nonprofit corporation, or as a limited
liability company. The bill would detail the information required by each applicant protected cell
captive insurance company to file with the Commissioner. The bill would also detail provisions
for formation, operations, participant qualifications, and conversion of a protected cell captive
insurance company into a standalone captive insurance company. The bill would detail the
Commissioner’s authority to enact and rules and regulations or other authorities necessary for the
Commissioner to enforce the Act.
The bill would expand the types of insurance that captive insurance companies can provide,
to include workers’ compensation insurance and excess or stop-loss accident and health insurance
unless prohibited by federal or state law. The bill would reduce the application and renewal fee
for new captive insurance companies from $10,000 to $2,500 and would extend the period between
required financial examinations from three years to five years. The bill would also allow a
provisional certificate of authority to allow a captive insurance company to begin operations while
completing the full application process.
The Kansas Insurance Department states that the bill has the potential to increase or
decrease revenues to its fee funds starting in FY 2026. The reduction to the captive application The Honorable William Sutton, Chairperson
Page 2—HB 2334
and renewal fees could reduce revenues into its Captive Insurance Regulation and Supervision
Fund. However, the fee reduction and other changes in the bill could result in additional captive
insurance companies being licensed, thus increasing revenues from application and renewal fees.
If there are additional captive insurance companies as a result of the enactment of the bill, then
there would also be an increase in premium taxes collected and deposited into the State General
Fund. However, the Department cannot estimate the fiscal effect of the bill.
The Office of Judicial Administration states that the bill could increase the number of cases
filed in district court because it establishes a cause of action. This, in turn, would increase the time
spent by district court judicial and nonjudicial personnel in processing, researching, and hearing
cases. Enactment of the bill could result in the collection of docket fees that would be deposited
into the State General Fund. However, the agency cannot estimate a precise fiscal effect. Any
fiscal effect associated with HB 2334 is not reflected in The FY 2026 Governor’s Budget Report.
The League of Kansas Municipalities and the Kansas Association of Counties state that the
bill would have no fiscal effect on cities or counties.
Sincerely,
Adam C. Proffitt
Director of the Budget
cc: Kyle Strathman, Insurance Department
Trisha Morrow, Judiciary
Wendi Stark, League of Kansas Municipalities
Jay Hall, Kansas Association of Counties
Lynn Robinson, Department of Revenue