Kansas 2025-2026 Regular Session

Kansas House Bill HB2334 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
	1	+	Session of 2025
1	2		HOUSE BILL No. 2334
2		-	AN ACT concerning insurance; relating to captive insurance companies; providing for
3		-	incorporated cell captive insurance companies and protected cell captive insurance
4		-	companies; enacting the Kansas protected cell captive insurance company act;
5		-	providing for the redomestication of a foreign or alien captive insurance company;
6		-	providing for a provisional certificate of authority; expanding the types of insurance
7		-	that a captive insurance company may provide; extending the period of time in
8		-	between financial examinations conducted by the commissioner; exempting a
9		-	redomesticated foreign or alien captive insurance company from paying premium tax
10		-	for one year; reducing insurance company premium tax rates; discontinuing
11		-	remittance and crediting of a portion of the premium tax to the insurance department
12		-	service regulation fund; updating the licensing requirements for insurance agents and
13		-	public adjusters relating to the suspension, revocation, denial of licensure and license
14		-	renewal; authorizing insurers to file certain travel insurance policies under the
15		-	accident and health line of insurance; authorizing the commissioner of insurance to
16		-	select and announce the version of certain instructions, calculations and documents in
17		-	effect for the upcoming calendar year and cause such announcement to be published
18		-	in the Kansas register; allowing certain life insurers to follow health financial reports;
19		-	adopting certain provisions from the national association of insurance commissioners
20		-	holding company system regulatory act relating to group capital calculations and
21		-	liquidity stress testing; exempting certain entities from state regulations as health
22		-	benefit plans; amending K.S.A. 40-112, 40-202, 40-252, 40-2d01, 40-3302, 40-3305,
23		-	40-3306, 40-3307, 40-3308, 40-4304, 40-4312, 40-4314, 40-4602 and 40-5510 and
24		-	K.S.A. 2024 Supp. 40-2,239, 40-2c01, 40-4302, 40-4308 and 40-4909 and repealing
25		-	the existing sections.
	3	+	By Committee on Insurance
	4	+	Requested by Representative Tarwater
	5	+	2-7
	6	+	AN ACT concerning insurance; relating to captive insurance companies;
	7	+	providing for incorporated cell captive insurance companies and
	8	+	protected cell captive insurance companies; enacting the Kansas
	9	+	protected cell captive insurance company act; providing for a
	10	+	provisional certificate of authority; expanding the types of insurance
	11	+	that a captive insurance company may provide; extending the period of
	12	+	time in-between financial examinations conducted by the
	13	+	commissioner; amending K.S.A. 40-4304, 40-4312 and 40-4314 and
	14	+	K.S.A. 2024 Supp. 40-4302 and 40-4308 and repealing the existing
	15	+	sections.
26	16		Be it enacted by the Legislature of the State of Kansas:
27		-	New Section 1. Sections 1 through 10, and amendments thereto,
28		-	~~shall~~ be known and may be cited as the Kansas protected cell captive
29		-	~~insurance~~ company act.
	17	+	New Section 1. Sections 1 through 10, and amendments thereto, shall
	18	+	be known and may be cited as the Kansas protected cell captive insurance
	19	+	company act.
30	20		New Sec. 2. (a) One or more sponsors may form a protected cell
31		-	captive insurance company under this act. This act shall apply to
32		-	protected cell captive insurance companies.
33		-	(b) A protected cell captive insurance company shall be
34		-	incorporated as a stock insurer with its capital divided into shares and
35		-	held by the stockholders as a mutual corporation, as a nonprofit
36		-	corporation with one or more members or as a limited liability
37		-	company.
38		-	New Sec. 3. As used in this act, unless the context requires
39		-	otherwise:
40		-	(a) "Act" means the Kansas protected cell captive insurance
41		-	company act;
	21	+	captive insurance company under this act. This act shall apply to protected
	22	+	cell captive insurance companies.
	23	+	(b) A protected cell captive insurance company shall be incorporated
	24	+	as a stock insurer with its capital divided into shares and held by the
	25	+	stockholders as a mutual corporation, as a nonprofit corporation with one
	26	+	or more members or as a limited liability company.
	27	+	New Sec. 3. As used in this act, unless the context requires otherwise:
	28	+	(a) "Act" means the Kansas protected cell captive insurance company
	29	+	act;
42	30		(b) "general account" means all assets and liabilities of a protected
43	31		cell captive insurance company not attributable to a protected cell;
44	32		(c) "participant" means a person or an entity, authorized to be a
45	33		participant by section 5, and amendments thereto, or any affiliate of a
46		-	participant, that is insured by a protected cell captive insurance
47		-	company if the losses of the participant are limited through a
48		-	participant contract;
49		-	(d) "participant contract" means a contract by which a protected
50		-	cell captive insurance company insures the risks of a participant and
51		-	limits the losses of each such participant to its pro rata share of the
52		-	assets of one or more protected cells identified in such participant
53		-	contract;
54		-	(e) "protected cell" means a separate account that is established by
55		-	a protected cell captive insurance company formed or licensed pursuant
56		-	to this act and in which an identified pool of assets and liabilities are
	34	+	participant, that is insured by a protected cell captive insurance company if
	35	+	the losses of the participant are limited through a participant contract;
	36	+	(d) "participant contract" means a contract by which a protected cell
	37	+	captive insurance company insures the risks of a participant and limits the
	38	+	losses of each such participant to its pro rata share of the assets of one or
	39	+	more protected cells identified in such participant contract;
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	75	+	(e) "protected cell" means a separate account that is established by a
	76	+	protected cell captive insurance company formed or licensed pursuant to
	77	+	this act and in which an identified pool of assets and liabilities are
57	78		segregated and insulated by means of this act from the remainder of the
58	79		protected cell captive insurance company's assets and liabilities in
59		-	accordance with the terms of one or more participant contracts to fund
60		-	~~the~~ liability of the protected cell captive insurance company with
61		-	~~respect to the~~ participants as set forth in the participant contracts;
62		-	(f) "protected cell assets" means all assets, contract rights and
63		-	~~general~~ intangibles identified with and attributable to a specific
64		-	~~protected cell of a~~ protected cell captive insurance company;
	80	+	accordance with the terms of one or more participant contracts to fund the
	81	+	liability of the protected cell captive insurance company with respect to the
	82	+	participants as set forth in the participant contracts;
	83	+	(f) "protected cell assets" means all assets, contract rights and general
	84	+	intangibles identified with and attributable to a specific protected cell of a
	85	+	protected cell captive insurance company;
65	86		(g) "protected cell captive insurance company" means any captive
66	87		insurance company:
67		-	(1) In which the minimum capital and surplus required by the
68		-	~~chapter~~ are provided by one or more sponsors;
69		-	(2) that is formed or licensed under this act; ~~HOUSE BILL No. 2334—page 2~~
70		-	(3) that insures the risks of separate participants through
71		-	~~participant~~ contracts; and
	88	+	(1) In which the minimum capital and surplus required by the chapter
	89	+	are provided by one or more sponsors;
	90	+	(2) that is formed or licensed under this act;
	91	+	(3) that insures the risks of separate participants through participant
	92	+	contracts; and
72	93		(4) that funds its liability to each participant through one or more
73	94		protected cells and segregates the assets of each protected cell from the
74	95		assets of other protected cells and from the assets of the protected cell
75	96		captive insurance company's general account;
76	97		(h) "protected cell liabilities" means all liabilities and other
77		-	obligations identified with and attributed to a specific protected cell of
78		-	a protected cell captive insurance company; and
	98	+	obligations identified with and attributed to a specific protected cell of a
	99	+	protected cell captive insurance company; and
79	100		(i) "protected cell liabilities" means all liabilities and other
80		-	obligations identified with and attributed to a specific protected cell of
81		-	a protected cell captive insurance company; and
	101	+	obligations identified with and attributed to a specific protected cell of a
	102	+	protected cell captive insurance company; and
82	103		(j) "sponsor" means any person or entity that is approved by the
83		-	commissioner to provide all or part of the capital and surplus required
84		-	by this act and organize and operate a protected cell captive insurance
	104	+	commissioner to provide all or part of the capital and surplus required by
	105	+	this act and organize and operate a protected cell captive insurance
85	106		company.
86	107		New Sec. 4. In addition to the information required by K.S.A. 40-
87	108		4302, and amendments thereto, each applicant-protected cell captive
88	109		insurance company shall file with the commissioner the following:
89	110		(a) Materials demonstrating how the applicant will account for the
90	111		loss and expense experience of each protected cell at a level of detail
91	112		found to be sufficient by the commissioner, and how it will report such
92	113		experience to the commissioner;
93	114		(b) a statement acknowledging that all financial records of the
94	115		applicant, including records pertaining to any protected cells, shall be
95		-	made available for inspection or examination by the commissioner or
96		-	the commissioner's designated agent;
	116	+	made available for inspection or examination by the commissioner or the
	117	+	commissioner's designated agent;
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97	161		(c) all contracts or sample contracts between the applicant and any
98	162		participants; and
99		-	(d) evidence that expenses shall be allocated to each protected cell
100		-	in a fair and equitable manner.
101		-	New Sec. 5. A protected cell captive insurance company formed
102		-	or licensed under this chapter may establish and maintain one or more
	163	+	(d) evidence that expenses shall be allocated to each protected cell in
	164	+	a fair and equitable manner.
	165	+	New Sec. 5. A protected cell captive insurance company formed or
	166	+	licensed under this chapter may establish and maintain one or more
103	167		incorporated or unincorporated protected cells to insure risks of one or
104	168		more participants, subject to the following conditions:
105		-	(a) (1) A protected cell captive insurance company may establish
106		-	~~one~~ or more protected cells if the commissioner has approved in writing
107		-	~~a plan~~ of operation or amendments to a plan of operation submitted by
108		-	~~the~~ protected cell captive insurance company with respect to each
109		-	~~protected~~ cell. A plan of operation includes, but is not limited to, the
110		-	~~specific~~ business objectives and investment guidelines of the protected
111		-	~~cell, except~~ that the commissioner may require additional information
112		-	~~in the plan of~~ operation. The commissioner may put into effect a plan of
113		-	~~operation or~~ amendments to a plan of operation on or before the date
114		-	~~that the approval~~ is signed if the effective date is not earlier than the
115		-	~~date that the plan of~~ operation or amendments to the plan of operation
116		-	~~were filed with the~~ department;
117		-	(2) upon the commissioner's written approval of the plan of
118		-	~~operation,~~ the protected cell captive insurance company, in accordance
119		-	~~with the~~ approved plan of operation, may attribute insurance
120		-	~~obligations with~~ respect to its insurance business to the protected cell;
	169	+	(a) (1) A protected cell captive insurance company may establish one
	170	+	or more protected cells if the commissioner has approved in writing a plan
	171	+	of operation or amendments to a plan of operation submitted by the
	172	+	protected cell captive insurance company with respect to each protected
	173	+	cell. A plan of operation includes, but is not limited to, the specific
	174	+	business objectives and investment guidelines of the protected cell, except
	175	+	that the commissioner may require additional information in the plan of
	176	+	operation. The commissioner may put into effect a plan of operation or
	177	+	amendments to a plan of operation on or before the date that the approval
	178	+	is signed if the effective date is not earlier than the date that the plan of
	179	+	operation or amendments to the plan of operation were filed with the
	180	+	department;
	181	+	(2) upon the commissioner's written approval of the plan of operation,
	182	+	the protected cell captive insurance company, in accordance with the
	183	+	approved plan of operation, may attribute insurance obligations with
	184	+	respect to its insurance business to the protected cell;
121	185		(3) a protected cell shall have its own distinct name or designation
122	186		that shall include the words "protected cell" or "incorporated cell." An
123	187		incorporated cell formed as a series of a limited liability company shall
124		-	bear a distinct name or designation as reflected in its formation
125		-	~~documents~~ and include the words "series cell." Such names or
126		-	~~designations may also~~ be reasonably abbreviated, including, without
127		-	~~limitation, pc or p.c. for~~ "protected cell," ic, i.c., ipc, or i.p.c. for
128		-	~~"incorporated cell" and sc, s.c.,~~ spc or s.p.c. for "series cell";
	188	+	bear a distinct name or designation as reflected in its formation documents
	189	+	and include the words "series cell." Such names or designations may also
	190	+	be reasonably abbreviated, including, without limitation, pc or p.c. for
	191	+	"protected cell," ic, i.c., ipc, or i.p.c. for "incorporated cell" and sc, s.c.,
	192	+	spc or s.p.c. for "series cell";
129	193		(4) the protected cell captive insurance company shall transfer all
130		-	assets attributable to a protected cell to one or more separately
131		-	~~established~~ and identified protected cell accounts bearing the name or
132		-	~~designation of~~ such protected cell. Protected cell assets shall be held in
133		-	~~the protected cell~~ accounts for the purpose of satisfying the obligations ~~HOUSE BILL No. 2334—page 3~~
134		-	~~of such protected~~ cell;
135		-	(5) an incorporated protected cell may be organized and operated
136		-	in any form of business organization authorized by the commissioner,
	194	+	assets attributable to a protected cell to one or more separately established
	195	+	and identified protected cell accounts bearing the name or designation of
	196	+	such protected cell. Protected cell assets shall be held in the protected cell
	197	+	accounts for the purpose of satisfying the obligations of such protected
	198	+	cell;
	199	+	(5) an incorporated protected cell may be organized and operated in
	200	+	any form of business organization authorized by the commissioner,
137	201		including, but not limited to, an individual series of a limited liability
138		-	company as provided for in the Kansas revised limited liability
139		-	company act. Each incorporated protected cell of a protected cell
140		-	captive insurer shall be treated as a captive insurer for purposes of this
141		-	act and shall have the power to enter into contracts, including an
142		-	individual series of a limited liability company. Unless otherwise
143		-	permitted by the organizational documents of a protected cell captive
144		-	insurer, each incorporated protected cell of the protected cell captive
145		-	insurer shall have the same directors, secretary and registered office as
146		-	the protected cell captive insurer; and
	202	+	company as provided for in the Kansas revised limited liability company
	203	+	act. Each incorporated protected cell of a protected cell captive insurer
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	247	+	shall be treated as a captive insurer for purposes of this act and shall have
	248	+	the power to enter into contracts, including an individual series of a limited
	249	+	liability company. Unless otherwise permitted by the organizational
	250	+	documents of a protected cell captive insurer, each incorporated protected
	251	+	cell of the protected cell captive insurer shall have the same directors,
	252	+	secretary and registered office as the protected cell captive insurer; and
147	253		(6) all attributions of assets and liabilities between a protected cell
148		-	and the general account shall be in accordance with the plan of
149		-	operation and participant contracts approved by the commissioner. No
150		-	other attribution of assets or liabilities shall be made by a protected cell
151		-	captive insurance company between the protected cell captive
152		-	insurance company's general account and its protected cells. Any
153		-	attribution of assets and liabilities between the general account and a
154		-	protected cell shall be in cash or in readily marketable securities with
155		-	established market values.
	254	+	and the general account shall be in accordance with the plan of operation
	255	+	and participant contracts approved by the commissioner. No other
	256	+	attribution of assets or liabilities shall be made by a protected cell captive
	257	+	insurance company between the protected cell captive insurance
	258	+	company's general account and its protected cells. Any attribution of assets
	259	+	and liabilities between the general account and a protected cell shall be in
	260	+	cash or in readily marketable securities with established market values.
156	261		(b) The creation of a protected cell does not create, with respect to
157		-	such protected cell, a legal person separate from the protected cell
158		-	~~captive~~ insurance company unless the protected cell is an incorporated
159		-	~~cell.~~ Amounts attributed to a protected cell under this section, including
160		-	~~assets~~ transferred to a protected cell account, are deemed to be owned
161		-	~~by the~~ protected cell. No protected cell captive insurance company shall
162		-	~~be, or~~ represent itself as a trustee with respect to those protected cell
163		-	~~assets of~~ such protected cell account. Notwithstanding the provisions of
164		-	~~this~~ subsection, the protected cell captive insurance company may
165		-	~~allow for a~~ security interest to attach to protected cell assets or a
166		-	~~protected cell~~ account when in favor of a creditor of the protected cell
167		-	~~and otherwise~~ allowed under applicable law.
	262	+	such protected cell, a legal person separate from the protected cell captive
	263	+	insurance company unless the protected cell is an incorporated cell.
	264	+	Amounts attributed to a protected cell under this section, including assets
	265	+	transferred to a protected cell account, are deemed to be owned by the
	266	+	protected cell. No protected cell captive insurance company shall be, or
	267	+	represent itself as a trustee with respect to those protected cell assets of
	268	+	such protected cell account. Notwithstanding the provisions of this
	269	+	subsection, the protected cell captive insurance company may allow for a
	270	+	security interest to attach to protected cell assets or a protected cell
	271	+	account when in favor of a creditor of the protected cell and otherwise
	272	+	allowed under applicable law.
168	273		(c) This act shall not be construed to prohibit the protected cell
169	274		captive insurance company from contracting with or arranging for an
170	275		investment advisor, commodity trading advisor or other third party to
171	276		manage the protected cell assets of a protected cell if all remuneration,
172		-	expenses and other compensation of the third-party advisor or manager
173		-	~~are~~ payable from the protected cell assets of such protected cell and not
174		-	~~from~~ the protected cell assets of other protected cells or the assets of the
	277	+	expenses and other compensation of the third-party advisor or manager are
	278	+	payable from the protected cell assets of such protected cell and not from
	279	+	the protected cell assets of other protected cells or the assets of the
175	280		protected cell captive insurance company's general account.
176	281		(d) (1) A protected cell captive insurance company shall establish
177		-	administrative and accounting procedures necessary to properly
178		-	identify the one or more protected cells of the protected cell captive
179		-	insurance company and the protected cell assets and protected cell
180		-	liabilities attributable to the protected cells. The directors of a protected
181		-	cell captive insurance company shall keep protected cell assets and
182		-	protected cell liabilities:
183		-	(A) Separate and separately identifiable from the assets and
184		-	liabilities of the protected cell captive insurance company's general
185		-	account; and
	282	+	administrative and accounting procedures necessary to properly identify
	283	+	the one or more protected cells of the protected cell captive insurance
	284	+	company and the protected cell assets and protected cell liabilities
	285	+	attributable to the protected cells. The directors of a protected cell captive
	286	+	insurance company shall keep protected cell assets and protected cell
	287	+	liabilities:
	288	+	(A) Separate and separately identifiable from the assets and liabilities
	289	+	of the protected cell captive insurance company's general account; and
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186	333		(B) attributable to one protected cell that is separate and separately
187	334		identifiable from protected cell assets and protected cell liabilities
188	335		attributable to other protected cells.
189	336		(2) If subsection (d)(1) is violated, then the remedy of tracing is
190	337		applicable to protected cell assets when commingled with protected cell
191	338		assets of other protected cells or the assets of the protected cell captive
192		-	insurance company's general account. The remedy of tracing shall not
193		-	be construed as an exclusive remedy.
	339	+	insurance company's general account. The remedy of tracing shall not be
	340	+	construed as an exclusive remedy.
194	341		(e) When establishing a protected cell, the protected cell captive
195		-	insurance company shall attribute to the protected cell assets a value
196		-	~~that is~~ at least equal to the reserves and other insurance liabilities
197		-	~~attributed to~~ such protected cell. ~~HOUSE BILL No. 2334—page 4~~
198		-	(f) Each protected cell shall be accounted for separately on the
199		-	~~books~~ and records of the protected cell captive insurance company to
200		-	~~reflect the~~ financial condition and results of operations of such
201		-	~~protected cell, net~~ income or loss, dividends or other distributions to
202		-	~~participants and such~~ other factors as may be provided in the participant
203		-	~~contract or required by~~ the commissioner.
	342	+	insurance company shall attribute to the protected cell assets a value that is
	343	+	at least equal to the reserves and other insurance liabilities attributed to
	344	+	such protected cell.
	345	+	(f) Each protected cell shall be accounted for separately on the books
	346	+	and records of the protected cell captive insurance company to reflect the
	347	+	financial condition and results of operations of such protected cell, net
	348	+	income or loss, dividends or other distributions to participants and such
	349	+	other factors as may be provided in the participant contract or required by
	350	+	the commissioner.
204	351		(g) No asset of a protected cell shall be chargeable with liabilities
205		-	arising out of any other insurance business that the protected cell
206		-	~~captive~~ insurance company may conduct.
	352	+	arising out of any other insurance business that the protected cell captive
	353	+	insurance company may conduct.
207	354		(h) No sale, exchange or other transfer of assets shall be made by
208		-	such protected cell captive insurance company between or among any
209		-	of its protected cells without the consent of such protected cells.
210		-	(i) No sale, exchange, transfer of assets, dividend or distribution
211		-	shall be made from a protected cell to another protected cell captive
212		-	insurance company or participant without the commissioner's approval.
213		-	In no event shall the commissioner's approval be given if the sale,
214		-	exchange, transfer, dividend or distribution would result in the
215		-	insolvency or impairment of a protected cell.
216		-	(j) All attributions of assets and liabilities to the protected cells
217		-	and the general account shall be in accordance with the plan of
218		-	operation approved by the commissioner. No other attribution of assets
219		-	or liabilities shall be made by a protected cell captive insurance
220		-	company between its general account and any protected cell or between
221		-	any protected cells. The protected cell captive insurance company shall
222		-	attribute all insurance obligations, assets and liabilities relating to a
223		-	reinsurance contract entered into with respect to a protected cell to such
224		-	protected cell. The performance under such reinsurance contract and
225		-	any tax benefits, losses, refunds or credits allocated pursuant to a tax
226		-	allocation agreement to which the protected cell captive insurance
227		-	company is a party, including any payments made by or due to be made
228		-	to the protected cell captive insurance company pursuant to the terms of
229		-	such agreement, shall reflect the insurance obligations, assets and
230		-	liabilities relating to the reinsurance contract that are attributed to such
	355	+	such protected cell captive insurance company between or among any of
	356	+	its protected cells without the consent of such protected cells.
	357	+	(i) No sale, exchange, transfer of assets, dividend or distribution shall
	358	+	be made from a protected cell to another protected cell captive insurance
	359	+	company or participant without the commissioner's approval. In no event
	360	+	shall the commissioner's approval be given if the sale, exchange, transfer,
	361	+	dividend or distribution would result in the insolvency or impairment of a
231	362		protected cell.
232		-	(k) In connection with the conservation, rehabilitation or
233		-	liquidation of a protected cell captive insurance company, the assets
234		-	and liabilities of a protected cell shall, to the extent that the
235		-	commissioner determines that such assets and liabilities are separable,
236		-	at all times be kept separate from and shall not be commingled with
237		-	those of other protected cells and the protected cell captive insurance
238		-	company.
239		-	(l) Each protected cell captive insurance company shall annually
240		-	file with the commissioner such financial reports as required by the
241		-	commissioner. Any such financial report shall include, without
242		-	limitation, accounting statements detailing the financial experience of
243		-	each protected cell.
	363	+	(j) All attributions of assets and liabilities to the protected cells and
	364	+	the general account shall be in accordance with the plan of operation
	365	+	approved by the commissioner. No other attribution of assets or liabilities
	366	+	shall be made by a protected cell captive insurance company between its
	367	+	general account and any protected cell or between any protected cells. The
	368	+	protected cell captive insurance company shall attribute all insurance
	369	+	obligations, assets and liabilities relating to a reinsurance contract entered
	370	+	into with respect to a protected cell to such protected cell. The
	371	+	performance under such reinsurance contract and any tax benefits, losses,
	372	+	refunds or credits allocated pursuant to a tax allocation agreement to which
	373	+	the protected cell captive insurance company is a party, including any
	374	+	payments made by or due to be made to the protected cell captive
	375	+	insurance company pursuant to the terms of such agreement, shall reflect
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	419	+	the insurance obligations, assets and liabilities relating to the reinsurance
	420	+	contract that are attributed to such protected cell.
	421	+	(k) In connection with the conservation, rehabilitation or liquidation
	422	+	of a protected cell captive insurance company, the assets and liabilities of a
	423	+	protected cell shall, to the extent that the commissioner determines that
	424	+	such assets and liabilities are separable, at all times be kept separate from
	425	+	and shall not be commingled with those of other protected cells and the
	426	+	protected cell captive insurance company.
	427	+	(l) Each protected cell captive insurance company shall annually file
	428	+	with the commissioner such financial reports as required by the
	429	+	commissioner. Any such financial report shall include, without limitation,
	430	+	accounting statements detailing the financial experience of each protected
	431	+	cell.
244	432		(m) Each protected cell captive insurance company shall notify the
245		-	commissioner in writing within 10 business days of any protected cell
246		-	that is insolvent or otherwise unable to meet its claim or expense
247		-	obligations.
	433	+	commissioner in writing within 10 business days of any protected cell that
	434	+	is insolvent or otherwise unable to meet its claim or expense obligations.
248	435		(n) No participant contract shall take effect without the
249		-	commissioner's prior written approval. The addition of each new
250		-	~~protected~~ cell, the withdrawal of any participant or the termination of
251		-	~~any existing~~ protected cell shall constitute a change in the plan of
252		-	~~operation requiring~~ the commissioner's prior written approval.
	436	+	commissioner's prior written approval. The addition of each new protected
	437	+	cell, the withdrawal of any participant or the termination of any existing
	438	+	protected cell shall constitute a change in the plan of operation requiring
	439	+	the commissioner's prior written approval.
253	440		(o) The business written by a protected cell captive insurance
254	441		company, with respect to each protected cell, shall be:
255		-	(1) Fronted by an insurance company licensed under the laws of
256		-	any state;
257		-	(2) reinsured by a reinsurer authorized or approved by this state;
258		-	or
	442	+	(1) Fronted by an insurance company licensed under the laws of any
	443	+	state;
	444	+	(2) reinsured by a reinsurer authorized or approved by this state; or
259	445		(3) secured by a trust fund in the United States for the benefit of
260		-	policyholders and claimants or funded by an irrevocable letter of credit
261		-	or other arrangement that is acceptable to the commissioner. The HOUSE BILL No. 2334—page 5
262		-	amount of security provided shall be not less than the reserves
263		-	associated with those liabilities that are neither fronted nor reinsured,
264		-	including reserves for losses, allocated loss adjustment expenses,
265		-	incurred but not reported losses and unearned premiums for business
266		-	written through the participant's protected cell. The commissioner may
267		-	require the protected cell captive insurance company to increase the
268		-	funding of any security arrangement established under this subsection.
269		-	If the form of security is a letter of credit, the letter of credit shall be
270		-	issued or confirmed by a bank approved by the commissioner. A trust
271		-	maintained pursuant to this subsection shall be established in a form
272		-	and upon such terms approved by the commissioner.
273		-	(p) Notwithstanding this act or other laws of Kansas, and in
274		-	addition to article 36 of chapter 40 of the Kansas Statutes Annotated,
275		-	and amendments thereto, in the event of an insolvency of a protected
276		-	cell captive insurance company in which the commissioner determines
277		-	that one or more protected cells remain solvent, the commissioner may
278		-	separate such cells from the protected cell captive insurance company
279		-	and may allow, on application of the protected cell captive insurance
280		-	company, for the conversion of such protected cells into one or more
281		-	new or existing protected cell captive insurance companies or one or
282		-	more other captive insurance companies, pursuant to such plan of
283		-	operation as the commissioner deems acceptable.
	446	+	policyholders and claimants or funded by an irrevocable letter of credit or
	447	+	other arrangement that is acceptable to the commissioner. The amount of
	448	+	security provided shall be not less than the reserves associated with those
	449	+	liabilities that are neither fronted nor reinsured, including reserves for
	450	+	losses, allocated loss adjustment expenses, incurred but not reported losses
	451	+	and unearned premiums for business written through the participant's
	452	+	protected cell. The commissioner may require the protected cell captive
	453	+	insurance company to increase the funding of any security arrangement
	454	+	established under this subsection. If the form of security is a letter of
	455	+	credit, the letter of credit shall be issued or confirmed by a bank approved
	456	+	by the commissioner. A trust maintained pursuant to this subsection shall
	457	+	be established in a form and upon such terms approved by the
	458	+	commissioner.
	459	+	(p) Notwithstanding this act or other laws of Kansas, and in addition
	460	+	to article 36 of chapter 40 of the Kansas Statutes Annotated, and
	461	+	amendments thereto, in the event of an insolvency of a protected cell
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	505	+	captive insurance company in which the commissioner determines that one
	506	+	or more protected cells remain solvent, the commissioner may separate
	507	+	such cells from the protected cell captive insurance company and may
	508	+	allow, on application of the protected cell captive insurance company, for
	509	+	the conversion of such protected cells into one or more new or existing
	510	+	protected cell captive insurance companies or one or more other captive
	511	+	insurance companies, pursuant to such plan of operation as the
	512	+	commissioner deems acceptable.
284	513		(q) Biographical affidavits shall not be required for participants in
285		-	unincorporated cells. Biographical affidavits shall be required for
286		-	~~owners~~ of incorporated cells, including series members of a series LLC.
	514	+	unincorporated cells. Biographical affidavits shall be required for owners
	515	+	of incorporated cells, including series members of a series LLC.
287	516		(r) A protected cell captive insurance company formed or licensed
288		-	under this act may establish and operate unincorporated and
289		-	~~incorporated~~ protected cells.
	517	+	under this act may establish and operate unincorporated and incorporated
	518	+	protected cells.
290	519		New Sec. 6. (a) Associations, corporations, limited liability
291	520		companies, partnerships, trusts and other business entities may be
292	521		participants in any protected cell captive insurance company formed or
293	522		licensed under this chapter.
294	523		(b) A sponsor may be a participant in a protected cell captive
295	524		insurance company.
296	525		(c) A participant shall not be required to be a shareholder of the
297	526		protected cell captive insurance company or any affiliate thereof.
298	527		(d) A participant shall insure only such participant's own risks
299	528		through a protected cell captive insurance company, unless otherwise
300	529		approved by the commissioner.
301	530		New Sec. 7. (a) Notwithstanding the provisions of section 4, and
302	531		amendments thereto, the assets of two or more protected cells may be
303		-	combined for purposes of investment, and such combination shall not
304		-	be construed as defeating the segregation of such assets for accounting
305		-	or other purposes.
306		-	(b) Notwithstanding any other provision of this act, the
307		-	~~commissioner~~ may approve the use of alternative reliable methods of
308		-	~~valuation and~~ rating.
	532	+	combined for purposes of investment, and such combination shall not be
	533	+	construed as defeating the segregation of such assets for accounting or
	534	+	other purposes.
	535	+	(b) Notwithstanding any other provision of this act, the commissioner
	536	+	may approve the use of alternative reliable methods of valuation and
	537	+	rating.
309	538		New Sec. 8. (a) Except as otherwise provided in this section the
310	539		insurers supervision, rehabilitation and liquidation act shall apply to a
311	540		protected cell captive insurance company.
312		-	(b) Upon any order of supervision, rehabilitation, or liquidation of
313		-	a protected cell captive insurance company, the receiver shall manage
314		-	~~the~~ assets and liabilities of the protected cell captive insurance
315		-	~~company~~ pursuant to this section.
	541	+	(b) Upon any order of supervision, rehabilitation, or liquidation of a
	542	+	protected cell captive insurance company, the receiver shall manage the
	543	+	assets and liabilities of the protected cell captive insurance company
	544	+	pursuant to this section.
316	545		(c) Notwithstanding the provisions of the insurers supervision,
317	546		rehabilitation and liquidation act:
318		-	(1) No assets of a protected cell shall be used to pay any expenses
319		-	or claims other than those attributable to such protected cell; and
320		-	(2) a protected cell captive insurance company's capital and
321		-	surplus shall be available at all times to pay any expenses of or claims
322		-	against the protected cell captive insurance company.
	547	+	(1) No assets of a protected cell shall be used to pay any expenses or
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	591	+	claims other than those attributable to such protected cell; and
	592	+	(2) a protected cell captive insurance company's capital and surplus
	593	+	shall be available at all times to pay any expenses of or claims against the
	594	+	protected cell captive insurance company.
323	595		New Sec. 9. (a) The pleadings in any legal action brought by or
324	596		against a protected cell captive insurance company shall specify which
325		-	protected cell or cells should be named as a party to the suit. If the ~~HOUSE BILL No. 2334—page 6~~
326		-	~~general~~ account is party to this suit, it shall be separately identified in
327		-	~~the~~ pleadings as if it were a protected cell.
328		-	(b) A legal action brought against a protected cell captive
329		-	~~insurance~~ company that does not specify one or more protected cells
330		-	~~shall be deemed~~ to have been brought against the general account only.
331		-	(c) Any protected cell that is not named in the pleadings of the
332		-	~~legal~~ action shall not be deemed to be a party to the legal action. Any
333		-	~~protected~~ cell that is erroneously named as a party or named without
334		-	~~proper cause~~ shall be entitled to prompt dismissal from the legal action.
335		-	(d) Unless specified by the plan of operation, participant contract
336		-	or other prior contractual agreement, the assets of one protected cell
337		-	~~may not~~ be encumbered or seized to satisfy the obligations of or a
338		-	~~judgment against~~ any other protected cell. No protected cell shall have
339		-	~~a duty to defend the~~ rights and obligations of any other protected cell.
	597	+	protected cell or cells should be named as a party to the suit. If the general
	598	+	account is party to this suit, it shall be separately identified in the
	599	+	pleadings as if it were a protected cell.
	600	+	(b) A legal action brought against a protected cell captive insurance
	601	+	company that does not specify one or more protected cells shall be deemed
	602	+	to have been brought against the general account only.
	603	+	(c) Any protected cell that is not named in the pleadings of the legal
	604	+	action shall not be deemed to be a party to the legal action. Any protected
	605	+	cell that is erroneously named as a party or named without proper cause
	606	+	shall be entitled to prompt dismissal from the legal action.
	607	+	(d) Unless specified by the plan of operation, participant contract or
	608	+	other prior contractual agreement, the assets of one protected cell may not
	609	+	be encumbered or seized to satisfy the obligations of or a judgment against
	610	+	any other protected cell. No protected cell shall have a duty to defend the
	611	+	rights and obligations of any other protected cell.
340	612		(e) In any legal action involving a protected cell captive insurance
341	613		company or a protected cell, any papers, documents or property of a
342		-	nonparty protected cell shall be afforded the same status during
343		-	discovery as the documents or property of any other unrelated third
344		-	party. A nonparty protected cell shall have standing to appear and
345		-	petition for any appropriate relief to protect the confidentiality of its
346		-	papers or documents.
347		-	New Sec. 10. (a) (1) Upon the application of a protected cell
348		-	captive insurance company, one of its protected cells may be converted
349		-	to any form of captive insurance company authorized pursuant to
350		-	chapter 40 of the Kansas Statutes Annotated, and amendments thereto,
351		-	with the consent of the commissioner. The commissioner may issue to
352		-	the converting protected cell a certificate of authority with an effective
353		-	date of its original date of formation as a protected cell.
	614	+	nonparty protected cell shall be afforded the same status during discovery
	615	+	as the documents or property of any other unrelated third party. A nonparty
	616	+	protected cell shall have standing to appear and petition for any
	617	+	appropriate relief to protect the confidentiality of its papers or documents.
	618	+	New Sec. 10. (a) (1) Upon the application of a protected cell captive
	619	+	insurance company, one of its protected cells may be converted to any
	620	+	form of captive insurance company authorized pursuant to chapter 40 of
	621	+	the Kansas Statutes Annotated, and amendments thereto, with the consent
	622	+	of the commissioner. The commissioner may issue to the converting
	623	+	protected cell a certificate of authority with an effective date of its original
	624	+	date of formation as a protected cell.
354	625		(2) The following shall be the criteria for determining the filing or
355	626		submission requirements of:
356	627		(A) A series of a limited liability company, the cell shall file
357	628		organizational documents with the secretary of state that comply with
358	629		article 43 of chapter 40 and chapters 17 and 56A of the Kansas Statutes
359	630		Annotated, and amendments thereto, as applicable. The organizational
360	631		documents shall include the date of formation as a series. Upon
361	632		conversion, the formation date of the series shall be deemed as the
362	633		formation date of the new entity. The new entity shall possess all assets
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363	677		and liabilities, including outstanding insurance liabilities, owned by the
364	678		predecessor series;
365	679		(B) any other type of incorporated protected cell entity, then the
366		-	converting protected cell shall submit amended organizational
367		-	documents to the secretary of state that comply with article 43 of
368		-	chapter 40 and chapters 17 and 56A of the Kansas Statutes Annotated,
369		-	and amendments thereto, as applicable; or
370		-	(C) neither a series of a limited liability company nor an
371		-	incorporated protected cell, the cell shall file organizational documents
372		-	with the secretary of state that comply with article 43 of chapter 40 and
373		-	chapters 17 and 56A of the Kansas Statutes Annotated, and
374		-	amendments thereto, as applicable, or any other applicable provision
375		-	governing formation of that type of entity. The organizational
376		-	documents shall include the date of formation as a cell. Upon
377		-	conversion, the formation date of the cell shall be deemed as the
378		-	formation date of the new entity. The new entity shall possess all assets
379		-	and liabilities, including outstanding insurance liabilities, owned by the
380		-	predecessor cell.
381		-	(b) A captive insurance company may apply to the commissioner
382		-	for conversion to become a protected cell captive insurance company
383		-	under any form permitted under this section. Upon compliance with
384		-	this section, approval by the commissioner and the filing of amended
385		-	organizational documents with the secretary of state, the captive
386		-	insurance company shall be issued a revised certificate of authority.
387		-	The effective date of the revised protected cell captive insurance
388		-	company's certificate of authority shall remain the same as the effective
389		-	date of the prior captive insurance company. HOUSE BILL No. 2334—page 7
390		-	New Sec. 11. (a) A foreign or alien insurer may become a
391		-	domestic captive insurance company by complying with all of the
392		-	requirements of chapter 40 of the Kansas Statutes Annotated, and
393		-	amendments thereto, relating to the organization and licensing of a
394		-	domestic captive insurance company of the same type, with the
395		-	approval of the commissioner. A company redomesticating to this state
396		-	pursuant to this section may be organized under any lawful corporate
397		-	form permitted by chapter 40 of the Kansas Statutes Annotated, and
398		-	amendments thereto.
399		-	(b) A redomestication pursuant to this section shall be authorized
400		-	for insurance companies domiciled in foreign or alien jurisdictions that
401		-	authorize the redomestication of insurance companies if, as a result of
402		-	the actions taken by the company pursuant to this section to
403		-	redomesticate to this state, such insurance company will no longer be a
404		-	domestic legal entity of foreign or alien jurisdiction. A company
405		-	wishing to redomesticate pursuant to this section shall provide evidence
406		-	that the applicable regulatory authority of its domicile consents to the
407		-	redomestication.
408		-	(c) An insurance company wishing to redomesticate under this
409		-	section shall file organizational documents with the secretary of state
410		-	that comply with article 43 of chapter 40 and chapters 17 and 56a of the
411		-	Kansas Statutes Annotated, and amendments thereto, as applicable, or
412		-	any other applicable provision governing formation of such type of
413		-	entity.
414		-	(d) The insurance company shall file a copy of the secretary of
415		-	state's acknowledgement letter with the commissioner, who shall then
416		-	issue a certificate of authority, pursuant to K.S.A. 40-4302, and
417		-	amendments thereto.
418		-	(e) Upon the completion of a redomestication under this section,
419		-	the captive insurance company shall be subject to the laws of this state
420		-	and considered domiciled in this state. Such captive insurance company
421		-	shall be deemed to have a formation date corresponding to its original
422		-	formation date in the foreign or alien domicile.
423		-	(f) For the purposes of the financial examination required pursuant
424		-	to K.S.A. 40-4308, and amendments thereto, any examination
425		-	conducted by the foreign or alien domicile that is substantially similar
426		-	to an examination that would have been done in this state had the
427		-	company been domiciled in this state shall be recognized for the
428		-	purposes of establishing the period of time when the next examination
429		-	is due.
430		-	New Sec. 12. (a) The commissioner is hereby authorized to select
431		-	and announce the version of insurance calculations, instructions
432		-	promulgated by the NAIC or other documents required by the NAIC
433		-	that shall be in effect for the next calendar year. Not later than
434		-	December 1 of each year, the commissioner shall cause such
435		-	announcement to be published in the Kansas register.
436		-	(b) Calculations and instructions include, but are not limited to,
437		-	risk-based capital instructions, as used in K.S.A. 40-2c01, and
438		-	amendments thereto, risk-based capital managed care instructions, as
439		-	used in K.S.A. 40-2d01, and amendments thereto, and group capital
440		-	calculation instructions, as used in K.S.A. 40-3302, and amendments
441		-	thereto.
442		-	Sec. 13. K.S.A. 40-112 is hereby amended to read as follows: 40-
443		-	112. (a) For the purpose of maintaining the insurance department and
444		-	the payment of expenses incident thereto, there is hereby established
445		-	the insurance department service regulation fund in the state treasury,
446		-	which shall be administered by the commissioner of insurance. All
447		-	expenditures from the insurance department service regulation fund
448		-	shall be made in accordance with appropriation acts upon warrants of
449		-	the director of accounts and reports issued pursuant to vouchers
450		-	approved by the commissioner of insurance or by a person or persons
451		-	designated by the commissioner.
452		-	(b) On and after the effective date of this act January 1, 2026, all
453		-	fees received by the commissioner of insurance pursuant to any statute HOUSE BILL No. 2334—page 8
454		-	and 1% of taxes received pursuant to K.S.A. 40-252, and amendments
455		-	thereto, shall be remitted to the state treasurer in accordance with the
456		-	provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt
457		-	of each such remittance, the state treasurer shall deposit the entire
458		-	amount in the state treasury to the credit of the insurance department
459		-	service regulation fund.
460		-	(c) Except as otherwise provided by this section, the
461		-	commissioner of insurance shall make an annual assessment on each
462		-	group of affiliated insurers whose certificates of authority to do
463		-	business in this state are in good standing at the time of the assessment.
464		-	The total amount of all such assessments for a fiscal year shall be equal
465		-	to the amount sufficient whichthat, when combined with the total
466		-	amount to be credited to the insurance department service regulation
467		-	fund pursuant to subsection (b) is equal to the amount approved by the
468		-	legislature to fund the insurance company regulation program. With
469		-	respect to each group of affiliated insurers, such assessment shall be in
470		-	proportion to the amount of total assets of the group of affiliated
471		-	insurers as reported to the commissioner of insurance pursuant to
472		-	K.S.A. 40-225, and amendments thereto, for the immediately preceding
473		-	calendar year, shall not be less than $500 and shall not be more than the
474		-	amount equal to .0000015 of the amount of total assets of the group of
475		-	affiliated insurers or $25,000, whichever is less. The total assessment
476		-	for any fiscal year shall not increase by any amount greater than 15% of
477		-	the total budget approved by the legislature to fund the insurance
478		-	company regulation program for the fiscal year immediately preceding
479		-	the fiscal year for which the assessment is made. In the event the total
480		-	amount of the assessment would be less than the aggregate amount
481		-	resulting by assessing the $500 minimum on each insurer, the
482		-	commissioner may establish a lower minimum to be assessed equally
483		-	on each insurer.
484		-	(d) If, by the laws of any state other than Kansas or by the
485		-	retaliatory laws of any state other than Kansas, any insurer domiciled in
486		-	Kansas shall be required to pay any fee or tax in such other state of
487		-	licensure, and the fee or tax is due and payable either because the
488		-	insurance department service regulation fee imposed by this section on
489		-	insurers licensed in Kansas and organized or domiciled in such other
490		-	state is greater than the comparable fee or tax assessed in such other
491		-	state, or such other state has no comparable fee or tax but requires
492		-	payment on a retaliatory basis, then to the extent such fee or tax
493		-	amounts are legally due and are paid in such other state, any insurer
494		-	domiciled in Kansas may claim a dollar-for-dollar credit for such fees
495		-	paid against insurer's annual premium taxes due the state of Kansas
496		-	under K.S.A. 40-252, and amendments thereto, or privilege fee due the
497		-	state of Kansas under K.S.A. 40-3213, and amendments thereto, but
498		-	such credit shall only be calculated on the amount which that would not
499		-	have been required to be paid in such other state of licensure in the
500		-	absence of the existence of the insurance department service regulation
501		-	fee imposed by this section, and in no event shall the credit permitted
502		-	by this section exceed 90% of the insurer's annual premium tax or
503		-	privilege fee due the state of Kansas. The insurance commissioner shall
504		-	prescribe the forms for reporting such credits.
505		-	(e) Assessments payable under this section shall be past due if not
506		-	paid to the insurance department within 45 days of the billing date of
507		-	such assessment. A penalty equal to 10% of the amount assessed shall
508		-	be imposed upon any past due payment and the total amount of the
509		-	assessment and penalty shall bear interest at the rate of 1.5% per month
510		-	or any portion thereof.
511		-	(f) When there exists in the insurance department service
512		-	regulation fund a deficiency which that would render such fund
513		-	temporarily insufficient during any fiscal year to meet the insurance
514		-	department's funding requirements, the commissioner of insurance shall
515		-	certify the amount of the insufficiency. Upon receipt of any such
516		-	certification, the director of accounts and reports shall transfer an
517		-	amount of moneys equal to the amount so certified from the state HOUSE BILL No. 2334—page 9
518		-	general fund to the insurance department service regulation fund. On
519		-	June 30 of any fiscal year during which an amount or amounts are
520		-	certified and transferred under this subsection, the director of accounts
521		-	and reports shall provide for the repayment of the amounts so
522		-	transferred and shall transfer the amount equal to the total of all such
523		-	amounts transferred during the fiscal year from the insurance
524		-	department service regulation fund to the state general fund.
525		-	(g) Any unexpended balance in the insurance department service
526		-	regulation fund at the close of a fiscal year shall remain credited to the
527		-	insurance department service regulation fund for use in the succeeding
528		-	fiscal year and shall be used to reduce future assessments or to
529		-	accommodate cash flow demands on the fund.
530		-	(h) The commissioner of insurance shall exempt the assessment of
531		-	any insurer which that, as of December 31 of the calendar year
532		-	preceding the assessment, has a surplus of less than two times the
533		-	minimum amount of surplus required for a certificate of authority on
534		-	and after May 1, 1994, and which is subject to the premium tax or
535		-	privilege fee liability imposed on insurers organized under the laws of
536		-	this state. The commissioner of insurance may also exempt or defer, in
537		-	whole or in part, the assessment of any other insurer if, in the opinion
538		-	of the commissioner of insurance, immediate payment of the total
539		-	assessment would be detrimental to the solvency of the insurer.
540		-	(i) As used in this section:
541		-	(1) "Affiliates" or "affiliated" has the meaning ascribed by K.S.A.
542		-	40-3302, and amendments thereto;
543		-	(2) "group" or "group of affiliated insurers" means the affiliated
544		-	insurers of a group and also includes an individual, unaffiliated insurer;
545		-	and
546		-	(3) "insurer" means any insurance company, as defined by K.S.A.
547		-	40-201, and amendments thereto, any fraternal benefit society, as
548		-	defined by K.S.A. 40-738, and amendments thereto, any reciprocal or
549		-	interinsurance exchange under K.S.A. 40-1601 through 40-1614, and
550		-	amendments thereto, any mutual insurance company organized to
551		-	provide health care provider liability insurance under K.S.A. 40-12a01
552		-	through 40-12a09, and amendments thereto, any nonprofit dental
553		-	service corporation under K.S.A. 40-19a01 through 40-19a14, and
554		-	amendments thereto, any nonprofit medical and hospital service
555		-	corporation under K.S.A. 40-19c01 through 40-19c11, and amendments
556		-	thereto, any health maintenance organization, as defined by K.S.A. 40-
557		-	3202, and amendments thereto, or any captive insurance company, as
558		-	defined by K.S.A. 40-4301, and amendments thereto, which that is
559		-	authorized to do business in Kansas.
560		-	Sec. 14. K.S.A. 40-202 is hereby amended to read as follows: 40-
561		-	202. Nothing contained in this code shall apply to:
562		-	(a) Grand or subordinate lodges of any fraternal benefit society
563		-	which that admits to membership only persons engaged in one or more
564		-	hazardous occupations in the same or similar line of business or to
565		-	fraternal benefit societies as defined in and organized under article 7 of
566		-	chapter 40 of the Kansas Statutes Annotated, and amendments thereto,
567		-	unless they be expressly designated;
568		-	(b) the employees of a particular person, firm, or corporation;
569		-	(c) mercantile associations which that simply guarantee insurance
570		-	to each other in the same lines of trade and do not solicit insurance
571		-	from the general public;
572		-	(d) the Swedish mutual aid association of Rapp, Osage county,
573		-	Kansas;
574		-	(e) the Scandia mutual protective insurance company, of Chanute,
575		-	Kansas;
576		-	(f) the Seneca and St. Benedict mutual fire insurance company of
577		-	Nemaha county, Kansas;
578		-	(g) the mutual insurance system practiced in the Mennonite
579		-	church, in accordance with an old custom, either by the congregation
580		-	themselves or by special associations, of its members in Kansas;
581		-	(h) the Kansas state high-school activities association; HOUSE BILL No. 2334—page 10
582		-	(i) the mutual aid association of the church of the brethren; or
583		-	(j) a voluntary noncontractual mutual aid arrangement whereby
584		-	the needs of participants are announced and accommodated through
585		-	subscriptions to a monthly publication;
586		-	(k) a self-funded health plan established or maintained for its
587		-	employees by the state or a subdivision of the state, a school district,
588		-	any public authority or by a county or city government or any political
589		-	subdivision, agency or instrumentality thereof; or
590		-	(l) a self-funded health plan established or maintained for its
591		-	employees by a church or by a convention or association of churches
592		-	that is exempt from tax under section 501 of the internal revenue code.
593		-	Sec. 15. K.S.A. 40-252 is hereby amended to read as follows: 40-
594		-	252. Every insurance company or fraternal benefit society organized
595		-	under the laws of this state or doing business in this state shall pay to
596		-	the commissioner of insurance fees and taxes specified in the following
597		-	schedule:
598		-	A
599		-	Insurance companies organized under the laws of this state:
600		-	1.Capital stock insurance companies and mutual legal reserve life
601		-	insurance companies:
602		-	Filing application for sale of stock or certificates of indebtedness$25
603		-	Admission fees:
604		-	Examination of charter and other documents.................................500
605		-	Filing annual statement..................................................................100
606		-	Certificate of authority.....................................................................10
607		-	Annual fees:
608		-	Filing annual statement..................................................................100
609		-	Continuation of certificate of authority............................................10
610		-	2.Mutual life, accident and health associations:
611		-	Admission fees:
612		-	Examination of charter and other documents...............................$500
613		-	Filing annual statement..................................................................100
614		-	Certificate of authority.....................................................................10
615		-	Annual fees:
616		-	Filing annual statement..................................................................100
617		-	Continuation of certificate of authority............................................10
618		-	3.Mutual fire, hail, casualty and multiple line insurers and reciprocal
619		-	or interinsurance exchanges:
620		-	Admission fees:
621		-	Examination of charter and other documents...............................$500
622		-	Filing annual statement..................................................................100
623		-	Certificate of authority.....................................................................10
624		-	Annual fees:
625		-	Filing annual statement..................................................................100
626		-	Continuation of certificate of authority............................................10
627		-	In addition to the above fees and as a condition precedent to the
628		-	continuation of the certificate of authority provided in this code, all
629		-	such companies shall pay a fee of $2 for each agent certified by the
630		-	company and shall also pay a tax annually upon all premiums received
631		-	on risk located in this state at the rate of 1% for tax year 1997, and 2%
632		-	for tax year 2025 and 1.98% for tax year 2026, and all tax years
633		-	thereafter, per annum less (1) for tax years prior to 1984, any taxes paid
634		-	on business in this state pursuant to the provisions of K.S.A. 40-1701 to
635		-	40-1707, inclusive, and 75-1508, and amendments thereto, and (2) for
636		-	tax years 1984 and thereafter, any taxes paid on business in this state
637		-	pursuant to the provisions of K.S.A. 75-1508, and amendments thereto,
638		-	and the amount of the firefighters relief tax credit determined by the
639		-	commissioner of insurance. The amount of the firefighters relief tax
640		-	credit for a company for the current tax year shall be determined by the
641		-	commissioner of insurance by dividing (A) the total amount of credits
642		-	against the tax imposed by this section for taxes paid by all such
643		-	companies on business in this state under K.S.A. 40-1701 to 40-1707,
644		-	inclusive, and amendments thereto, for tax year 1983, by (B) the total
645		-	amount of taxes paid by all such companies on business in this state HOUSE BILL No. 2334—page 11
646		-	under K.S.A. 40-1703, and amendments thereto, for the tax year
647		-	immediately preceding the current tax year, and by multiplying the
648		-	result so obtained by (C) the amount of taxes paid by the company on
649		-	business in this state under K.S.A. 40-1703, and amendments thereto,
650		-	for the current tax year.
651		-	In the computation of the gross premiums all such companies shall
652		-	be entitled to deduct any premiums returned on account of
653		-	cancellations, including funds accepted before January 1, 1997, and
654		-	declared and taxed as annuity premiums which that, on or after January
655		-	1, 1997, are withdrawn before application to the purchase of annuities,
656		-	all premiums received for reinsurance from any other company
657		-	authorized to do business in this state, dividends returned to
658		-	policyholders and premiums received in connection with the funding of
659		-	a pension, deferred compensation, annuity or profit-sharing plan
660		-	qualified or exempt under sections 401, 403, 404, 408, 457 or 501 of
661		-	the United States internal revenue code of 1986. Funds received by life
662		-	insurers for the purchase of annuity contracts and funds applied by life
663		-	insurers to the purchase of annuities shall not be deemed taxable
664		-	premiums or be subject to tax under this section for tax years
665		-	commencing on or after January 1, 1997.
666		-	B
667		-	Fraternal benefit societies organized under the laws of this state:
668		-	Admission fees:
669		-	Examination of charter and other documents...............................$500
670		-	Filing annual statement..................................................................100
671		-	Certificate of authority.....................................................................10
672		-	Annual fees:
673		-	Filing annual statement..................................................................100
674		-	Continuation of certificate of authority............................................10
675		-	C
676		-	Mutual nonprofit hospital service corporations, nonprofit medical
677		-	service corporations, nonprofit dental service corporations, nonprofit
678		-	optometric service corporations and nonprofit pharmacy service
679		-	corporations organized under the laws of this state:
680		-	1.Mutual nonprofit hospital service corporations:
681		-	Admission fees:
682		-	Examination of charter and other documents...............................$500
683		-	Filing annual statement..................................................................100
684		-	Certificate of authority.....................................................................10
685		-	Annual fees:
686		-	Filing annual statement..................................................................100
687		-	Continuation of certificate of authority............................................10
688		-	2.Nonprofit medical service corporations:
689		-	Admission fees:
690		-	Examination of charter and other documents...............................$500
691		-	Filing annual statement..................................................................100
692		-	Certificate of authority.....................................................................10
693		-	Annual fees:
694		-	Filing annual statement..................................................................100
695		-	Continuation of certificate of authority............................................10
696		-	3.Nonprofit dental service corporations:
697		-	Admission fees:
698		-	Examination of charter and other documents...............................$500
699		-	Filing annual statement..................................................................100
700		-	Certificate of authority.....................................................................10
701		-	Annual fees:
702		-	Filing annual statement..................................................................100
703		-	Continuation of certificate of authority............................................10
704		-	4.Nonprofit optometric service corporations:
705		-	Admission fees:
706		-	Examination of charter and other documents...............................$500
707		-	Filing annual statement..................................................................100
708		-	Certificate of authority.....................................................................10
709		-	Annual fees: HOUSE BILL No. 2334—page 12
710		-	Filing annual statement..................................................................100
711		-	Continuation of certificate of authority............................................10
712		-	5.Nonprofit pharmacy service corporations:
713		-	Admission fees:
714		-	Examination of charter and other documents...............................$500
715		-	Filing annual statement..................................................................100
716		-	Certificate of authority.....................................................................10
717		-	Annual fees:
718		-	Filing annual statement..................................................................100
719		-	Continuation of certificate of authority............................................10
720		-	In addition to the above fees and as a condition precedent to the
721		-	continuation of the certificate of authority, provided in this code, every
722		-	corporation or association shall pay annually to the commissioner of
723		-	insurance a tax in an amount equal to 1% for tax year 1997, and 2% for
724		-	tax year 2025 and 1.98% for tax year 2026, and all tax years thereafter,
725		-	per annum of the total of all premiums, subscription charges, or any
726		-	other term which that may be used to describe the charges made by
727		-	such corporation or association to subscribers for hospital, medical or
728		-	other health services or indemnity received during the preceding year.
729		-	In such computations all such corporations or associations shall be
730		-	entitled to deduct any premiums or subscription charges returned on
731		-	account of cancellations and dividends returned to members or
732		-	subscribers.
733		-	D
734		-	Insurance companies organized under the laws of any other state,
735		-	territory or country:
736		-	1.Capital stock insurance companies and mutual legal reserve life
737		-	insurance companies:
738		-	Filing application for sale of stock or certificates of indebtedness$25
739		-	Admission fees:
740		-	Examination of charter and other documents.................................500
741		-	Filing annual statement..................................................................100
742		-	Certificate of authority.....................................................................10
743		-	Annual fees:
744		-	Filing annual statement..................................................................100
745		-	Continuation of certificate of authority............................................10
746		-	In addition to the above fees all such companies shall pay $5 for
747		-	each agent certified by the company, except as otherwise provided by
748		-	law.
749		-	As a condition precedent to the continuation of the certificate of
750		-	authority, provided in this code, every company organized under the
751		-	laws of any other state of the United States or of any foreign country
752		-	shall pay a tax upon all premiums received during the preceding year at
753		-	the rate of 2% for tax year 2025 and 1.98% for tax year 2026, and all
754		-	tax years thereafter, per annum.
755		-	In the computation of the gross premiums all such companies shall
756		-	be entitled to deduct any premiums returned on account of
757		-	cancellations, including funds accepted before January 1, 1997, and
758		-	declared and taxed as annuity premiums which that, on or after January
759		-	1, 1997, are withdrawn before application to the purchase of annuities,
760		-	dividends returned to policyholders and all premiums received for
761		-	reinsurance from any other company authorized to do business in this
762		-	state and premiums received in connection with the funding of a
763		-	pension, deferred compensation, annuity or profit-sharing plan
764		-	qualified or exempt under sections 401, 403, 404, 408, 457 or 501 of
765		-	the United States internal revenue code of 1986. Funds received by life
766		-	insurers for the purchase of annuity contracts and funds applied by life
767		-	insurers to the purchase of annuities shall not be deemed taxable
768		-	premiums or be subject to tax under this section for tax years
769		-	commencing on or after January 1, 1997.
770		-	2. Mutual life, accident and health associations:
771		-	Admission fees:
772		-	Examination of charter and other documents...............................$500
773		-	Filing annual statement..................................................................100 HOUSE BILL No. 2334—page 13
774		-	Certificate of authority.....................................................................10
775		-	Annual fees:
776		-	Filing annual statement..................................................................100
777		-	Continuation of certificate of authority............................................10
778		-	In addition to the above fees, every such company organized under
779		-	the laws of any other state of the United States shall pay $5 for each
780		-	agent certified by the company, and shall pay a tax annually upon all
781		-	premiums received at the rate of 2% for tax year 2025 and 1.98% for
782		-	tax year 2026, and all tax years thereafter, per annum.
783		-	In the computation of the gross premiums all such companies shall
784		-	be entitled to deduct any premiums returned on account of
785		-	cancellations, including funds accepted before January 1, 1997, and
786		-	declared and taxed as annuity premiums which that, on or after January
787		-	1, 1997, are withdrawn before application to the purchase of annuities,
788		-	dividends returned to policyholders and all premiums received for
789		-	reinsurance from any other company authorized to do business in this
790		-	state and premiums received in connection with the funding of a
791		-	pension, deferred compensation, annuity or profit-sharing plan
792		-	qualified or exempt under sections 401, 403, 404, 408, 457 or 501 of
793		-	the United States internal revenue code of 1986. Funds received by life
794		-	insurers for the purchase of annuity contracts and funds applied by life
795		-	insurers to the purchase of annuities shall not be deemed taxable
796		-	premiums or be subject to tax under this section for tax years
797		-	commencing on or after January 1, 1997.
798		-	3.Mutual fire, casualty and multiple line insurers and reciprocal or
799		-	interinsurance exchanges:
800		-	Admission fees:
801		-	Examination of charter and other documents and issuance of
802		-	certificate of authority..................................................................$500
803		-	Filing annual statement..................................................................100
804		-	Certificate of authority.....................................................................10
805		-	Annual fees:
806		-	Filing annual statement..................................................................100
807		-	Continuation of certificate of authority............................................10
808		-	In addition to the above fees, every such company or association
809		-	organized under the laws of any other state of the United States shall
810		-	pay a fee of $5 for each agent certified by the company and shall also
811		-	pay a tax annually upon all premiums received at the rate of 2% for tax
812		-	year 2025 and 1.98% for tax year 2026, and all tax years thereafter, per
813		-	annum.
814		-	For tax years 1998 and thereafter, the annual tax shall be reduced by
815		-	the "applicable percentage" of: (1) Any taxes paid on business in this
816		-	state pursuant to the provisions of K.S.A. 75-1508, and amendments
817		-	thereto,; and (2) the amount of the firefighters relief tax credit
818		-	determined by the commissioner of insurance. The amount of the
819		-	firefighters relief tax credit for a company taxable under this subsection
820		-	for the current tax year shall be determined by the commissioner of
821		-	insurance by dividing (A) the total amount of taxes paid by all such
822		-	companies on business in this state under K.S.A. 40-1701 to 40-1707,
823		-	and amendments thereto, for tax year 1983 as then in effect, by (B) the
824		-	total amount of taxes paid by all such companies on business in this
825		-	state under K.S.A. 40-1703, and amendments thereto, for the tax year
826		-	immediately preceding the current tax year, and by multiplying the
827		-	result so obtained by (C) the amount of taxes paid by the company on
828		-	business in this state under K.S.A. 40-1703, and amendments thereto,
829		-	for the current tax year. The "applicable percentage" shall be as
830		-	follows: 100%.
831		-	Tax Year Applicable Percentage
832		-	1998 10%
833		-	1999 20%
834		-	2000 40%
835		-	2002 50%
836		-	2003 60% HOUSE BILL No. 2334—page 14
837		-	2004 70%
838		-	2005 80%
839		-	2006 90%
840		-	2007 and thereafter100%
841		-	In the computation of the gross premiums all such companies shall
842		-	be entitled to deduct any premiums returned on account of
843		-	cancellations, all premiums received for reinsurance from any other
844		-	company authorized to do business in this state, and dividends returned
845		-	to policyholders.
846		-	E
847		-	Fraternal benefit societies organized under the laws of any other state,
848		-	territory or country:
849		-	Admission fees:
850		-	Examination of charter and other documents...............................$500
851		-	Filing annual statement..................................................................100
852		-	Certificate of authority.....................................................................10
853		-	Annual fees:
854		-	Filing annual statement..................................................................100
855		-	Continuation of certificate of authority............................................10
856		-	F
857		-	Mutual nonprofit hospital service corporations, nonprofit medical
858		-	service corporations, nonprofit dental service corporations, nonprofit
859		-	optometric service corporations and nonprofit pharmacy service
860		-	corporations organized under the laws of any other state, territory or
861		-	country:
862		-	1.Mutual nonprofit hospital service corporations:
863		-	Admission fees:
864		-	Examination of charter and other documents...............................$500
865		-	Filing annual statement..................................................................100
866		-	Certificate of authority.....................................................................10
867		-	Annual fees:
868		-	Filing annual statement..................................................................100
869		-	Continuation of certificate of authority............................................10
870		-	2.Nonprofit medical service corporations, nonprofit dental service
871		-	corporations, nonprofit optometric service corporations and
872		-	nonprofit pharmacy service corporations:
873		-	Admission fees:
874		-	Examination of charter and other documents...............................$500
875		-	Filing annual statement..................................................................100
876		-	Certificate of authority.....................................................................10
877		-	Annual fees:
878		-	Filing annual statement..................................................................100
879		-	Continuation of certificate of authority............................................10
880		-	In addition to the above fees and as a condition precedent to the
881		-	continuation of the certificate of authority, provided in this code, every
882		-	corporation or association shall pay annually to the commissioner of
883		-	insurance a tax in an amount equal to 2% for tax year 2025 and 1.98%
884		-	for tax year 2026, and all tax years thereafter, per annum of the total of
885		-	all premiums, subscription charges, or any other term which that may
886		-	be used to describe the charges made by such corporation or association
887		-	to subscribers in this state for hospital, medical or other health services
888		-	or indemnity received during the preceding year. In such computations
889		-	all such corporations or associations shall be entitled to deduct any
890		-	premiums or subscription charges returned on account of cancellations
891		-	and dividends returned to members or subscribers.
892		-	G
893		-	Payment of Taxes.
894		-	For the purpose of insuring the collection of the tax upon premiums,
895		-	assessments and charges as set out in subsection A, C, D or F, every
896		-	insurance company, corporation or association shall at the time it files
897		-	its annual statement, as required by the provisions of K.S.A. 40-225,
898		-	and amendments thereto, make a return, generated by or at the direction
899		-	of its president and secretary or other chief officers, under penalty of HOUSE BILL No. 2334—page 15
900		-	K.S.A. 21-5824, and amendments thereto, to the commissioner of
901		-	insurance, stating the amount of all premiums, assessments and charges
902		-	received by the companies or corporations in this state, whether in cash
903		-	or notes, during the year ending on the December 31 next preceding.
904		-	Commencing in 1985 and annually thereafter the estimated taxes
905		-	shall be paid as follows: On or before June 15 and December 15 of
906		-	such year an amount equal to 50% of the full amount of the prior year's
907		-	taxes as reported by the company shall be remitted to the commissioner
908		-	of insurance. As used in this paragraph, "prior year's taxes" includes:
909		-	(1) Taxes assessed pursuant to this section for the prior calendar year,;
910		-	(2) fees and taxes assessed pursuant to K.S.A. 40-253, and amendments
911		-	thereto, for the prior calendar year,; and (3) taxes paid for maintenance
912		-	of the department of the state fire marshal pursuant to K.S.A. 75-1508,
913		-	and amendments thereto, for the prior calendar year.
914		-	Upon the receipt of such returns the commissioner of insurance shall
915		-	verify the same and assess the taxes upon such companies, corporations
916		-	or associations on the basis and at the rate provided herein and the
917		-	balance of such taxes shall thereupon become due and payable giving
918		-	credit for amounts paid pursuant to the preceding paragraph, or the
919		-	commissioner shall make a refund if the taxes paid in the prior June and
920		-	December are in excess of the taxes assessed.
921		-	All reports and returns required by this act and rules and
922		-	regulations adopted pursuant thereto shall be preserved for three years
923		-	and thereafter until the commissioner orders them to be destroyed.
924		-	H
925		-	The fee prescribed for the examination of charters and other
926		-	documents shall apply to each company's initial application for
927		-	admission and shall not be refundable for any reason.
928		-	Sec. 16. K.S.A. 2024 Supp. 40-2,239 is hereby amended to read as
929		-	follows: 40-2,239. (a) Notwithstanding any other provision of chapter
930		-	40 of the Kansas Statutes Annotated, and amendments thereto, travel
931		-	insurance shall be classified and filed for purposes of rates and forms
932		-	under an inland marine line of insurance. Travel insurance that
933		-	provides coverage for sickness, accident, disability or death occurring
934		-	during travel either exclusively, or in conjunction with related
935		-	coverages of emergency evacuation or repatriation of remains, may be
936		-	classified and filed under either an accident and health or an inland
937		-	marine line of insurance.
938		-	(b) Travel insurance may be in the form of an individual, group or
939		-	blanket policy.
940		-	(c) Eligibility and underwriting standards for travel insurance may
941		-	be developed and provided based on travel protection plans designed
942		-	for individual or identified marketing or distribution channels, provided
943		-	if those standards also meet underwriting standards of the state for
944		-	inland marine insurance.
945		-	Sec. 17. K.S.A. 2024 Supp. 40-2c01 is hereby amended to read as
946		-	follows: 40-2c01. As used in this act:
947		-	(a) "Adjusted RBC report" means an RBC report that has been
948		-	adjusted by the commissioner in accordance with K.S.A. 40-2c04, and
949		-	amendments thereto.
950		-	(b) "Corrective order" means an order issued by the commissioner
951		-	specifying corrective actions that the commissioner has determined are
952		-	required to address an RBC level event.
953		-	(c) "Domestic insurer" means any insurance company or risk
954		-	retention group that is licensed and organized in this state.
955		-	(d) "Foreign insurer" means any insurance company or risk
956		-	retention group not domiciled in this state that is licensed or registered
957		-	to do business in this state pursuant to article 41 of chapter 40 of the
958		-	Kansas Statutes Annotated, and amendments thereto, or K.S.A. 40-209,
959		-	and amendments thereto.
960		-	(e) "NAIC" means the national association of insurance
961		-	commissioners.
962		-	(f) "Life and health insurer" means any insurance company
963		-	licensed under article 4 or 5 of chapter 40 of the Kansas Statutes HOUSE BILL No. 2334—page 16
964		-	Annotated, and amendments thereto, or a licensed property and
965		-	casualty insurer writing only accident and health insurance.
966		-	(g) "Property and casualty insurer" means any insurance company
967		-	licensed under articles 9, 10, 11, 12, 12a, 15 or 16 of chapter 40 of the
968		-	Kansas Statutes Annotated, and amendments thereto, but does not
969		-	include monoline mortgage guaranty insurers, financial guaranty
970		-	insurers and title insurers.
971		-	(h) "Negative trend" means, with respect to a life and health
972		-	insurer, a negative trend over a period of time, as determined in
973		-	accordance with the "trend test calculation" included in the RBC
974		-	instructions defined in subsection (j).
975		-	(i) "RBC" means risk-based capital.
976		-	(j) "RBC instructions" means the risk-based capital instructions
977		-	promulgated by the NAIC that are in effect on December 31, 2023, or
978		-	any later version promulgated by the NAIC as may be adopted by the
979		-	as announced and noticed by the commissioner under K.S.A. 40-2c29
980		-	pursuant to section 12, and amendments thereto.
981		-	(k) "RBC level" means an insurer's company action level RBC,
982		-	regulatory action level RBC, authorized control level RBC or
983		-	mandatory control level RBC where:
984		-	(1) "Company action level RBC" means, with respect to any
985		-	insurer, the product of 2.0 and its authorized control level RBC;
986		-	(2) "regulatory action level RBC" means the product of 1.5 and its
987		-	authorized control level RBC;
988		-	(3) "authorized control level RBC" means the number determined
989		-	under the risk-based capital formula in accordance with the RBC
990		-	instructions; and
991		-	(4) "mandatory control level RBC" means the product of 0.70 and
992		-	the authorized control level RBC.
993		-	(l) "RBC plan" means a comprehensive financial plan containing
994		-	the elements specified in K.S.A. 40-2c06, and amendments thereto. If
995		-	the commissioner rejects the RBC plan, and it is revised by the insurer,
996		-	with or without the commissioner's recommendation, the plan shall be
997		-	called the "revised RBC plan."
998		-	(m) "RBC report" means the report required by K.S.A. 40-2c02,
999		-	and amendments thereto.
1000		-	(n) "Total adjusted capital" means the sum of:
1001		-	(1) An insurer's capital and surplus or surplus only if a mutual
1002		-	insurer; and
1003		-	(2) such other items, if any, as the RBC instructions may provide.
1004		-	(o) "Commissioner" means the commissioner of insurance.
1005		-	Sec. 18. K.S.A. 40-2d01 is hereby amended to read as follows: 40-
1006		-	2d01. As used in K.S.A. 40-2d01 through 40-2d30, and amendments
1007		-	thereto:
1008		-	(a) "Adjusted RBC report" means an RBC report which that has
1009		-	been adjusted by the commissioner in accordance with K.S.A. 40-2d04,
1010		-	and amendments thereto.
1011		-	(b) "Corrective order" means an order issued by the commissioner
1012		-	specifying corrective actions which that the commissioner has
1013		-	determined are required.
1014		-	(c) "Domestic health organization" means any health organization
1015		-	which that is licensed and organized in this state.
1016		-	(d) "Foreign health organization" means any health organization
1017		-	not domiciled in this state which that is licensed to do business in this
1018		-	state pursuant to articles 19a, 19c or 32 of chapter 40 of the Kansas
1019		-	Statutes Annotated, and amendments thereto.
1020		-	(e) "NAIC" means the national association of insurance
1021		-	commissioners.
1022		-	(f) "Health organization" means a health maintenance
1023		-	organization, limited health service organization, dental or vision plan,
1024		-	hospital, medical and dental indemnity or service corporation or other
1025		-	managed care organization licensed under articles 19a, 19c or 32 of
1026		-	chapter 40 of the Kansas Statutes Annotated, and amendments thereto.
1027		-	This definition shall, or an organization that is licensed as a life and HOUSE BILL No. 2334—page 17
1028		-	health insurer under article 4 of chapter 40 of the Kansas Statutes
1029		-	Annotated, and amendments thereto, and has been determined by the
1030		-	commissioner to report predominantly health lines of business in
1031		-	accordance with a health statement test. "Health organization" does
1032		-	not include an organization that is licensed as either a life and health
1033		-	insurer or a property and casualty insurer under articles 4, 5, 9, 10, 11,
1034		-	12, 12a, 15 or 16 of chapter 40 of the Kansas Statutes Annotated, and
1035		-	amendments thereto, and that is otherwise subject to either the life or
1036		-	property and casualty RBC requirements in K.S.A. 40-2c01 et seq., and
1037		-	amendments thereto.
1038		-	(g) "RBC" means risk-based capital.
1039		-	(h) "RBC instructions" means the risk-based capital instructions
1040		-	for managed care organizations promulgated by the NAIC which that
1041		-	are in effect on December 31, 1999, or any later version as adopted by
1042		-	as announced and noticed by the commissioner in rules and regulations
1043		-	pursuant to section 12, and amendments thereto.
1044		-	(i) "RBC level" means a health organization's company action
1045		-	level RBC, regulatory action level RBC, authorized control level RBC,
1046		-	or mandatory control level RBC where:
1047		-	(1) "Company action level RBC" means, with respect to any
1048		-	health organization, the product of 2.0 and its authorized control level
1049		-	RBC;
1050		-	(2) "regulatory action level RBC" means the product of 1.5 and its
1051		-	authorized control level RBC;
1052		-	(3) "authorized control level RBC" means the number determined
1053		-	under the risk-based capital formula in accordance with the RBC
1054		-	instructions; and
1055		-	(4) "mandatory control level RBC" means the product of .70 and
1056		-	the authorized control level RBC.
1057		-	(j) "RBC plan" means a comprehensive financial plan containing
1058		-	the elements specified in K.S.A. 40-2d05, and amendments thereto. If
1059		-	the commissioner rejects the RBC plan, and it is revised by the health
1060		-	organization, with or without the commissioner's recommendation, the
1061		-	plan shall be called the "revised RBC plan."
1062		-	(k) "RBC report" means the report required by K.S.A. 40-2d02,
1063		-	40-2d03 and 40-2d04, and amendments thereto.
1064		-	(l) "Total adjusted capital" means the sum of:
1065		-	(1) A health organization's capital and surplus as determined in
1066		-	accordance with the annual financial statements required to be filed
1067		-	under articles 19a, 19c or 32 of chapter 40 of the Kansas Statutes
1068		-	Annotated, and amendments thereto; and
1069		-	(2) such other items, if any, as the RBC instructions may provide.
1070		-	(m) "Commissioner" means the commissioner of insurance.
1071		-	Sec. 19. K.S.A. 40-3302 is hereby amended to read as follows: 40-
1072		-	3302. As used in the insurance holding company act, unless the context
1073		-	otherwise requires:
1074		-	(a) "Affiliate" of, or person "affiliated" with, a specific person,
1075		-	means a person that directly, or indirectly through one or more
1076		-	intermediaries, controls, is controlled by, or is under common control
1077		-	with, the person specified.
1078		-	(b) "Commissioner of insurance" or "commissioner" means the
1079		-	commissioner of insurance, the commissioner's deputies, or the
1080		-	insurance department, as appropriate.
1081		-	(c) "Control" including the terms "controlling," "controlled by"
1082		-	and "under common control with," means the possession, direct or
1083		-	indirect, of the power to direct or cause the direction of the
1084		-	management or policies of a person, whether through the ownership of
1085		-	voting securities, by contract other than a commercial contract for
1086		-	goods or nonmanagement services, or otherwise, unless the power is
1087		-	the result of an official position with or corporate office held by the
1088		-	person. Control shall be presumed to exist if any person, directly or
1089		-	indirectly, owns, controls, holds with the power to vote, or holds
1090		-	proxies representing 10% or more of the voting securities of any other
1091		-	person. This presumption may be rebutted by a showing made in the HOUSE BILL No. 2334—page 18
1092		-	manner provided by K.S.A. 40-3305(k), and amendments thereto, that
1093		-	control does not exist in fact. The commissioner of insurance may
1094		-	determine, after a hearing in accordance with the provisions of the
1095		-	Kansas administrative procedure act, that control exists in fact,
1096		-	notwithstanding the absence of a presumption to that effect.
1097		-	(d) "Enterprise risk" means any activity, circumstance, event or
1098		-	series of events involving one or more affiliates of an insurer that, if not
1099		-	remedied promptly, is likely to have a material adverse effect upon the
1100		-	financial condition or liquidity of the insurer or its insurance holding
1101		-	company system as a whole, including, but not limited to, anything that
1102		-	would cause the insurer's risk-based capital to fall into company action
1103		-	level RBC, as such term is defined in either K.S.A. 40-2c01 et seq., and
1104		-	amendments thereto, or K.S.A. 40-2d01 et seq., and amendments
1105		-	thereto, as appropriate, or would cause the insurer to be in hazardous
1106		-	financial condition as set forth in K.S.A. 40-222b, 40-222c and 40-
1107		-	222d, and amendments thereto.
1108		-	(e) "Financial analysis handbook" means the version of the NAIC
1109		-	financial analysis handbook adopted by the NAIC and in effect that has
1110		-	been selected and noticed by the commissioner pursuant to section 12,
1111		-	and amendments thereto.
1112		-	(f) "Group capital calculation instructions" means the group
1113		-	capital calculation instructions selected and announced by the
1114		-	commissioner pursuant to section 12, and amendments thereto.
1115		-	(g) "Group-wide supervisor" means the regulatory official
1116		-	authorized to engage in conducting and coordinating group-wide
1117		-	supervision activities who is determined or acknowledged by the
1118		-	commissioner under K.S.A. 40-3318, and amendments thereto, to have
1119		-	sufficient significant contacts with the internationally active insurance
1120		-	group.
1121		-	(f)(h) "Insurance holding company system" means two or more
1122		-	affiliated persons, one or more of which is an insurer.
1123		-	(g)(i) "Insurer" means any corporation, company, association,
1124		-	society, fraternal benefit society, health maintenance organization,
1125		-	nonprofit medical and hospital service corporation, nonprofit dental
1126		-	service corporation, reciprocal exchange, person or partnership writing
1127		-	contracts of insurance, indemnity or suretyship in this state upon any
1128		-	type of risk or loss except lodges, societies, persons or associations
1129		-	transacting business pursuant to the provisions of K.S.A. 40-202, and
1130		-	amendments thereto.
1131		-	(h)(j) "Internationally active insurance group" means an insurance
1132		-	holding company system that:
1133		-	(1) Includes an insurer registered under K.S.A. 40-3305, and
1134		-	amendments thereto; and
1135		-	(2) meets the following criteria:
1136		-	(A) Has premiums written in at least three countries;
1137		-	(B) the percentage of gross premiums written outside the United
1138		-	States is at least 10% of the insurance holding company system's total
1139		-	gross written premiums; and
1140		-	(C) based on a three-year rolling average, the total assets of the
1141		-	insurance holding company system are at least $50,000,000,000 or the
1142		-	total gross written premiums of the insurance holding company system
1143		-	are at least $10,000,000,000.
1144		-	(i)(k) "NAIC" means the national association of insurance
1145		-	commissioners.
1146		-	(l) "NAIC liquidity stress test framework" means the separate
1147		-	NAIC publication that includes the history of the NAIC's development
1148		-	of regulatory liquidity stress testing, the scope criteria applicable for a
1149		-	specific data year and the liquidity stress test instructions and
1150		-	reporting templates for a specific data year and such scope criteria,
1151		-	instructions and reporting templates as adopted by the NAIC and as
1152		-	amended by the NAIC from time to time in accordance with the
1153		-	procedures adopted by the NAIC and as selected and announced by the
1154		-	commissioner pursuant to section 12, and amendments thereto.
1155		-	(m) "Person" means an individual, corporation, a partnership, an HOUSE BILL No. 2334—page 19
1156		-	association, a joint stock company, a trust, an unincorporated
1157		-	organization, any similar entity or any combination of the foregoing
1158		-	acting in concert.
1159		-	(n) "Scope criteria," as detailed in the NAIC liquidity stress test
1160		-	framework, are the designated exposure bases along with minimum
1161		-	magnitudes thereof for the specified data year, used to establish a
1162		-	preliminary list of insurers considered scoped into the NAIC liquidity
1163		-	stress test framework for such specified data year.
1164		-	(j)(o) "Securityholder" of a specified person means one who owns
1165		-	any security of such person, including common stock, preferred stock,
1166		-	debt obligations, and any other security convertible into or evidencing
1167		-	the right to acquire any of the foregoing.
1168		-	(k)(p) "Subsidiary" of a specified person means an affiliate
1169		-	controlled by such person, directly, or indirectly, through one or more
1170		-	intermediaries.
1171		-	(l)(q) "Voting security" means any security convertible into or
1172		-	evidencing a right to acquire a voting security.
1173		-	Sec. 20. K.S.A. 40-3305 is hereby amended to read as follows: 40-
1174		-	3305. (a) Every insurer that is authorized to do business in this state
1175		-	and that is a member of an insurance holding company system shall
1176		-	register with the commissioner of insurance, except a foreign insurer
1177		-	subject to registration requirements and standards adopted by statute or
1178		-	regulation in the jurisdiction of its domicile that are substantially
1179		-	similar to those contained in this section. Any insurer that is subject to
1180		-	registration under this section shall register within 15 days after it
1181		-	becomes subject to registration, and annually thereafter by May 1 of
1182		-	each year unless for the previous calendar year the commissioner of
1183		-	insurance for good cause shown extends the time for registration, and
1184		-	then within such extended time. The commissioner of insurance may
1185		-	require any authorized insurer that is a member of an insurance holding
1186		-	company system and that is not subject to registration under this
1187		-	section to furnish a copy of the registration statement, the summary
1188		-	specified in subsection (c) or other information filed by such insurance
1189		-	company with the insurance regulatory authority of domiciliary
1190		-	jurisdiction.
1191		-	(b) Pursuant to subsection (a), every insurer subject to registration
1192		-	shall file a registration statement on a form provided by the
1193		-	commissioner of insurance, that shall contain current information about
1194		-	regarding:
1195		-	(1) The capital structure, general financial condition, ownership
1196		-	and management of the insurer and any person controlling the insurer;
1197		-	(2) the identity and relationship of every member of the insurance
1198		-	holding company system;
1199		-	(3) the following agreements in force and transactions currently
1200		-	outstanding or that occurred during the last calendar year between such
1201		-	insurer and its affiliates:
1202		-	(A) Loans, other investments, or purchases, sales or exchanges of
1203		-	securities of the affiliates by the insurer or of the insurer by its
1204		-	affiliates;
1205		-	(B) purchases, sales or exchanges of assets;
1206		-	(C) transactions not in the ordinary course of business;
1207		-	(D) guarantees or undertakings for the benefit of an affiliate that
1208		-	result in an actual contingent exposure of the insurer's assets to liability,
1209		-	other than insurance contracts entered into in the ordinary course of the
1210		-	insurer's business;
1211		-	(E) all management agreements, service contracts and cost sharing
1212		-	arrangements;
1213		-	(F) reinsurance agreements;
1214		-	(G) dividends and other distributions to shareholders; and
1215		-	(H) consolidated tax allocation agreements;
1216		-	(4) other matters concerning transactions between registered
1217		-	insurers and any affiliates as may be included from time to time in any
1218		-	registration forms adopted or approved by the commissioner of
1219		-	insurance; HOUSE BILL No. 2334—page 20
1220		-	(5) any pledge of the insurer's stock, including stock of any
1221		-	subsidiary or controlling affiliate, for a loan made to any member of the
1222		-	insurance holding company system;
1223		-	(6) financial statements of or within an insurance holding
1224		-	company system, including all affiliates, if requested by the
1225		-	commissioner of insurance. Financial statements may include, but are
1226		-	not be limited to, annual audited financial statements filed with the U.S.
1227		-	securities and exchange commission (, SEC), pursuant to the securities
1228		-	act of 1933, as amended, or the securities exchange act of 1934, as
1229		-	amended. An insurer required to file financial statements pursuant to
1230		-	this paragraph may satisfy the request by providing the commissioner
1231		-	of insurance with the most recently filed parent corporation financial
1232		-	statements that have been filed with the SEC;
1233		-	(7) statements that the insurer's board of directors and principal
1234		-	officers oversee corporate governance and internal controls and that the
1235		-	insurer's principal officers have approved, implemented and continue to
1236		-	maintain and monitor corporate governance and internal control
1237		-	procedures; and
1238		-	(8) any other information required by the commissioner of
1239		-	insurance by rules and regulations.
1240		-	(c) All registration statements shall be accompanied by a summary
1241		-	outlining all items in the current registration statement representing
1242		-	changes from the prior registration statement.
1243		-	(d) No information need be disclosed on the registration statement
1244		-	filed pursuant to subsection (b) if such information is not material for
1245		-	the purpose of this section. Unless the commissioner of insurance by
1246		-	rules and regulations or order provides otherwise, sales, purchases,
1247		-	exchanges, loans or extensions of credit, investments or guarantees,
1248		-	involving 0.5% or less of an insurer's admitted assets as of the
1249		-	December 31 immediately next preceding shall be deemed immaterial
1250		-	for purposes of this section.
1251		-	(e) Each registered insurer shall keep current the information
1252		-	required to be disclosed in such insurer's registration statement by
1253		-	reporting all material changes or additions on amendment forms
1254		-	provided by the commissioner of insurance within 15 days after the end
1255		-	of the month in which it learns of each such change or addition, except
1256		-	that each registered insurer shall report all dividends and other
1257		-	distributions to shareholders within five business days following its
1258		-	declaration. Any such dividend or distribution shall not be paid for at
1259		-	least 10 business days from the commissioner's receipt of the notice of
1260		-	its declaration.
1261		-	(f) Any person within an insurance holding company system
1262		-	subject to registration shall provide complete and accurate information
1263		-	to an insurer, where if such information is reasonably necessary to
1264		-	enable the insurer to comply with the provisions of this act.
1265		-	(g) The commissioner of insurance shall terminate the registration
1266		-	of any insurer that demonstrates that such insurer is no longer is a
1267		-	member of an insurance holding company system.
1268		-	(h) The commissioner of insurance may require or allow two or
1269		-	more affiliated insurers subject to registration hereunder to file a
1270		-	consolidated registration statement.
1271		-	(i) The commissioner of insurance may allow an insurer that is
1272		-	authorized to do business in this state and that is part of an insurance
1273		-	holding company system to register on behalf of any affiliated insurer
1274		-	that is required to register under subsection (a) and to file all
1275		-	information and material required to be filed under this section.
1276		-	(j) The provisions of this section shall not apply to any
1277		-	information or transaction if and to the extent the commissioner of
1278		-	insurance by rule and regulation or order exempts the same from the
1279		-	provisions of this section.
1280		-	(k) Any person may file with the commissioner of insurance a
1281		-	disclaimer of affiliation with any authorized insurer or such a
1282		-	disclaimer may be filed by such insurer or any member of an insurance
1283		-	holding company system. The disclaimer shall fully disclose all HOUSE BILL No. 2334—page 21
1284		-	material relationships and bases for affiliation between such person and
1285		-	such insurer as well as the basis for disclaiming such affiliation. After a
1286		-	disclaimer has been filed, the insurer shall be relieved of any duty to
1287		-	register or report under this section which that may arise out of the
1288		-	insurer's relationship with such person unless and until the
1289		-	commissioner of insurance disallows such a disclaimer. The
1290		-	commissioner of insurance shall disallow such a disclaimer only after
1291		-	furnishing all parties in interest with notice and opportunity to be heard
1292		-	in accordance with the provisions of the Kansas administrative
1293		-	procedure act.
1294		-	(l) (1) Except as provided in paragraph (2), the ultimate
1295		-	controlling person of every insurer subject to registration also shall file
1296		-	an annual enterprise risk report. The report, to the best of the ultimate
1297		-	controlling person's knowledge and belief, shall identify the material
1298		-	risks within the insurance holding company system that could pose
1299		-	enterprise risk to the insurer. The report shall be appropriate to the
1300		-	nature, scale and complexity of the insurer. The report shall be filed
1301		-	with the lead state commissioner of insurance of the insurance holding
1302		-	company system as determined by the procedures within the financial
1303		-	analysis handbook adopted by the national association of insurance
1304		-	commissioners NAIC. The first enterprise risk report shall be filed no
1305		-	not later than May 1, 2015, and annually thereafter by May 1 of each
1306		-	year unless the commissioner of insurance extends the time for filing
1307		-	for good cause shown.
1308		-	(2) The ultimate controlling person of a domestic insurer that is
1309		-	authorized, admitted or eligible to engage in the business of insurance
1310		-	only in this state with total direct and assumed annual premiums of less
1311		-	than $300 million is not required to submit an enterprise risk report
1312		-	under paragraph (1) unless the ultimate controlling person of the
1313		-	domestic insurer also controls other insurers that do not meet the
1314		-	requirements of this subsection. For the purposes of this subsection, an
1315		-	insurer is not considered to be authorized, admitted or eligible to
1316		-	engage in the business of insurance only in this state if the insurer
1317		-	directly or indirectly writes or assumes insurance in any other manner
1318		-	in another state (A) Except as provided hereunder, the ultimate
1319		-	controlling person of every insurer subject to registration shall
1320		-	concurrently file with the registration an annual group capital
1321		-	calculation as directed by the lead state commissioner. The report shall
1322		-	be completed in accordance with the NAIC group capital calculation
1323		-	instructions, which may permit the lead state commissioner to allow a
1324		-	controlling person that is not the ultimate controlling person to file the
1325		-	group capital calculation. The report shall be filed with the lead state
1326		-	commissioner of the insurance holding company system as determined
1327		-	by the commissioner of insurance in accordance with the procedures
1328		-	within the financial analysis handbook. An insurance holding company
1329		-	system shall be exempt from filing the group capital calculation if:
1330		-	(i) It has only one insurer within its holding company structure,
1331		-	only writes business is only licensed in its domestic state and assumes
1332		-	no business from any other insurer;
1333		-	(ii) it is required to perform a group capital calculation specified
1334		-	by the board of governors of the federal reserve system. The lead state
1335		-	commissioner shall request the calculation from the federal reserve
1336		-	board under the terms of information sharing agreements in effect. If
1337		-	the federal reserve board cannot share the calculation with the lead
1338		-	state commissioner, the insurance holding company shall not be exempt
1339		-	from the group capital calculation filing;
1340		-	(iii) its non-United States group-wide supervisor is located within
1341		-	a reciprocal jurisdiction, as defined in K.S.A. 40-221a, and
1342		-	amendments thereto, that recognizes the United States regulatory
1343		-	approach to group supervision and group capital; and
1344		-	(iv) it is an insurance holding company system:
1345		-	(a) That provides information to the lead state that meets the
1346		-	requirements for accreditation under the NAIC financial standards and
1347		-	accreditation program, either directly or indirectly through the group- HOUSE BILL No. 2334—page 22
1348		-	wide supervisor, who has determined that such information is
1349		-	satisfactory to allow the lead state to comply with the NAIC group
1350		-	supervision approach, as detailed in the NAIC financial analysis
1351		-	handbook; and
1352		-	(b) whose non-United States group-wide supervisor who is not in
1353		-	a reciprocal jurisdiction recognizes and accepts, as specified by the
1354		-	commissioner in rules and regulations, the group capital calculation as
1355		-	the worldwide group capital assessment for United States insurance
1356		-	groups that operate in that jurisdiction.
1357		-	(B) Notwithstanding the provisions of K.S.A. 40-3305, and
1358		-	amendments thereto, a lead state commissioner shall require the group
1359		-	capital calculation for the United States operations of any non-United
1360		-	States based insurance holding company system if, after any necessary
1361		-	consultation with other supervisors or officials, it is deemed
1362		-	appropriate by the lead state commissioner for prudential oversight
1363		-	and solvency monitoring purposes or for ensuring the competitiveness
1364		-	of the insurance marketplace.
1365		-	(C) Notwithstanding the exemptions from filing the group capital
1366		-	calculation stated in K.S.A. 40-3305, and amendments thereto, the lead
1367		-	state commissioner has the discretion to exempt the ultimate
1368		-	controlling person from filing the annual group capital calculation or
1369		-	to accept a limited group capital filing or report in accordance with
1370		-	criteria specified by the commissioner in regulation.
1371		-	(D) If the lead state commissioner determines that an insurance
1372		-	holding company system no longer meets one or more of the
1373		-	requirements for an exemption from filing the group capital calculation
1374		-	under this section, the insurance holding company system shall file the
1375		-	group capital calculation at the next annual filing date unless given an
1376		-	extension by the lead state commissioner based on reasonable grounds
1377		-	shown.
1378		-	(E) The ultimate controlling person of every insurer subject to
1379		-	registration and also scoped into the NAIC liquidity stress test
1380		-	framework shall file the results of a specific year's liquidity stress test.
1381		-	The filing shall be made to the lead state insurance commissioner of
1382		-	the insurance holding company system as determined by the
1383		-	procedures within the financial analysis handbook and that:
1384		-	(i) The NAIC liquidity stress test framework includes scope
1385		-	criteria applicable to a specific data year. These scope criteria are
1386		-	reviewed at least annually by the financial stability task force or its
1387		-	successor. Any change to the NAIC liquidity stress test framework or to
1388		-	the data year for which the scope criteria are to be measured shall be
1389		-	effective on January 1 of the year following the calendar year in which
1390		-	such changes are adopted. Insurers meeting at least one threshold of
1391		-	the scope criteria are considered scoped into the NAIC liquidity stress
1392		-	test framework for the specified data year, unless the lead state
1393		-	insurance commissioner, in consultation with the NAIC financial
1394		-	stability task force or its successor, determines that such insurer should
1395		-	not be scoped into the framework for that data year. Similarly, insurers
1396		-	that do not trigger at least one threshold of the scope criteria are
1397		-	considered scoped out of the NAIC liquidity stress test framework for
1398		-	the specified data year, unless the lead state insurance commissioner,
1399		-	in consultation with the NAIC financial stability task force or its
1400		-	successor, determines that the insurer should be scoped into the
1401		-	framework for that data year.
1402		-	(ii) The lead state insurance commissioner, in consultation with
1403		-	the financial stability task force or its successor, shall assess the
1404		-	concerns of regulators that wish to avoid having insurers scoped in and
1405		-	out of the NAIC liquidity stress test framework on a frequent basis as
1406		-	part of the determination for an insurer.
1407		-	(F) The performance and filing of the results of a specific year's
1408		-	liquidity stress test shall comply with the NAIC liquidity stress test
1409		-	framework instructions and reporting templates for that year and any
1410		-	lead state insurance commissioner determinations, in consultation with
1411		-	the financial stability task force or its successor, provided within the HOUSE BILL No. 2334—page 23
1412		-	framework.
1413		-	(m) The failure of an insurer or an ultimate controlling person of
1414		-	the insurer to file a registration statement, any summary of the
1415		-	registration statement or enterprise risk filing within the specified time
1416		-	for filing shall be a violation by the insurer or by the ultimate
1417		-	controlling person of the insurer, as applicable.
1418		-	Sec. 21. K.S.A. 40-3306 is hereby amended to read as follows: 40-
1419		-	3306. (a) Material Transactions by registered insurers with their
1420		-	affiliates shall be subject to the following standards:
1421		-	(1) The terms shall be fair and reasonable;
1422		-	(2) agreements for cost-sharing services and management shall
1423		-	include such provisions as required by rules and regulations adopted by
1424		-	the commissioner of insurance;
1425		-	(3) the charges or fees for services performed shall be reasonable;
1426		-	(4) expenses incurred and payment received with respect to such
1427		-	transactions shall be allocated to the insurer in conformity with the
1428		-	requirements of K.S.A. 40-225, and amendments thereto;
1429		-	(5) the books, accounts and records of each party to all such
1430		-	transactions shall be so maintained as to clearly and accurately disclose
1431		-	the nature and details of the transactions including such accounting
1432		-	information necessary to support the reasonableness of the charges or
1433		-	fees to the respective parties; and
1434		-	(6) the insurer's surplus as regards policyholders following any
1435		-	transactions, dividends or distributions to shareholder affiliates shall be
1436		-	reasonable in relation to the insurer's outstanding liabilities and
1437		-	adequate to its financial needs.
1438		-	(b) (1) If an insurer subject to this act is deemed by the
1439		-	commissioner of insurance to be in a hazardous financial condition as
1440		-	defined by K.S.A. 40-222d, and amendments thereto, or a condition
1441		-	that would be grounds for supervision, conservation or a delinquency
1442		-	proceeding, then the commissioner may require the insurer to secure
1443		-	and maintain either a deposit, held by the commissioner, or a bond, as
1444		-	determined by the insurer at the insurer's discretion, for the protection
1445		-	of the insurer for the duration of the contract or agreement or the
1446		-	existence of the condition for which the commissioner required the
1447		-	deposit or the bond.
1448		-	(2) In determining whether a deposit or a bond is required, the
1449		-	commissioner shall consider whether concerns exist with respect to the
1450		-	affiliated person's ability to fulfill the contract or agreement if the
1451		-	insurer were to be put into liquidation. Once the insurer is deemed to
1452		-	be in a hazardous financial condition or a condition that would be
1453		-	grounds for supervision, conservation or a delinquency proceeding and
1454		-	a deposit or bond is necessary, the commissioner shall have the
1455		-	discretion to determine the amount of the deposit or bond, not to
1456		-	exceed the value of the contract or agreement in any one year, and
1457		-	whether such deposit or bond should be required for a single contract,
1458		-	multiple contracts or a contract only with a specific person;
1459		-	(c) All records and data of the insurer held by an affiliate are and
1460		-	shall remain the property of the insurer, are subject to control of the
1461		-	insurer, are identifiable and are segregated or readily capable of
1462		-	segregation, at no additional cost to the insurer from all other persons'
1463		-	records and data. All records and data that are otherwise the property
1464		-	of the insurer, in whatever form maintained, including, but not limited
1465		-	to, claims and claim files, policyholder lists, application files, litigation
1466		-	files, premium records, rate books, underwriting manuals, personnel
1467		-	records, financial records or similar records within the possession,
1468		-	custody or control of the affiliate shall remain the property of the
1469		-	insurer. At the request of the insurer, the affiliate shall provide that the
1470		-	receiver may obtain a complete set of all records of any type that
1471		-	pertain to the insurer's business, obtain access to the operating systems
1472		-	upon which the data is maintained, obtain the software that runs those
1473		-	systems either through assumption of licensing agreements or
1474		-	otherwise and restrict the use of the data by the affiliate if it is not
1475		-	operating the insurer's business. The affiliate shall provide a waiver of HOUSE BILL No. 2334—page 24
1476		-	any landlord lien or other encumbrance to provide the insurer with
1477		-	access to all records and data in the event of the affiliate's default
1478		-	under a lease or other agreement; and
1479		-	(d) Premiums or other funds belonging to the insurer that are
1480		-	collected or held by an affiliate shall be deemed the exclusive property
1481		-	of and subject to the control of such insurer. Any right of offset in the
1482		-	event that an insurer is placed into receivership shall be subject to
1483		-	K.S.A. 40-3605 et seq., and amendments thereto.
1484		-	(b)(e) The following transactions involving a domestic insurer and
1485		-	any person in such insurer's insurance holding company system,
1486		-	including amendments or modifications of affiliate agreements
1487		-	previously filed pursuant to this section, may not be entered into unless
1488		-	the insurer has notified the commissioner of insurance in writing of
1489		-	such insurer's intention to enter into such transaction at least 30 days
1490		-	prior thereto, or such shorter period as the commissioner of insurance
1491		-	may permit, and the commissioner of insurance has not disapproved
1492		-	such transaction within such period.
1493		-	(1) Sales, purchases, exchanges, loans or extensions of credit,
1494		-	guarantees or investments provided such transactions are equal to or
1495		-	exceed:
1496		-	(A) With respect to nonlife insurers, the lesser of 3% of the
1497		-	insurer's admitted assets or 25% of surplus as regards policyholders; or
1498		-	(B) with respect to life insurers, 3% of the insurer's admitted
1499		-	assets, each as of December 31 immediately preceding.
1500		-	(2) Loans or extensions of credit to any person who is not an
1501		-	affiliate, where if the insurer makes such loans or extensions of credit
1502		-	with the agreement or understanding that the proceeds of such
1503		-	transactions, in whole or in substantial part, are to be used to make
1504		-	loans or extensions of credit to, purchase assets of, or make
1505		-	investments in, any affiliate of the insurer making such loans or
1506		-	extensions of credit provided if such transactions are equal to or
1507		-	exceed:
1508		-	(A) With respect to nonlife insurers, the lesser of 3% of the
1509		-	insurer's admitted assets or 25% of surplus as regards policyholders;
1510		-	(B) with respect to life insurers, 3% of the insurer's admitted
1511		-	assets, each as of December 31 immediately preceding.
1512		-	(3) Reinsurance agreements or modifications thereto, including:
1513		-	(A) All reinsurance pooling agreements; and
1514		-	(B) agreements in which the reinsurance premium or a change in
1515		-	the insurer's liabilities, or the projected reinsurance premium or a
1516		-	projected change in the insurer's liabilities in any of the next three
1517		-	consecutive years equals or exceeds 5% of the insurer's surplus as
1518		-	regards policyholders, as of December 31 immediately preceding,
1519		-	including those agreements which that may require as consideration the
1520		-	transfer of assets from an insurer to a nonaffiliate, if an agreement or
1521		-	understanding exists between the insurer and nonaffiliate that any
1522		-	portion of such assets will be transferred to one or more affiliates of the
1523		-	insurer;
1524		-	(4) all management agreements, service contracts, tax allocation
1525		-	agreements and all cost-sharing arrangements; and
1526		-	(5) any material transactions, specified by rules and regulations,
1527		-	which that the commissioner of insurance determines may adversely
1528		-	affect the interests of an insurer's policyholders.
1529		-	Nothing herein contained in this subsection shall be deemed to
1530		-	authorize or permit any transactions which, that in the case of an
1531		-	insurer not a member of the same insurance holding company system,
1532		-	would be otherwise contrary to law.
1533		-	(c)(f) A domestic insurer may shall not enter into transactions
1534		-	which that are part of a plan or series of like transactions with persons
1535		-	within the insurance holding company system if the purpose of those
1536		-	separate transactions is to avoid the threshold amount required under
1537		-	this section and thus avoid the review that would occur otherwise. If the
1538		-	commissioner of insurance determines that such separate transactions
1539		-	were entered into over any 12-month period for such purpose, the HOUSE BILL No. 2334—page 25
1540		-	commissioner of insurance may exercise authority under K.S.A. 40-
1541		-	3311, and amendments thereto.
1542		-	(d)(g) The commissioner of insurance, in reviewing transactions
1543		-	pursuant to subsection (b)(e), shall consider whether the transactions
1544		-	comply with the standards set forth in subsection (a), and whether such
1545		-	transactions may adversely affect the interests of policyholders.
1546		-	(e)(h) The commissioner of insurance shall be notified within 30
1547		-	days of any investment of the domestic insurer in any one corporation
1548		-	if the total investment in such corporation by the insurance holding
1549		-	company system exceeds 10% of such corporation's voting securities.
1550		-	(f)(i) A transaction subject to approval by the commissioner of
1551		-	insurance pursuant to K.S.A. 40-3304, and amendments thereto, shall
1552		-	not be subject to the requirements of this section.
1553		-	(g)(j) (1) No insurer subject to registration under K.S.A. 40-3305,
1554		-	and amendments thereto, shall pay any extraordinary dividend or make
1555		-	any other extraordinary distribution to such insurer's shareholders until:
1556		-	(A) 30 days after the commissioner of insurance has received
1557		-	notice of the declaration thereof and has not within such period
1558		-	disapproved such payment; or
1559		-	(B) the commissioner of insurance has approved such payment
1560		-	within such 30-day period.
1561		-	(2) (A) For purposes of this section, an extraordinary dividend or
1562		-	distribution includes any dividend or distribution of cash or other
1563		-	property, the fair market value of which, together with that of other
1564		-	dividends or distributions made within the preceding 12 months,
1565		-	exceeds the greater of:
1566		-	(i) 10% of such insurer's surplus as regards policyholders as of
1567		-	December 31 immediately preceding; or
1568		-	(ii) the net gain from operations of such insurer, if such insurer is a
1569		-	life insurer, or the net income, if such insurer is not a life insurer, not
1570		-	including realized capital gains for the 12-month period ending
1571		-	December 31 immediately next preceding, but shall not include pro rata
1572		-	distributions of any class of the insurer's own securities.
1573		-	(B) In determining whether a dividend or distribution is
1574		-	extraordinary, an insurer, other than a life insurer, may carry forward
1575		-	net income from the previous two calendar years that has not already
1576		-	been paid out as dividends. This carry-forward carryforward shall be
1577		-	computed by taking the net income from the second and third preceding
1578		-	calendar years, not including realized capital gains, less dividends paid
1579		-	in the second and immediately preceding calendar years.
1580		-	(C) An extraordinary dividend or distribution shall also include
1581		-	any dividend or distribution made or paid out of any funds other than
1582		-	earned surplus arising from the insurer's business, as defined in K.S.A.
1583		-	40-233, and amendments thereto. The provisions of K.S.A. 40-233, and
1584		-	amendments thereto, shall not be construed so as to prohibit an insurer,
1585		-	subject to registration under K.S.A. 40-3305, and amendments thereto,
1586		-	from making or paying an extraordinary dividend or distribution in
1587		-	accordance with this section.
1588		-	(3) Notwithstanding any other provisions of law, an insurer may
1589		-	declare an extraordinary dividend or distribution which that is
1590		-	conditional upon the approval of the commissioner of insurance. No
1591		-	declaration shall confer any rights upon shareholders until:
1592		-	(A) The commissioner of insurance has approved the payment of
1593		-	such dividend or distribution; or
1594		-	(B) the commissioner of insurance has not disapproved such
1595		-	payment within the 30-day period referred to above.
1596		-	(h)(k) (1) Notwithstanding the control of a domestic insurer by
1597		-	any person, the officers and directors of the insurer shall not thereby be
1598		-	relieved of any obligation or liability to which they would otherwise be
1599		-	subject by law, and the insurer shall be managed so as to assure its
1600		-	separate operating identity consistent with this act.
1601		-	(2) Nothing herein shall preclude a domestic insurer from having
1602		-	or sharing a common management or cooperative or joint use of
1603		-	personnel, property or services with one or more other persons under HOUSE BILL No. 2334—page 26
1604		-	arrangements meeting the standards of K.S.A. 40-3306, and
1605		-	amendments thereto.
1606		-	(i) For purposes of this act, in determining whether an insurer's
1607		-	surplus as regards policyholders is reasonable in relation to the insurer's
1608		-	outstanding liabilities and adequate to such insurer's financial needs,
1609		-	the following factors, among others, shall be considered:
1610		-	(1) The size of the insurer as measured by such insurer's assets,
1611		-	capital and surplus, reserves, premium writings, insurance in force and
1612		-	other appropriate criteria;
1613		-	(2) the extent to which the insurer's business is diversified among
1614		-	the several lines of insurance;
1615		-	(3) the number and size of risks insured in each line of business;
1616		-	(4) the extent of the geographical dispersion of the insurer's
1617		-	insured risks;
1618		-	(5) the nature and extent of the insurer's reinsurance program;
1619		-	(6) the quality, diversification and liquidity of the insurer's
1620		-	investment portfolio;
1621		-	(7) the recent past and projected future trend in the size and
1622		-	performance of the insurer's surplus as regards policyholders;
1623		-	(8) the surplus as regards policyholders maintained by other
1624		-	comparable insurers;
1625		-	(9) the adequacy of the insurer's reserves;
1626		-	(10) the quality and liquidity of investments in affiliates. The
1627		-	commissioner of insurance may treat any such investment as a
1628		-	disallowed asset for purposes of determining the adequacy of surplus as
1629		-	regards policyholders whenever in the judgment of the commissioner
1630		-	of insurance such investment so warrants; and
1631		-	(11) the quality of the insurer's earnings and the extent to which
1632		-	the reported earnings include extraordinary items.
1633		-	Sec. 22. K.S.A. 40-3307 is hereby amended to read as follows: 40-
1634		-	3307. (a) Subject to the limitation contained in this section and in
1635		-	addition to the powers which that the commissioner of insurance has
1636		-	under K.S.A. 40-222 and K.S.A. 40-222a, and amendments thereto,
1637		-	relating to the examination of insurers, the commissioner of insurance
1638		-	shall have the power to examine any insurer registered under K.S.A.
1639		-	40-3305, and amendments thereto, and such insurer's affiliates to
1640		-	ascertain the financial condition, including enterprise risk, of such
1641		-	insurer including the enterprise risk to the insurer by the ultimate
1642		-	controlling party or by any entity or combination of entities within the
1643		-	insurance holding company system or by the insurance holding
1644		-	company system on a consolidated basis.
1645		-	(b) (1) The commissioner of insurance may order any insurer
1646		-	registered under K.S.A. 40-3305, and amendments thereto, to produce
1647		-	such records, books or other information in the possession of the
1648		-	insurer or its affiliates as are reasonably necessary to determine
1649		-	compliance with this act.
1650		-	(2) To determine compliance with this act, the commissioner of
1651		-	insurance may order any insurer registered under K.S.A. 40-3305, and
1652		-	amendments thereto, to produce information not in the possession of
1653		-	the insurer, if the insurer can obtain access to such information pursuant
1654		-	to contractual relationships, statutory obligations or another method. In
1655		-	the event that the insurer cannot obtain the information requested by
1656		-	the commissioner of insurance, the insurer shall provide the
1657		-	commissioner of insurance a detailed explanation of the reason that the
1658		-	insurer cannot obtain the information and the identity of the holder of
1659		-	information. Whenever it appears to the commissioner of insurance that
1660		-	the detailed explanation is without merit, the commissioner of
1661		-	insurance may require, after notice and hearing, the insurer to pay a
1662		-	penalty of not more than $1,000 for each day's delay, or may suspend
1663		-	or revoke the license of the insurer.
1664		-	(c) The commissioner of insurance may retain at the registered
1665		-	insurer's expense such attorneys, actuaries, accountants and other
1666		-	experts not otherwise a part of the staff of the commissioner of
1667		-	insurance as the commissioner of insurance shall determine to be HOUSE BILL No. 2334—page 27
1668		-	reasonably necessary to assist in the conduct of the examination under
1669		-	subsection (a). Any persons so retained shall be under the direction and
1670		-	control of the commissioner of insurance and shall act in a purely
1671		-	advisory capacity.
1672		-	(d) Each registered insurer producing examination records, books
1673		-	and papers pursuant to subsection (a) shall be liable for and shall pay
1674		-	the expense of such examination in accordance with K.S.A. 40-223 and
1675		-	K.S.A. 40-253, and amendments thereto.
1676		-	(e) The commissioner of insurance shall have the power to issue
1677		-	subpoenas, administer oaths and examine under oath any person for
1678		-	purposes of determining compliance with this section. Upon the failure
1679		-	or refusal of any person to obey a subpoena, the commissioner of
1680		-	insurance may petition a court of competent jurisdiction, and upon
1681		-	proper showing, the court may enter an order compelling the witness to
1682		-	appear and testify or produce documentary evidence. Failure to obey
1683		-	the court order shall be punishable as contempt of court. Every person
1684		-	subpoenaed shall be obliged to attend as a witness at the place specified
1685		-	in the subpoena, when subpoenaed, anywhere within the state. Such
1686		-	subpoenaed person shall be entitled to the same fees and mileage, if
1687		-	claimed, as a witness in K.S.A. 28-125, and amendments thereto. Fees,
1688		-	mileage and actual expense, if any, necessarily incurred in securing the
1689		-	attendance and testimony of witnesses shall be itemized, charged
1690		-	against and paid by the company being examined.
1691		-	Sec. 23. K.S.A. 40-3308 is hereby amended to read as follows: 40-
1692		-	3308. (a) Documents, materials or other information obtained by or
1693		-	disclosed to the commissioner of insurance or any other person in the
1694		-	course of an examination or investigation made pursuant to K.S.A. 40-
1695		-	3307, and amendments thereto, and all information reported pursuant to
1696		-	K.S.A. 40-3304, 40-3305 and 40-3306, and amendments thereto, shall:
1697		-	(1) Be confidential and privileged;
1698		-	(2) not be subject to disclosure under the Kansas open records act,
1699		-	K.S.A. 45-215 et seq., and amendments thereto;
1700		-	(3) not be subject to subpoena; and
1701		-	(4) not be subject to discovery or admissible in evidence in any
1702		-	private civil action.
1703		-	(b) (1) The commissioner of insurance shall not otherwise make
1704		-	the documents, materials or other information public without the prior
1705		-	written consent of the insurer to which it pertains unless the
1706		-	commissioner of insurance, after giving the insurer and its affiliates
1707		-	who would be affected thereby notice and opportunity to be heard in
1708		-	accordance with the provisions of the Kansas administrative procedure
1709		-	act, determines that the interests of policyholders, shareholders or the
1710		-	public would be served by the publication thereof, in which event, the
1711		-	commissioner of insurance may publish all or any part thereof in such a
1712		-	manner as the commissioner of insurance may deem appropriate. In
1713		-	making such determination, the commissioner of insurance also shall
1714		-	take into consideration any potential adverse consequences of the
1715		-	disclosure thereof.
1716		-	(2) For purposes of the information reported and provided to the
1717		-	commissioner pursuant to K.S.A. 40-3304 through 40-3307, and
1718		-	amendments thereto, the commissioner shall maintain the
1719		-	confidentiality of the:
1720		-	(A) Group capital calculation and group capital ratio produced
1721		-	within the calculation and any group capital information received from
1722		-	an insurance holding company supervised by the federal reserve board
1723		-	or any United States group-wide supervisor; and
1724		-	(B) liquidity stress test results and supporting disclosures and any
1725		-	liquidity stress test information received from an insurance holding
1726		-	company supervised by the federal reserve board and non-United
1727		-	States group-wide supervisors.
1728		-	(c) Neither the commissioner of insurance nor any person who
1729		-	received documents, materials or other information while acting under
1730		-	the authority of the commissioner of insurance or with whom such
1731		-	documents, materials or other information are shared pursuant to this HOUSE BILL No. 2334—page 28
1732		-	section shall be permitted or required to testify in any private civil
1733		-	action concerning any confidential documents, materials or information
1734		-	subject to subsection (a).
1735		-	(d) In order to assist in the performance of the commissioner of
1736		-	insurance's duties, the commissioner of insurance:
1737		-	(1) May share documents, materials or other information,
1738		-	including the confidential and privileged documents, materials or
1739		-	information subject to subsection (a), with other state, federal and
1740		-	international regulatory agencies, with the national association of
1741		-	insurance commissioners and its affiliates and subsidiaries, and with
1742		-	state, federal and international law enforcement authorities, including
1743		-	members of any supervisory college described in K.S.A. 40-3316, and
1744		-	amendments thereto, provided that the recipient agrees in writing to
1745		-	maintain the confidentiality and privileged status of the document,
1746		-	material or other information, and has verified in writing the legal
1747		-	authority to maintain confidentiality;
1748		-	(2) notwithstanding the provisions of paragraph (1) above, the
1749		-	commissioner of insurance may only share confidential and privileged
1750		-	documents, material or information reported pursuant to subsection (1)
1751		-	of K.S.A. 40-3305, and amendments thereto, with the commissioner of
1752		-	insurance or corresponding official of any state having statutes or
1753		-	regulations substantially similar to subsections (a) and, (b) and (c), and
1754		-	who has agreed in writing not to not disclose such information;
1755		-	(3) may receive documents, materials or information, including
1756		-	otherwise confidential and privileged documents, materials or
1757		-	information from the national association of insurance commissioners,
1758		-	and its affiliates and subsidiaries, and from regulatory and law
1759		-	enforcement officials of other foreign or domestic jurisdictions, and
1760		-	shall maintain as confidential or privileged any document, material or
1761		-	information received with notice or the understanding that it is
1762		-	confidential or privileged under the laws of the jurisdiction that is the
1763		-	source of the document, material or information. Documents received
1764		-	pursuant to this section shall not be subject to disclosure pursuant to the
1765		-	open records act, K.S.A. 45-215 et seq., and amendments thereto; and
1766		-	(4) shall enter into written agreements with the national
1767		-	association of insurance commissioners governing sharing and use of
1768		-	information provided pursuant to this act consistent with this
1769		-	subsection that shall:
1770		-	(i) Specify procedures and protocols regarding the confidentiality
1771		-	and security of information shared with the national association of
1772		-	insurance commissioners and its affiliates and subsidiaries pursuant to
1773		-	this act, including procedures and protocols for sharing by the national
1774		-	association of insurance commissioners with other state, federal or
1775		-	international regulators;
1776		-	(ii) specify that ownership of information shared with the national
1777		-	association of insurance commissioners and its affiliates and
1778		-	subsidiaries pursuant to this act remains with the commissioner of
1779		-	insurance, and that the national association of insurance
1780		-	commissioners' NAIC's use of the information is subject to the direction
1781		-	of the commissioner of insurance;
1782		-	(iii) exclude documents, material or information reported
1783		-	pursuant to K.S.A. 40-3305, and amendments thereto, and prohibit the
1784		-	NAIC and its affiliates and subsidiaries from storing the information
1785		-	shared pursuant to the insurance holding company act in a permanent
1786		-	database after the underlying analysis is completed;
1787		-	(iv) require prompt notice to be given to an insurer and its
1788		-	affiliates whose confidential information in the possession of the
1789		-	national association of insurance commissioners NAIC, pursuant to this
1790		-	act, is subject to a request or subpoena to the national association of
1791		-	insurance commissioners NAIC for disclosure or production; and
1792		-	(iv)(v) require the national association of insurance commissioners
1793		-	NAIC and its affiliates and subsidiaries to consent to intervention by an
1794		-	insurer in any judicial or administrative action in which the national
1795		-	association of insurance commissioners NAIC and its affiliates and HOUSE BILL No. 2334—page 29
1796		-	subsidiaries may be required to disclose confidential information about
1797		-	the insurer and its affiliates that are shared with the national association
1798		-	of insurance commissioners NAIC and its affiliates and subsidiaries
1799		-	pursuant to this the insurance holding company act; and
1800		-	(vi) for documents, material or information reporting pursuant to
1801		-	K.S.A. 40-3305, and amendments thereto, in the case of an agreement
1802		-	involving a third-party consultant, provide for notification of the
1803		-	identity of the consultant to the applicable insurers.
1804		-	(e) The sharing of information by the commissioner of insurance,
1805		-	pursuant to this act, shall not constitute a delegation of regulatory
1806		-	authority or rule-making rulemaking authority, and the commissioner of
1807		-	insurance is solely responsible for the administration, execution and
1808		-	enforcement of the provisions of this act.
1809		-	(f) No waiver of any applicable privilege or claim of
1810		-	confidentiality in the documents, materials or information shall occur
1811		-	as a result of disclosure to the commissioner of insurance under this act
1812		-	or as a result of sharing as authorized in subsection (d).
1813		-	(g) Documents, materials or other information in the possession or
1814		-	control of the national association of insurance commissioners shall be
1815		-	confidential by law and privileged, shall not be subject to the open
1816		-	records act, K.S.A. 45-215 et seq., and amendments thereto, shall not
1817		-	be subject to subpoena, and shall not be subject to discovery or
1818		-	admissible in evidence in any private civil action.
1819		-	(h) (1) The group capital calculation and resulting group capital
1820		-	ratio required under K.S.A. 40-3305, and amendments thereto, and the
1821		-	liquidity stress test along with its results and supporting disclosures
1822		-	required under K.S.A. 40-3305, and amendments thereto, shall be
1823		-	deemed regulatory tools for assessing group risks and capital
1824		-	adequacy and group liquidity risks, respectively, and shall not be
1825		-	construed as a means to rank insurers or insurance holding company
1826		-	systems.
1827		-	(2) Except as otherwise may be required under the provisions of
1828		-	the insurance holding company act, the making, publishing,
1829		-	disseminating, circulating, placing before the public or causing directly
1830		-	or indirectly to be made, published, disseminated, circulated or placed
1831		-	before the public in a newspaper, magazine or other publication, in the
1832		-	form of a notice, circular, pamphlet, letter or poster, broadcast by any
1833		-	radio or television station or by any electronic means of
1834		-	communication available to the public, or in any other way as an
1835		-	advertisement, announcement or statement containing a representation
1836		-	or statement with regard to the group capital calculation, group capital
1837		-	ratio, the liquidity stress test results, or supporting disclosures for the
1838		-	liquidity stress test of any insurer or any insurer group, or of any
1839		-	component derived in the calculation by any insurer, broker, or other
1840		-	person engaged in any manner in the insurance business could be
1841		-	misleading and is therefore prohibited.
1842		-	(3) If any materially false statement with respect to the group
1843		-	capital calculation, resulting group capital ratio, an inappropriate
1844		-	comparison of any amount to an insurer's or insurance group's group
1845		-	capital calculation or resulting group capital ratio, liquidity stress test
1846		-	result, supporting disclosures for the liquidity stress test or an
1847		-	inappropriate comparison of any amount to an insurer's or insurance
1848		-	group's liquidity stress test result or supporting disclosures is published
1849		-	in any written publication and the insurer is able to demonstrate to the
1850		-	commissioner with substantial proof the falsity or inappropriateness of
1851		-	such statement, then the insurer may publish announcements in a
1852		-	written publication if the sole purpose of the announcement is to rebut
1853		-	the materially false statement.
1854		-	(i) The provisions of this section shall not be subject to the
1855		-	provisions of K.S.A. 45-229, and amendments thereto.
1856		-	Sec. 24. K.S.A. 2024 Supp. 40-4302 is hereby amended to read as
1857		-	follows: 40-4302. (a) Any captive insurance company, when permitted
1858		-	by its organizational documents, may apply to the commissioner for a
1859		-	certificate of authority to do any and all insurance comprised in K.S.A. HOUSE BILL No. 2334—page 30
1860		-	40-901 et seq., 40-1102(1)(a), (1)(c) through (1)(n), and amendments
1861		-	thereto, and to issue life, accident and health insurance policies
1862		-	provided, except that:
	680	+	converting protected cell shall submit amended organizational documents
	681	+	to the secretary of state that comply with article 43 of chapter 40 and
	682	+	chapters 17 and 56A of the Kansas Statutes Annotated, and amendments
	683	+	thereto, as applicable; or
	684	+	(C) neither a series of a limited liability company nor an incorporated
	685	+	protected cell, the cell shall file organizational documents with the
	686	+	secretary of state that comply with article 43 of chapter 40 and chapters 17
	687	+	and 56A of the Kansas Statutes Annotated, and amendments thereto, as
	688	+	applicable, or any other applicable provision governing formation of that
	689	+	type of entity. The organizational documents shall include the date of
	690	+	formation as a cell. Upon conversion, the formation date of the cell shall
	691	+	be deemed as the formation date of the new entity. The new entity shall
	692	+	possess all assets and liabilities, including outstanding insurance liabilities,
	693	+	owned by the predecessor cell.
	694	+	(b) A captive insurance company may apply to the commissioner for
	695	+	conversion to become a protected cell captive insurance company under
	696	+	any form permitted under this section. Upon compliance with this section,
	697	+	approval by the commissioner and the filing of amended organizational
	698	+	documents with the secretary of state, the captive insurance company shall
	699	+	be issued a revised certificate of authority. The effective date of the revised
	700	+	protected cell captive insurance company's certificate of authority shall
	701	+	remain the same as the effective date of the prior captive insurance
	702	+	company.
	703	+	Sec. 11. K.S.A. 2024 Supp. 40-4302 is hereby amended to read as
	704	+	follows: 40-4302. (a) Any captive insurance company, when permitted by
	705	+	its organizational documents, may apply to the commissioner for a
	706	+	certificate of authority to do any and all insurance comprised in K.S.A. 40-
	707	+	901 et seq., 40-1102(1)(a), (1)(c) through (1)(n), and amendments thereto,
	708	+	and to issue life, accident and health insurance policies provided, except
	709	+	that:
1863	710		(1) NoA pure captive insurance company shall not insure any risks
1864	711		other than those of its parent and affiliated companies and, upon prior
1865		-	approval of the commissioner, any controlled unaffiliated business up
1866		-	to 5% of total direct written premium or combination thereof;
1867		-	(2) no association captive insurance company shall insure any
1868		-	~~risks~~ other than those of its association and those of the member
1869		-	~~organizations~~ of its association. No association captive insurance
1870		-	~~company shall expose~~ itself to loss on any one risk or hazard in an
1871		-	~~amount exceeding 10% of its~~ paid-up capital and surplus;
	712	+	approval of the commissioner, any controlled unaffiliated business up to
	713	+	5% of total direct written premium or combination thereof;
	714	+	(2) no association captive insurance company shall insure any risks
	715	+	other than those of its association and those of the member organizations
	716	+	of its association. No association captive insurance company shall expose
	717	+	itself to loss on any one risk or hazard in an amount exceeding 10% of its
	718	+	paid-up capital and surplus;
1872	719		(3) no captive insurance company shall provide personal lines of
1873		-	insurance, workers' compensation, employers' liability insurance
1874		-	coverage, long-term care coverage, critical care coverage, surety, title
1875		-	insurance, credit insurance or any component thereof, except that a
1876		-	technology-enabled fiduciary financial institution insurance company
1877		-	shall be permitted to provide contracts of suretyship and credit
1878		-	insurance in accordance with K.S.A. 2024 Supp. 40-4354, and
1879		-	amendments thereto;
1880		-	(4) noa captive insurance company shall accept or cede may
1881		-	provide workers compensation insurance, insurance in the nature of
1882		-	workers compensation insurance and the reinsurance except as
1883		-	provided in K.S.A. 40-4311, and amendments thereto of such policies
1884		-	unless prohibited by federal law, the provisions of chapter 40 of the
1885		-	Kansas Statutes Annotated, and amendments thereto, or any other state
1886		-	having jurisdiction over the transaction;
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	763	+	insurance, workers' compensation, employers' liability insurance coverage,
	764	+	long-term care coverage, critical care coverage, surety, title insurance,
	765	+	credit insurance or any component thereof, except that a technology-
	766	+	enabled fiduciary financial institution insurance company shall be
	767	+	permitted to provide contracts of suretyship and credit insurance in
	768	+	accordance with K.S.A. 2024 Supp. 40-4354, and amendments thereto;
	769	+	(4) noa captive insurance company shall accept or cede may provide
	770	+	workers compensation insurance, insurance in the nature of workers
	771	+	compensation insurance and the reinsurance except as provided in K.S.A.
	772	+	40-4311, and amendments thereto of such policies unless prohibited by
	773	+	federal law, the provisions of chapter 40 of the Kansas Statutes Annotated,
	774	+	and amendments thereto, or any other state having jurisdiction over the
	775	+	transaction;
1887	776		(5) a captive insurance company may provide excess or stop-loss
1888		-	accident and health insurance unless prohibited by federal law or the
1889		-	~~laws~~ of the state having jurisdiction over the transaction;
	777	+	accident and health insurance unless prohibited by federal law or the laws
	778	+	of the state having jurisdiction over the transaction;
1890	779		(6) any captive insurance company may provide workers
1891	780		compensation insurance, insurance in the nature of workers'
1892	781		compensation insurance and reinsurance of such policies unless
1893	782		prohibited by federal law, the laws of the state of Kansas or any other
1894	783		state having jurisdiction over the transaction;
1895		-	(7) no captive insurance company shall provide accident and
1896		-	~~health,~~ life insurance or annuities on a direct basis;
	784	+	(7) no captive insurance company shall provide accident and health,
	785	+	life insurance or annuities on a direct basis;
1897	786		(6)(8) no captive insurance company authorized as a life insurance
1898	787		company shall transact business other than life insurance; and
1899		-	(7)(9) no captive insurance company authorized to transact
1900		-	business under article 9 or 11 of chapter 40 of the Kansas Statutes
1901		-	Annotated, and amendments thereto, shall engage in the business of life
1902		-	insurance.
1903		-	(b) No captive insurance company organized under the laws of
1904		-	this state shall do any insurance business in this state unless such
1905		-	captive insurance company:
	788	+	(7)(9) no captive insurance company authorized to transact business
	789	+	under article 9 or 11 of chapter 40 of the Kansas Statutes Annotated, and
	790	+	amendments thereto, shall engage in the business of life insurance.
	791	+	(b) No captive insurance company organized under the laws of this
	792	+	state shall do any insurance business in this state unless such captive
	793	+	insurance company:
1906	794		(1) It First obtains from the commissioner a certificate of authority
1907	795		authorizing it to do insurance business in this state;
1908	796		(2) has its board of directors, members, partners, managers,
1909	797		committee of managers or other governing body holds hold at least one
1910	798		meeting each year in this state;
1911	799		(3) it maintains its principal place of business in this state; and
1912		-	(4) it authorizes the commissioner to accept service of process on
1913		-	~~its~~ behalf in accordance with K.S.A. 40-218, and amendments thereto.
	800	+	(4) it authorizes the commissioner to accept service of process on its
	801	+	behalf in accordance with K.S.A. 40-218, and amendments thereto.
1914	802		(c) Before receiving a certificate of authority, an applicant captive
1915	803		insurance company shall file with the commissioner:
1916	804		(1) A copy of the applicant captive insurance company's
1917	805		organizational documents; and
1918		-	(2) a plan of operation or a feasibility study describing the
1919		-	anticipated activities and results of the applicant captive insurance
1920		-	company that shall include:
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	849	+	(2) a plan of operation or a feasibility study describing the anticipated
	850	+	activities and results of the applicant captive insurance company that shall
	851	+	include:
1921	852		(A) The company's loss prevention program of its parent and
1922	853		insureds, as applicable;
1923		-	(B) historical and expected loss experience of the risks to be ~~HOUSE BILL No. 2334—page 31~~
1924		-	~~insured~~ or reinsured by the applicant captive insurance company;
	854	+	(B) historical and expected loss experience of the risks to be insured
	855	+	or reinsured by the applicant captive insurance company;
1925	856		(C) pro forma financial statements and projections of the proposed
1926	857		business operations of the applicant captive insurance company;
1927	858		(D) an analysis of the adequacy of the applicant captive insurance
1928	859		company's proposed premiums, assets and capital and surplus levels
1929	860		relative to the risks to be insured or reinsured by the captive insurance
1930	861		company;
1931	862		(E) a statement of the applicant captive insurance company's net
1932		-	retained limited liability on any contract of insurance or reinsurance it
1933		-	~~that~~ such insurance company intends to issue and the nature of any
1934		-	~~reinsurance~~ it intends to cede;
	863	+	retained limited liability on any contract of insurance or reinsurance it that
	864	+	such insurance company intends to issue and the nature of any reinsurance
	865	+	it intends to cede;
1935	866		(F) a statement certifying that the applicant captive insurance
1936		-	company's investment policy is in compliance with this act and
1937		-	~~specifying~~ the type of investments to be made;
	867	+	company's investment policy is in compliance with this act and specifying
	868	+	the type of investments to be made;
1938	869		(G) a statement identifying the geographic areas in which the
1939	870		applicant captive insurance company intends to operate;
1940	871		(H) a statement identifying the persons or organizations that will
1941	872		perform the applicant captive insurance company's major operational
1942	873		functions, including management, underwriting, accounting, asset
1943	874		investment, claims adjusting and loss control and the adequacy of the
1944		-	expertise, experience and character of such persons or organizations;
1945		-	and
1946		-	(I) whenever required by the commissioner, an appropriate
1947		-	opinion by a qualified independent actuary regarding the adequacy of
1948		-	the applicant captive insurance company's proposed capital, surplus and
1949		-	premium levels;
1950		-	(3) a description of the coverages, deductibles, coverage limits,
1951		-	rates and forms, together with any additional information that the
1952		-	commissioner may require;
	875	+	expertise, experience and character of such persons or organizations; and
	876	+	(I) whenever required by the commissioner, an appropriate opinion
	877	+	by a qualified independent actuary regarding the adequacy of the applicant
	878	+	captive insurance company's proposed capital, surplus and premium levels;
	879	+	(3) a description of the coverages, deductibles, coverage limits, rates
	880	+	and forms, together with any additional information that the commissioner
	881	+	may require;
1953	882		(4) such other items deemed to be relevant by the commissioner in
1954		-	ascertaining whether the proposed captive insurance company will be
1955		-	~~able~~ to meet its obligations; and
	883	+	ascertaining whether the proposed captive insurance company will be able
	884	+	to meet its obligations; and
1956	885		(5) any modification or change in the items required under this
1957	886		subsection that shall require the prior approval of the commissioner.
1958		-	(d) Notwithstanding any other provision of this act, the
1959		-	commissioner may issue a provisional certificate of authority to any
1960		-	applicant captive insurance company if the commissioner deems that
1961		-	the public interest will be served by the issuance of such a provisional
1962		-	certificate.
	887	+	(d) Notwithstanding any other provision of this act, the commissioner
	888	+	may issue a provisional certificate of authority to any applicant captive
	889	+	insurance company if the commissioner deems that the public interest will
	890	+	be served by the issuance of such a provisional certificate.
1963	891		(1) As a condition precedent to the issuance of a provisional
1964		-	certificate of authority under this subsection, the applicant shall have
1965		-	filed a complete application containing all information required in
1966		-	subsection (c) and paid all necessary fees. The commissioner shall
1967		-	have made a preliminary finding that the expertise, experience and
1968		-	character of the person who shall control and manage the applicant
1969		-	captive are acceptable.
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	935	+	certificate of authority under this subsection, the applicant shall have filed
	936	+	a complete application containing all information required in subsection
	937	+	(c) and paid all necessary fees. The commissioner shall have made a
	938	+	preliminary finding that the expertise, experience and character of the
	939	+	person who shall control and manage the applicant captive are
	940	+	acceptable.
1970	941		(2) The commissioner may by order limit the authority of any
1971		-	provisional certificate holder in any way deemed to be necessary in
1972		-	~~order~~ to protect insureds and the public. The commissioner may revoke
1973		-	a provisional certificate holder if the interests of the insureds or the
1974		-	~~public~~ are endangered. If the applicant fails to complete the regular
1975		-	~~application~~ for a certificate of authority, the provisional certificate of
1976		-	~~authority shall~~ terminate by operation of law.
1977		-	(3) The commissioner may enact all rules and regulations
1978		-	~~necessary~~ to implement a program for the issuance of provisional
1979		-	~~certificates of~~ authority.
1980		-	(d)(e) Each captive insurance company not in existence on
1981		-	~~January 1,~~ 2018, shall pay to the commissioner a nonrefundable fee of
1982		-	~~$10,000 up to~~ $2,500 for examining, investigating and processing its
1983		-	~~application for a~~ certificate of authority. The commissioner is
1984		-	~~authorized to retain legal,~~ financial, actuarial, analysis and examination
1985		-	~~services from outside the~~ department, the reasonable costs of which
1986		-	~~shall be charged against the~~ applicant. In addition, it shall pay a
1987		-	~~renewal fee of $2,500 for each year~~ thereafter of $10,000. ~~HOUSE BILL No. 2334—page 32~~
	942	+	provisional certificate holder in any way deemed to be necessary in order
	943	+	to protect insureds and the public. The commissioner may revoke a
	944	+	provisional certificate holder if the interests of the insureds or the public
	945	+	are endangered. If the applicant fails to complete the regular application
	946	+	for a certificate of authority, the provisional certificate of authority shall
	947	+	terminate by operation of law.
	948	+	(3) The commissioner may enact all rules and regulations necessary
	949	+	to implement a program for the issuance of provisional certificates of
	950	+	authority.
	951	+	(d)(e) Each captive insurance company not in existence on January 1,
	952	+	2018, shall pay to the commissioner a nonrefundable fee of $10,000
	953	+	$2,500 for examining, investigating and processing its application for a
	954	+	certificate of authority. The commissioner is authorized to retain legal,
	955	+	financial, actuarial, analysis and examination services from outside the
	956	+	department, the reasonable costs of which shall be charged against the
	957	+	applicant. In addition, it shall pay a renewal fee of $2,500 for each year
	958	+	thereafter of $10,000.
1988	959		(e)(f) Each captive insurance company already in existence on
1989		-	January 1, 2018, shall pay an annual renewal fee of $110 until January
1990		-	1, 2028, after which date, the provisions of subsection (d) (e) shall
1991		-	apply.
	960	+	January 1, 2018, shall pay an annual renewal fee of $110 until January 1,
	961	+	2028, after which date, the provisions of subsection (d) (e) shall apply.
1992	962		(f)(g) If the commissioner is satisfied that the documents and
1993		-	statements that such captive insurance company has filed comply with
1994		-	~~the~~ provisions of this act, the commissioner may grant a certificate of
	963	+	statements that such captive insurance company has filed comply with the
	964	+	provisions of this act, the commissioner may grant a certificate of
1995	965		authority authorizing a:
1996	966		(1) Captive insurance company other than a technology-enabled
1997	967		fiduciary financial institution to do insurance business in this state until
1998	968		March 1 thereafter, which certificate of authority may be renewed; and
1999	969		(2) technology-enabled fiduciary financial institution insurance
2000	970		company to do insurance business in this state until the later of March 1
2001	971		thereafter or the maturity date of the last payment-in-kind asset held by
2002		-	such technology-enabled fiduciary financial institution insurance
2003		-	company pursuant to this act.
2004		-	(g)(h) Information submitted under this section shall be and
2005		-	remain confidential, and shall not be made public by the commissioner
2006		-	or any employee or agent of the commissioner without the written
2007		-	consent of the company, except that:
2008		-	(1) Such information may be discoverable by a party in a civil
2009		-	action or contested case to which the captive insurance company that
2010		-	submitted such information is a party, upon a showing by the party
2011		-	seeking to discover such information that:
	972	+	such technology-enabled fiduciary financial institution insurance company
	973	+	pursuant to this act.
	974	+	(g)(h) Information submitted under this section shall be and remain
	975	+	confidential, and shall not be made public by the commissioner or any
	976	+	employee or agent of the commissioner without the written consent of the
	977	+	company, except that:
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	1021	+	(1) Such information may be discoverable by a party in a civil action
	1022	+	or contested case to which the captive insurance company that submitted
	1023	+	such information is a party, upon a showing by the party seeking to
	1024	+	discover such information that:
2012	1025		(A) The information sought is relevant to and necessary for the
2013	1026		furtherance of such action or case;
2014		-	(B) the information sought is unavailable from other non-
2015		-	~~confidential nonconfidential~~ sources;
	1027	+	(B) the information sought is unavailable from other non-confidential
	1028	+	nonconfidential sources;
2016	1029		(C) a subpoena issued by a judicial or administrative officer or
2017	1030		competent jurisdiction has been submitted to the commissioner; and
2018		-	(D) the privacy of a qualified policyholder shall be protected in
2019		-	any court proceeding concerning such qualified policyholder if the
2020		-	technology-enabled fiduciary financial institution insurance company
2021		-	so petitions the court. Upon the filing of such petition, any information,
2022		-	including, but not limited to, an instrument, inventory, statement or
2023		-	verified report produced by the technology-enabled fiduciary financial
2024		-	institution insurance company regarding a policy issued to a qualified
2025		-	policyholder or payment-in-kind assets held by the technology-enabled
2026		-	fiduciary financial institution insurance company to satisfy claims of
2027		-	such qualified policyholder, all payment-in-kind policies, all petitions
2028		-	relevant to such information and all court orders thereon, shall be
2029		-	sealed upon filing and shall not be made a part of the public record of
2030		-	the proceeding, except that such petition shall be available to the court,
2031		-	the commissioner, the technology-enabled fiduciary financial
2032		-	institution insurance company, their attorneys and to such other
2033		-	interested persons as the court may order upon a showing of good
2034		-	cause;
	1031	+	(D) the privacy of a qualified policyholder shall be protected in any
	1032	+	court proceeding concerning such qualified policyholder if the technology-
	1033	+	enabled fiduciary financial institution insurance company so petitions the
	1034	+	court. Upon the filing of such petition, any information, including, but not
	1035	+	limited to, an instrument, inventory, statement or verified report produced
	1036	+	by the technology-enabled fiduciary financial institution insurance
	1037	+	company regarding a policy issued to a qualified policyholder or payment-
	1038	+	in-kind assets held by the technology-enabled fiduciary financial
	1039	+	institution insurance company to satisfy claims of such qualified
	1040	+	policyholder, all payment-in-kind policies, all petitions relevant to such
	1041	+	information and all court orders thereon, shall be sealed upon filing and
	1042	+	shall not be made a part of the public record of the proceeding, except that
	1043	+	such petition shall be available to the court, the commissioner, the
	1044	+	technology-enabled fiduciary financial institution insurance company, their
	1045	+	attorneys and to such other interested persons as the court may order upon
	1046	+	a showing of good cause;
2035	1047		(2) the commissioner may disclose such information to a public
2036		-	officer having jurisdiction over the regulation of insurance in another
2037		-	~~state,~~ provided that:
	1048	+	officer having jurisdiction over the regulation of insurance in another state,
	1049	+	provided that:
2038	1050		(A) Such public official shall agree in writing to maintain the
2039	1051		confidentiality of such information; and
2040		-	(B) the laws of the state in which such public official serves
2041		-	~~requires~~ such information to be and to remain confidential;
	1052	+	(B) the laws of the state in which such public official serves requires
	1053	+	such information to be and to remain confidential;
2042	1054		(3) access may also be granted to the national association of
2043	1055		insurance commissioners and its affiliates, and the international
2044	1056		association of supervisors and its affiliates. Such parties must agree in
2045	1057		writing prior to receiving the information to provide to it the same
2046	1058		confidential treatment as required by this section, unless the company
2047	1059		gives prior written consent; and
2048		-	(4) the privacy of those who have established an affiliated fidfin
2049		-	trust or alternative asset custody account shall be protected in any court
2050		-	proceeding concerning such trust or custody account if the acting
2051		-	trustee, custodian, trustor or any beneficiary so petition the court. Upon HOUSE BILL No. 2334—page 33
2052		-	the filing of such a petition, the instrument, inventory, statement filed
2053		-	by any trustee or custodian, annual verified report of the trustee or
2054		-	custodian and all petitions relevant to trust administration and all court
2055		-	orders thereon shall be sealed upon filing and shall not be made a part
2056		-	of the public record of the proceeding, except that such petition shall be
2057		-	available to the court, the trustor, the trustee, the custodian, any
2058		-	beneficiary, their attorneys and to such other interested persons as the
2059		-	court may order upon a showing of good cause.
2060		-	Sec. 25. K.S.A. 40-4304 is hereby amended to read as follows: 40-
	1060	+	(4) the privacy of those who have established an affiliated fidfin trust
	1061	+	or alternative asset custody account shall be protected in any court
	1062	+	proceeding concerning such trust or custody account if the acting trustee,
	1063	+	custodian, trustor or any beneficiary so petition the court. Upon the filing
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	1107	+	of such a petition, the instrument, inventory, statement filed by any trustee
	1108	+	or custodian, annual verified report of the trustee or custodian and all
	1109	+	petitions relevant to trust administration and all court orders thereon shall
	1110	+	be sealed upon filing and shall not be made a part of the public record of
	1111	+	the proceeding, except that such petition shall be available to the court, the
	1112	+	trustor, the trustee, the custodian, any beneficiary, their attorneys and to
	1113	+	such other interested persons as the court may order upon a showing of
	1114	+	good cause.
	1115	+	Sec. 12. K.S.A. 40-4304 is hereby amended to read as follows: 40-
2061	1116		4304. (a) No captive insurance company shall be issued a certificate of
2062	1117		authority unless it such company shall possess and thereafter maintain
2063	1118		unimpaired paid-in capital and surplus of not less than:
2064	1119		(1) In the case of a pure captive insurance company, not less than
2065	1120		$250,000, in the case of a pure captive insurance company; and
2066	1121		(2) in the case of an association captive insurance company
2067		-	incorporated as a stock insurer, not less than $500,000, in the case of
2068		-	an association captive insurance company incorporated as a stock
2069		-	~~insurer;~~ and
	1122	+	incorporated as a stock insurer, not less than $500,000, in the case of an
	1123	+	association captive insurance company incorporated as a stock insurer;
	1124	+	and
2070	1125		(3) $100,000, in the case of a protected cell captive insurance
2071	1126		company.
2072		-	(b) Such capital may be in the form of cash or, upon approval of
2073		-	~~the~~ commissioner, an irrevocable letter of credit issued by a bank
2074		-	~~chartered by~~ the state of Kansas or the United States comptroller of
2075		-	~~currency, domiciled~~ in Kansas, and approved by the commissioner.
	1127	+	(b) Such capital may be in the form of cash or, upon approval of the
	1128	+	commissioner, an irrevocable letter of credit issued by a bank chartered by
	1129	+	the state of Kansas or the United States comptroller of currency, domiciled
	1130	+	in Kansas, and approved by the commissioner.
2076	1131		(c) In connection with the issuance of a certificate of authority, the
2077	1132		commissioner may prescribe additional minimum capital and surplus
2078	1133		based upon the type, volume and nature of the insurance business
2079	1134		transacted.
2080		-	(d) Loans of minimum capital and surplus funds shall be
2081		-	~~prohibited.~~ Notwithstanding the foregoing, the minimum capital and
2082		-	~~surplus funds~~ may be received by the issuance of a surplus note as
2083		-	~~approved by the~~ commissioner.
	1135	+	(d) Loans of minimum capital and surplus funds shall be prohibited.
	1136	+	Notwithstanding the foregoing, the minimum capital and surplus funds
	1137	+	may be received by the issuance of a surplus note as approved by the
	1138	+	commissioner.
2084	1139		(e) No pure captive insurance company shall make a loan or an
2085	1140		investment in its parent company or affiliates without prior written
2086	1141		approval of the commissioner, and any such loan or investment shall be
2087	1142		evidenced by documentation approved by the commissioner.
2088		-	Sec. 26. K.S.A. 2024 Supp. 40-4308 is hereby amended to read as
2089		-	follows: 40-4308. (a) Whenever the commissioner deems necessary,
2090		-	but at least once every three five years, the commissioner may make, or
2091		-	direct to be made, a financial examination of any captive insurance
2092		-	company in the process of organization or applying for admission or
2093		-	doing business in Kansas. The commissioner may engage in continuous
2094		-	analysis for the preparation of the examination. In addition, at the
2095		-	commissioner's discretion, the commissioner may make, or direct to be
2096		-	made, a market regulation examination of any insurance company
2097		-	doing business in Kansas.
2098		-	(b) In scheduling and determining the nature, scope and frequency
2099		-	of examinations of financial condition, the commissioner shall consider
2100		-	such matters as the results of financial statement analyses and ratios,
2101		-	changes in management or ownership, actuarial opinions, reports of
2102		-	independent certified public accountants and other criteria as set forth
2103		-	in the examiner's handbook adopted by the national association of
2104		-	insurance commissioners in effect when the commissioner exercises
2105		-	discretion under this subsection.
2106		-	(c) The commissioner shall have free access to the books and
2107		-	papers of any such company that relate to its business and to the books
2108		-	and papers kept by any of its agents and may examine under oath,
2109		-	which the commissioner shall be empowered to administer, the
2110		-	directors, officers, agents or employees of any such company in
2111		-	relation to its affairs, transactions and condition.
2112		-	(d) For the purpose of such analysis, the commissioner may
2113		-	require reports and other documents be filed with the commissioner.
2114		-	(e) The commissioner may also examine or investigate any
2115		-	person, or the business of any person, insofar as such examination or HOUSE BILL No. 2334—page 34
2116		-	investigation is, in the sole discretion of the commissioner, necessary or
2117		-	material to the examination of the company, but such examination or
2118		-	investigation shall not infringe upon or extend to any communications
2119		-	or information accorded privileged or confidential status under any
2120		-	other laws of this state.
2121		-	(f) Upon determining that an examination should be conducted,
2122		-	the commissioner or the commissioner's designee shall appoint one or
2123		-	more examiners to perform the examination and instruct such
2124		-	examiners as to the scope of the examination. The commissioner may
2125		-	also employ such other guidelines or procedures as the commissioner
2126		-	may deem appropriate.
	1143	+	Sec. 13. K.S.A. 2024 Supp. 40-4308 is hereby amended to read as
	1144	+	follows: 40-4308. (a) Whenever the commissioner deems necessary, but at
	1145	+	least once every three five years, the commissioner may make, or direct to
	1146	+	be made, a financial examination of any captive insurance company in the
	1147	+	process of organization or applying for admission or doing business in
	1148	+	Kansas. The commissioner may engage in continuous analysis for the
	1149	+	preparation of the examination. In addition, at the commissioner's
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	1193	+	discretion, the commissioner may make, or direct to be made, a market
	1194	+	regulation examination of any insurance company doing business in
	1195	+	Kansas.
	1196	+	(b) In scheduling and determining the nature, scope and frequency of
	1197	+	examinations of financial condition, the commissioner shall consider such
	1198	+	matters as the results of financial statement analyses and ratios, changes in
	1199	+	management or ownership, actuarial opinions, reports of independent
	1200	+	certified public accountants and other criteria as set forth in the examiner's
	1201	+	handbook adopted by the national association of insurance commissioners
	1202	+	in effect when the commissioner exercises discretion under this subsection.
	1203	+	(c) The commissioner shall have free access to the books and papers
	1204	+	of any such company that relate to its business and to the books and papers
	1205	+	kept by any of its agents and may examine under oath, which the
	1206	+	commissioner shall be empowered to administer, the directors, officers,
	1207	+	agents or employees of any such company in relation to its affairs,
	1208	+	transactions and condition.
	1209	+	(d) For the purpose of such analysis, the commissioner may require
	1210	+	reports and other documents be filed with the commissioner.
	1211	+	(e) The commissioner may also examine or investigate any person, or
	1212	+	the business of any person, insofar as such examination or investigation is,
	1213	+	in the sole discretion of the commissioner, necessary or material to the
	1214	+	examination of the company, but such examination or investigation shall
	1215	+	not infringe upon or extend to any communications or information
	1216	+	accorded privileged or confidential status under any other laws of this
	1217	+	state.
	1218	+	(f) Upon determining that an examination should be conducted, the
	1219	+	commissioner or the commissioner's designee shall appoint one or more
	1220	+	examiners to perform the examination and instruct such examiners as to
	1221	+	the scope of the examination. The commissioner may also employ such
	1222	+	other guidelines or procedures as the commissioner may deem appropriate.
2127	1223		(g) When making an examination under this act, the commissioner
2128	1224		may retain attorneys, appraisers, independent actuaries, independent
2129	1225		certified public accountants or other professionals and specialists as
2130		-	examiners, the reasonable cost of which shall be paid by the company
2131		-	~~that~~ is the subject of the examination.
	1226	+	examiners, the reasonable cost of which shall be paid by the company that
	1227	+	is the subject of the examination.
2132	1228		(h) (1) Not later than 30 days following completion of the
2133	1229		examination or at such earlier time as the commissioner shall prescribe,
2134	1230		the examiner in charge shall file with the deparment a verified written
2135		-	report of examination under oath. Not later than 30 days following
2136		-	receipt of the verified report, the department shall transmit the report to
2137		-	the company examined, together with a notice that shall afford such
2138		-	company examined a reasonable opportunity of not more than 30 days
2139		-	to make a written submission or rebuttal with respect to any matters
2140		-	contained in the examination report.
2141		-	(2) Within 30 days of the end of the period allowed for the receipt
2142		-	of written submissions or rebuttals, the commissioner shall fully
2143		-	consider and review the report, together with any written submissions
2144		-	or rebuttals and any relevant portions of the examiners' workpapers,
2145		-	and enter an order:
2146		-	(A) Adopting the examination report as filed or with modification
2147		-	or corrections. If the examination report reveals that the company is
2148		-	operating in violation of any law, rule and regulation or prior order of
2149		-	the commissioner, the commissioner may order the company to take
2150		-	any action the commissioner considers necessary and appropriate to
2151		-	cure such violations;
2152		-	(B) rejecting the examination report with directions to the
2153		-	examiners to reopen the examination for purposes of obtaining
2154		-	additional data, documentation or information; or
	1231	+	report of examination under oath. Not later than 30 days following receipt
	1232	+	of the verified report, the department shall transmit the report to the
	1233	+	company examined, together with a notice that shall afford such company
	1234	+	examined a reasonable opportunity of not more than 30 days to make a
	1235	+	written submission or rebuttal with respect to any matters contained in the
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	1279	+	examination report.
	1280	+	(2) Within 30 days of the end of the period allowed for the receipt of
	1281	+	written submissions or rebuttals, the commissioner shall fully consider and
	1282	+	review the report, together with any written submissions or rebuttals and
	1283	+	any relevant portions of the examiners' workpapers, and enter an order:
	1284	+	(A) Adopting the examination report as filed or with modification or
	1285	+	corrections. If the examination report reveals that the company is operating
	1286	+	in violation of any law, rule and regulation or prior order of the
	1287	+	commissioner, the commissioner may order the company to take any
	1288	+	action the commissioner considers necessary and appropriate to cure such
	1289	+	violations;
	1290	+	(B) rejecting the examination report with directions to the examiners
	1291	+	to reopen the examination for purposes of obtaining additional data,
	1292	+	documentation or information; or
2155	1293		(C) call for and conduct a fact-finding hearing in accordance with
2156	1294		K.S.A. 40-281, and amendments thereto, for purposes of obtaining
2157	1295		additional documentation, data, information and testimony.
2158		-	(3) All orders entered as a result of revelations contained in the
2159		-	~~final~~ examination report shall be accompanied by findings and
2160		-	~~conclusions~~ resulting from the commissioner's consideration and
2161		-	~~review of the~~ examination report, relevant examiner work papers and
2162		-	~~any written~~ submissions or rebuttals. Within 30 days of the issuance of
2163		-	~~the adopted~~ report, the company shall file affidavits executed by each
2164		-	~~of its directors~~ stating under oath that they have received a copy of the
2165		-	~~adopted report and~~ related orders.
	1296	+	(3) All orders entered as a result of revelations contained in the final
	1297	+	examination report shall be accompanied by findings and conclusions
	1298	+	resulting from the commissioner's consideration and review of the
	1299	+	examination report, relevant examiner work papers and any written
	1300	+	submissions or rebuttals. Within 30 days of the issuance of the adopted
	1301	+	report, the company shall file affidavits executed by each of its directors
	1302	+	stating under oath that they have received a copy of the adopted report and
	1303	+	related orders.
2166	1304		(4) Upon the adoption of the examination report of an association
2167		-	captive insurance company, the commissioner shall hold the content of
2168		-	~~the~~ examination report as private and confidential as to the pure captive
	1305	+	captive insurance company, the commissioner shall hold the content of the
	1306	+	examination report as private and confidential as to the pure captive
2169	1307		insurance company. Nothing contained in this act shall be construed to
2170	1308		limit the commissioner's authority to use and, if appropriate, to make
2171	1309		public any final or preliminary examination report in the furtherance of
2172	1310		any legal or regulatory action that the commissioner may, in the
2173	1311		commissioner's discretion, deem appropriate.
2174	1312		(i) Nothing contained in this act shall be construed to limit the
2175		-	commissioner's authority to terminate or suspend any examination in
2176		-	~~order~~ to pursue other legal or regulatory action pursuant to the
2177		-	~~insurance laws of~~ this state.
	1313	+	commissioner's authority to terminate or suspend any examination in order
	1314	+	to pursue other legal or regulatory action pursuant to the insurance laws of
	1315	+	this state.
2178	1316		(j) All examination reports, preliminary examination reports or
2179		-	results, working papers, recorded information, documents and copies HOUSE BILL No. 2334—page 35
2180		-	thereof produced by, obtained by or disclosed to the commissioner or
2181		-	any other person in the course of an examination made under this
2182		-	section are confidential and are not subject to subpoena and may not be
2183		-	made public by the commissioner or an employee or agent of the
2184		-	commissioner without the written consent of the company, except to the
2185		-	extent provided in this subsection. Nothing in this subsection shall
2186		-	prevent the commissioner from using such information in furtherance
2187		-	of the commissioner's regulatory authority under this act. The
2188		-	commissioner may grant access to such information to public officers
2189		-	having jurisdiction over the regulation of insurance in any other state or
2190		-	country or to law enforcement officers of Kansas or any other state or
2191		-	agency of the federal government at any time. Access may also be
2192		-	granted to the national association of insurance commissioners and its
2193		-	affiliates and the international association of insurance supervisors and
2194		-	its affiliates. Persons receiving such information must agree in writing
2195		-	prior to receiving the information to provide to it the same confidential
2196		-	treatment as required by this section, unless the prior written consent of
2197		-	the company to which it pertains has been obtained.
	1317	+	results, working papers, recorded information, documents and copies
	1318	+	thereof produced by, obtained by or disclosed to the commissioner or any
	1319	+	other person in the course of an examination made under this section are
	1320	+	confidential and are not subject to subpoena and may not be made public
	1321	+	by the commissioner or an employee or agent of the commissioner without
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	1365	+	the written consent of the company, except to the extent provided in this
	1366	+	subsection. Nothing in this subsection shall prevent the commissioner
	1367	+	from using such information in furtherance of the commissioner's
	1368	+	regulatory authority under this act. The commissioner may grant access to
	1369	+	such information to public officers having jurisdiction over the regulation
	1370	+	of insurance in any other state or country or to law enforcement officers of
	1371	+	Kansas or any other state or agency of the federal government at any time.
	1372	+	Access may also be granted to the national association of insurance
	1373	+	commissioners and its affiliates and the international association of
	1374	+	insurance supervisors and its affiliates. Persons receiving such information
	1375	+	must agree in writing prior to receiving the information to provide to it the
	1376	+	same confidential treatment as required by this section, unless the prior
	1377	+	written consent of the company to which it pertains has been obtained.
2198	1378		(k) The commissioner may receive documents, materials or
2199		-	information, including otherwise confidential and privileged
2200		-	documents, materials or information, from the national association of
2201		-	insurance commissioners, and its affiliates and subsidiaries, and from
2202		-	regulatory and law enforcement officials of other foreign or domestic
2203		-	jurisdictions and shall maintain as confidential or privileged any
2204		-	document, material or information received with notice or the
2205		-	understanding that it is confidential or privileged under the laws of the
2206		-	jurisdiction that is the source of the document, material or information.
2207		-	Documents received pursuant to this section shall not be subject to
2208		-	disclosure pursuant to the open records act, K.S.A. 45-215 et seq., and
2209		-	amendments thereto.
2210		-	Sec. 27. K.S.A. 40-4312 is hereby amended to read as follows: 40-
	1379	+	information, including otherwise confidential and privileged documents,
	1380	+	materials or information, from the national association of insurance
	1381	+	commissioners, and its affiliates and subsidiaries, and from regulatory and
	1382	+	law enforcement officials of other foreign or domestic jurisdictions and
	1383	+	shall maintain as confidential or privileged any document, material or
	1384	+	information received with notice or the understanding that it is confidential
	1385	+	or privileged under the laws of the jurisdiction that is the source of the
	1386	+	document, material or information. Documents received pursuant to this
	1387	+	section shall not be subject to disclosure pursuant to the open records act,
	1388	+	K.S.A. 45-215 et seq., and amendments thereto.
	1389	+	Sec. 14. K.S.A. 40-4312 is hereby amended to read as follows: 40-
2211	1390		4312. No captive insurance company shall be required to join a rating
2212	1391		organization or a policy form organization.
2213		-	Sec. 28. K.S.A. 40-4314 is hereby amended to read as follows: 40-
	1392	+	Sec. 15. K.S.A. 40-4314 is hereby amended to read as follows: 40-
2214	1393		4314. (a) Each captive insurance company shall, at the time it files the
2215		-	report required by K.S.A. 40-4307, and amendments thereto, pay a tax
2216		-	on all premiums received on risks located in this state.
2217		-	(b) Each captive insurance company shall pay the commissioner a
2218		-	~~tax~~ at the rate of
	1394	+	report required by K.S.A. 40-4307, and amendments thereto, pay a tax on
	1395	+	all premiums received on risks located in this state.
	1396	+	(b) Each captive insurance company shall pay the commissioner a tax
	1397	+	at the rate of
2219	1398		2
2220		-	/10 of 1% on each dollar of direct premiums collected
2221		-	or contracted for, during the year ending December 31 next preceding,
2222		-	on policies or contracts of insurance written by the captive insurance
	1399	+	/10 of 1% on each dollar of direct premiums collected or
	1400	+	contracted for, during the year ending December 31 next preceding, on
	1401	+	policies or contracts of insurance written by the captive insurance
2223	1402		company, after deducting from the direct premiums subject to the tax
2224	1403		amounts paid to policyholders as return premiums with respect to such
2225	1404		preceding year only, which amounts shall include only dividends or
2226	1405		distributions of unabsorbed premiums or premium deposits returned or
2227		-	credited to policyholders, up to a maximum tax for such year of
2228		-	$500,000, except that no tax shall be due or payable as a consideration
2229		-	received for annuity contracts.
2230		-	(c) Each captive insurance company shall pay to the commissioner
2231		-	no later than March 1 of each year a tax at the rate of
	1406	+	credited to policyholders, up to a maximum tax for such year of $500,000,
	1407	+	except that no tax shall be due or payable as a consideration received for
	1408	+	annuity contracts.
	1409	+	(c) Each captive insurance company shall pay to the commissioner no
2232	1410		1
2233		-	/10 of 1% on each
2234		-	dollar assumed reinsurance premiums collected or contracted for,
2235		-	during the year end December 31 next preceding, on policies or
2236		-	contracts of insurance written by the captive insurance company, up to
2237		-	a maximum tax for such year of $300,000. However, no such tax
2238		-	applies to premiums for risks or portion of risks that are subject to
2239		-	taxation on a direct basis pursuant to subsection (b), and no such tax
2240		-	shall be payable in connection with the receipt of assets in exchange for
2241		-	the assumption of loss reserves and other liabilities of another insurer
2242		-	under common ownership and control if such transaction is part of a
2243		-	plan to discontinue the operations of such other insurer and if the intent
2244		-	of the company by the state or any county, city or municipality within
2245		-	Kansas, except ad valorem taxes on real and personal property used in
2246		-	the production of income.
2247		-	(d) (1) A company redomesticating under section 11, and HOUSE BILL No. 2334—page 36
2248		-	amendments thereto, shall only be liable for taxes due pursuant to
2249		-	subsections (b) and (c) on premiums paid to the company after
2250		-	redomestication.
2251		-	(2) A company redomesticating under this section after July 1 of
2252		-	any year shall only be subject to
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	1453	+	later than March 1 of each year a tax at the rate of
2253	1454		1
2254		-	/2 of the minimum premium tax
2255		-	specified in subsections (b) and (c).
2256		-	(3) A foreign or alien company redomesticating pursuant to
2257		-	section 11, and amendments thereto, shall report all premium taxes due
2258		-	pursuant to subsections (b) and (c) but may, in either its first or its
2259		-	second year of operations, but not both, after redomesticating into this
2260		-	state, elect to forego the payment of premium taxes. A company making
2261		-	such an election that surrenders its certificate of authority or
2262		-	redomesticates to another jurisdiction within five years of
2263		-	redomestication into this state shall immediately pay a tax in an
2264		-	amount equal to the foregone premium tax plus 10% per annum from
2265		-	the date of the foregone premium.
2266		-	(e) The tax provided in this section shall be calculated on an
2267		-	annual basis, notwithstanding that policies or contracts of insurance or
2268		-	contracts of reinsurance are issued on a multi-year basis. In the case of
2269		-	multi-year policies or contracts, the premium shall be prorated for
2270		-	purposes of determining the tax under this section.
2271		-	(f) The tax provided for in this section shall constitute all taxes
	1455	+	/10 of 1% on each dollar
	1456	+	assumed reinsurance premiums collected or contracted for, during the year
	1457	+	end December 31 next preceding, on policies or contracts of insurance
	1458	+	written by the captive insurance company, up to a maximum tax for such
	1459	+	year of $300,000. However, no such tax applies to premiums for risks or
	1460	+	portion of risks that are subject to taxation on a direct basis pursuant to
	1461	+	subsection (b), and no such tax shall be payable in connection with the
	1462	+	receipt of assets in exchange for the assumption of loss reserves and other
	1463	+	liabilities of another insurer under common ownership and control if such
	1464	+	transaction is part of a plan to discontinue the operations of such other
	1465	+	insurer and if the intent of the company by the state or any county, city or
	1466	+	municipality within Kansas, except ad valorem taxes on real and personal
	1467	+	property used in the production of income.
	1468	+	(d) The tax provided in this section shall be calculated on an annual
	1469	+	basis, notwithstanding that policies or contracts of insurance or contracts
	1470	+	of reinsurance are issued on a multi-year basis. In the case of multi-year
	1471	+	policies or contracts, the premium shall be prorated for purposes of
	1472	+	determining the tax under this section.
	1473	+	(e) The tax provided for in this section shall constitute all taxes
2272	1474		collectible under the laws of the state of Kansas from any captive
2273		-	insurance company, and no other occupation tax or any other tax shall
2274		-	be levied or collected from any captive insurance company by the state
2275		-	or any political subdivision thereof.
2276		-	Sec. 29. K.S.A. 40-4602 is hereby amended to read as follows: 40-
2277		-	4602. As used in this act:
2278		-	(a) "Emergency medical condition" means the sudden and, at the
2279		-	time, unexpected onset of a health condition that requires immediate
2280		-	medical attention, where failure to provide medical attention would
2281		-	result in serious impairment to bodily functions or serious dysfunction
2282		-	of a bodily organ or part, or would place the person's health in serious
2283		-	jeopardy.
2284		-	(b) "Emergency services" means ambulance services and health
2285		-	care healthcare items and services furnished or required to evaluate and
2286		-	treat an emergency medical condition, as directed or ordered by a
2287		-	physician.
2288		-	(c) "Health benefit plan" means any hospital or medical expense
2289		-	policy, health, hospital or medical service corporation contract, a plan
2290		-	provided by a municipal group-funded pool, a policy or agreement
2291		-	entered into by a health insurer or a health maintenance organization
2292		-	contract offered by an employer or any certificate issued under any
2293		-	such policies, contracts or plans. "Health benefit plan" does not include
2294		-	policies or certificates covering only accident, credit, dental, disability
2295		-	income, long-term care, hospital indemnity, medicare supplement,
2296		-	specified disease, vision care, coverage issued as a supplement to
2297		-	liability insurance, insurance arising out of a workers compensation or
2298		-	similar law, automobile medical-payment insurance, a self-funded
2299		-	health plan established or maintained for its employees by the state or
2300		-	a subdivision of the state, a school district, any public authority or by a
2301		-	county or city government or any political subdivision, agency or
2302		-	instrumentality thereof, a self-funded health plan established or
2303		-	maintained for its employees by a church or by a convention or
2304		-	association of churches that is exempt from tax under section 501 of the
2305		-	internal revenue code or insurance under which benefits are payable
2306		-	with or without regard to fault and which that is statutorily required to
2307		-	be contained in any liability insurance policy or equivalent self-
2308		-	insurance.
2309		-	(d) "Health insurer" means any insurance company, nonprofit
2310		-	medical and hospital service corporation, municipal group-funded pool,
2311		-	fraternal benefit society, health maintenance organization, or any other
2312		-	entity which that offers a health benefit plan subject to the Kansas
2313		-	Statutes Annotated. HOUSE BILL No. 2334—page 37
2314		-	(e) "Insured" means a person who is covered by a health benefit
2315		-	plan.
2316		-	(f) "Participating provider" means a provider who, under a
2317		-	contract with the health insurer or with its contractor or subcontractor,
2318		-	has agreed to provide one or more health care healthcare services to
2319		-	insureds with an expectation of receiving payment, other than
2320		-	coinsurance, copayments or deductibles, directly or indirectly from the
2321		-	health insurer.
2322		-	(g) "Provider" means a physician, hospital or other person which
2323		-	that is licensed, accredited or certified to perform specified health care
2324		-	healthcare services.
2325		-	(h) "Provider network" means those participating providers who
2326		-	have entered into a contract or agreement with a health insurer to
2327		-	provide items or health care healthcare services to individuals covered
2328		-	by a health benefit plan offered by such health insurer.
2329		-	(i) "Physician" means a person licensed by the state board of
2330		-	healing arts to practice medicine and surgery.
2331		-	Sec. 30. K.S.A. 2024 Supp. 40-4909 is hereby amended to read as
2332		-	follows: 40-4909. (a) The commissioner may deny, suspend, revoke or
2333		-	refuse renewal of any license issued under this act if the commissioner
2334		-	finds that the applicant or license holder has:
2335		-	(1) Provided incorrect, misleading, incomplete or untrue
2336		-	information in the license application.
2337		-	(2) Violated:
2338		-	(A) Any provision of chapter 40 of the Kansas Statutes Annotated,
2339		-	and amendments thereto, or any rules and regulations promulgated
2340		-	thereunder;
2341		-	(B) any subpoena or order of the commissioner;
2342		-	(C) any insurance law or regulation of another state; or
2343		-	(D) any subpoena or order issued by the regulatory official for
2344		-	insurance in another state.
2345		-	(3) Obtained or attempted to obtain a license under this act
2346		-	through misrepresentation or fraud.
2347		-	(4) Improperly withheld, misappropriated or converted any
2348		-	moneys or properties received in the course of doing insurance
2349		-	business.
2350		-	(5) Intentionally misrepresented the provisions, terms and
2351		-	conditions of an actual or proposed insurance contract or application
2352		-	for insurance.
2353		-	(6) Been convicted of a misdemeanor or felony.
2354		-	(7) Admitted to or been found to have committed any insurance
2355		-	unfair trade practice or fraud in violation of K.S.A. 40-2404, and
2356		-	amendments thereto.
2357		-	(8) Used any fraudulent, coercive, or dishonest practice, or
2358		-	demonstrated any incompetence, untrustworthiness or financial
2359		-	irresponsibility in the conduct of business in this state or elsewhere.
2360		-	(9) Had an insurance agent license, public adjuster license,
2361		-	securities registration, or its their equivalent, denied, suspended or
2362		-	revoked in any state, district or territory.
2363		-	(10) Forged another person's name to an application for insurance
2364		-	or to any document related to an insurance transaction.
2365		-	(11) Improperly used notes or any other reference material to
2366		-	complete an examination for an insurance license issued under this act.
2367		-	(12) Knowingly accepted insurance business from an individual
2368		-	who is not licensed.
2369		-	(13) Failed to comply with any administrative or court order
2370		-	imposing a child support obligation upon the applicant or license
2371		-	holder.
2372		-	(14) Failed to pay any state income tax or comply with any
2373		-	administrative or court order directing payment of state income tax.
2374		-	(15) Except as otherwise permitted by law, rebated the whole or
2375		-	any part of any insurance premium or offered in connection with the
2376		-	presentation of any contract of insurance any other inducement not
2377		-	contained in the contract of insurance. HOUSE BILL No. 2334—page 38
2378		-	(16) Made any misleading representation or incomplete
2379		-	comparison of policies to any person for the purposes of inducing or
2380		-	tending to induce such person to lapse, forfeit or surrender such
2381		-	person's insurance then in force.
2382		-	(17) Failed to respond to an inquiry from the commissioner within
2383		-	15 business days.
2384		-	(b) In addition, the commissioner may deny, suspend, revoke or
2385		-	refuse renewal of any license issued under this act if the commissioner
2386		-	finds that the interests of the insurer or the insurable interests of the
2387		-	public are not properly served under such license.
2388		-	(c) (1) When considering whether to deny, suspend, revoke or
2389		-	refuse to renew the application of an individual who has been convicted
2390		-	of a misdemeanor or felony, the commissioner shall consider the:
2391		-	(A) Applicant's age at the time of the conduct;
2392		-	(B) recency of the conduct;
2393		-	(C) reliability of the information concerning the conduct;
2394		-	(D) seriousness of the conduct;
2395		-	(E) factors underlying the conduct;
2396		-	(F) cumulative effect of the conduct or information;
2397		-	(G) evidence of rehabilitation;
2398		-	(H) applicant's social contributions since the conduct;
2399		-	(I) applicant's candor in the application process; and
2400		-	(J) materiality of any omissions or misrepresentations.
2401		-	(2) In determining whether to reinstate or grant to an applicant a
2402		-	license that has been revoked, the commissioner shall consider the:
2403		-	(A) Present moral fitness of the applicant;
2404		-	(B) demonstrated consciousness by the applicant of the wrongful
2405		-	conduct and disrepute that the conduct has brought to the insurance
2406		-	profession;
2407		-	(C) extent of the applicant's rehabilitation;
2408		-	(D) seriousness of the original conduct;
2409		-	(E) applicant's conduct subsequent to discipline;
2410		-	(F) amount of time that has elapsed since the original discipline;
2411		-	(G) applicant's character, maturity and experience at the time of
2412		-	revocation; and
2413		-	(H) applicant's present competence and skills in the insurance
2414		-	industry.
2415		-	(d) Any action taken under this section that affects any license or
2416		-	imposes any administrative penalty shall be taken only after notice and
2417		-	an opportunity for a hearing conducted in accordance with the
2418		-	provisions of the Kansas administrative procedure act.
2419		-	(e) The license of any business entity may be suspended, revoked
2420		-	or refused renewal if the insurance commissioner finds that any
2421		-	violation committed by an individual licensee employed by or acting on
2422		-	behalf of such business entity was known by or should have been
2423		-	known by one or more of the partners, officers or managers acting on
2424		-	behalf of the business entity and:
2425		-	(1) Such violation was not reported to the insurance commissioner
2426		-	by such business entity; or
2427		-	(2) such business entity failed to take any corrective action.
2428		-	(f) None of the following actions shall deprive the commissioner
2429		-	of any jurisdiction or right to institute or proceed with any disciplinary
2430		-	proceeding against such license, to render a decision suspending,
2431		-	revoking or refusing to renew such license, or to establish and make a
2432		-	record of the facts of any violation of law for any lawful purpose:
2433		-	(1) The imposition of an administrative penalty under this section;
2434		-	(2) the lapse or suspension of any license issued under this act by
2435		-	operation of law;
2436		-	(3) the licensee's failure to renew any license issued under this act;
2437		-	or
2438		-	(4) the licensee's voluntary surrender of any license issued under
2439		-	this act. No such disciplinary proceeding shall be instituted against any
2440		-	licensee after the expiration of two years from the termination of the
2441		-	license. HOUSE BILL No. 2334—page 39
2442		-	(g) Whenever the commissioner imposes any administrative
2443		-	penalty or denies, suspends, revokes or refuses renewal of any license
2444		-	pursuant to subsection (a), any costs incurred as a result of conducting
2445		-	an administrative hearing authorized under the provisions of this
2446		-	section shall be assessed against the person who is the subject of the
2447		-	hearing or any business entity represented by such person who is the
2448		-	party to the matters giving rise to the hearing. As used in this
2449		-	subsection, "costs" shall include includes witness fees, mileage
2450		-	allowances, any costs associated with the reproduction of documents
2451		-	that become a part of the hearing record and the expense of making a
2452		-	record of the hearing.
2453		-	(h) No person whose license as an agent or broker had been
2454		-	suspended or revoked shall be employed by any insurance company
2455		-	doing business in this state either directly, indirectly, as an independent
2456		-	contractor or otherwise to negotiate or effect contracts of insurance,
2457		-	suretyship or indemnity or perform any act toward the solicitation of or
2458		-	transaction of any business of insurance during the period of such
2459		-	suspension or revocation.
2460		-	(i) In lieu of taking any action under subsection (a), the
2461		-	commissioner may:
2462		-	(1) Censure the person; or
2463		-	(2) issue an order imposing an administrative penalty up to a
2464		-	maximum of $500 for each violation but not to exceed $2,500 for the
2465		-	same violation occurring within any six consecutive calendar months
2466		-	from the date of the original violation unless such person knew or
2467		-	should have known that the violative act could give rise to disciplinary
2468		-	action under subsection (a). If such person knew or reasonably should
2469		-	have known the violative act could give rise to any disciplinary
2470		-	proceeding authorized by subsection (a), the commissioner may impose
2471		-	a penalty up to a maximum of $1,000 for each violation but not to
2472		-	exceed $5,000 for the same violation occurring within any six
2473		-	consecutive calendar months from the date of the imposition of the
2474		-	original administrative penalty.
2475		-	(j) (1) An applicant to whom a license has been denied after a
2476		-	hearing shall not apply again for a license again until after the
2477		-	expiration of a period of one year from the date of the commissioner's
2478		-	order.
2479		-	(2) A licensee whose license was revoked shall not apply again for
2480		-	a license again until after the expiration of a period of two years from
2481		-	the date of the commissioner's order.
2482		-	Sec. 31. K.S.A. 40-5510 is hereby amended to read as follows: 40-
2483		-	5510. (a) The commissioner may suspend, revoke or refuse to issue or
2484		-	renew a public adjuster's license for any of the following causes:
2485		-	(1) Providing incorrect, misleading, incomplete or materially
2486		-	untrue information in the license application;
2487		-	(2) violating:
2488		-	(A) Any provision of chapter 40 of the Kansas Statutes Annotated,
2489		-	and amendments thereto, or any rule and regulation promulgated
2490		-	thereunder;
2491		-	(B) any subpoena or order of the commissioner;
2492		-	(C) any insurance law or regulation of another state; or
2493		-	(D) any subpoena or order issued by the regulatory official for
2494		-	insurance in another state;
2495		-	(3) obtaining or attempting to obtain a license through
2496		-	misrepresentation or fraud;
2497		-	(4) misappropriating, converting or improperly withholding any
2498		-	monies or properties received in the course of doing insurance
2499		-	business;
2500		-	(5) intentionally misrepresenting the terms of an actual or
2501		-	proposed insurance contract or application for insurance;
2502		-	(6) having been convicted of a misdemeanor or felony;
2503		-	(7) having admitted or committed any insurance unfair trade
2504		-	practice or insurance fraud;
2505		-	(8) using fraudulent, coercive or dishonest practices or HOUSE BILL No. 2334—page 40
2506		-	demonstrating incompetence, untrustworthiness or financial
2507		-	irresponsibility in the conduct of business in this state or elsewhere;
2508		-	(9) having an insurance license, public adjuster license, securities
2509		-	registration or its their equivalent, denied, suspended or revoked in any
2510		-	other state, province, district or territory;
2511		-	(10) forging another's name to an application for insurance or to
2512		-	any document related to an insurance transaction;
2513		-	(11) cheating, including improperly using notes or any other
2514		-	reference material, to complete an examination for an insurance
2515		-	license;
2516		-	(12) knowingly accepting insurance business from an individual
2517		-	who is not licensed but who is required to be licensed by the
2518		-	commissioner;
2519		-	(13) failing to comply with an administrative or court order
2520		-	imposing a child support obligation upon the applicant or license
2521		-	holder; or
2522		-	(14) failing to pay state income tax or comply with any
2523		-	administrative or court order directing payment of state income tax; or
2524		-	(15) failing to respond to an inquiry from the commissioner within
2525		-	15 business days.
2526		-	(b) In addition, the commissioner may deny, suspend, revoke or
2527		-	refuse renewal of a public adjuster's license if the commissioner finds
2528		-	that the interests of the public are not properly served under such
2529		-	license. Any action taken under this section which affects any license or
2530		-	imposes any administrative penalty shall be taken only after notice and
2531		-	an opportunity for a hearing conducted in accordance with the Kansas
2532		-	administrative procedure act.
2533		-	(c) In lieu of any action under subsection (a), the commissioner
2534		-	may:
2535		-	(1) Censure the individual; or
2536		-	(2) issue an order imposing an administrative penalty up to a
2537		-	maximum of $500 for each violation, but not to exceed $2,500 for the
2538		-	same violation occurring within any six consecutive calendar months
2539		-	from the date of the original violation, unless such person knew or
2540		-	should have known that the violative act could give rise to disciplinary
2541		-	action under subsection (a). If such person knew or reasonably should
2542		-	have known the violative act could give rise to any disciplinary
2543		-	proceeding authorized by subsection (a), the commissioner may impose
2544		-	a penalty up to a maximum of $1,000 for each violation, but not to
2545		-	exceed $5,000 for the same violation occurring within any six
2546		-	consecutive calendar months from the date of the original violation.
2547		-	(d) (1) When considering whether to deny, suspend, revoke or
2548		-	refuse to renew the application of an individual who has been
2549		-	convicted of a misdemeanor or felony, the commissioner shall consider
2550		-	the:
2551		-	(A) Applicant's age at the time of the conduct;
2552		-	(B) recency of the conduct;
2553		-	(C) reliability of the information concerning the conduct;
2554		-	(D) seriousness of the conduct;
2555		-	(E) factors underlying the conduct;
2556		-	(F) cumulative effect of the conduct or the information;
2557		-	(G) evidence of rehabilitation;
2558		-	(H) applicant's social contributions since the conduct;
2559		-	(I) applicant's candor in the application process; and
2560		-	(J) materiality of any omissions or misrepresentations.
2561		-	(2) In determining whether to reinstate or grant to an applicant a
2562		-	license that has been revoked, the commissioner shall consider the:
2563		-	(A) Present moral fitness of the applicant;
2564		-	(B) demonstrated consciousness by the applicant of the wrongful
2565		-	conduct and disrepute that the conduct has brought to the insurance
2566		-	profession;
2567		-	(C) extent of the applicant's rehabilitation;
2568		-	(D) seriousness of the original conduct;
2569		-	(E) applicant's conduct subsequent to discipline; HOUSE BILL No. 2334—page 41
2570		-	(F) amount of time that has elapsed since the original discipline;
2571		-	(G) applicant's character, maturity and experience at the time of
2572		-	revocation; and
2573		-	(H) applicant's present competence and skills in the insurance
2574		-	industry.
2575		-	(e) Any action taken under this section that affects any license or
2576		-	imposes any administrative penalty shall be taken only after notice and
2577		-	an opportunity for a hearing conducted in accordance with the
2578		-	provisions of the Kansas administrative procedure act.
2579		-	(d)(f) The commissioner shall remit all such fines collected under
2580		-	subsection (c) to the state treasurer in accordance with the provisions of
2581		-	K.S.A. 75-4215, and amendments thereto. Upon receipt of each such
2582		-	remittance, the state treasurer shall deposit the entire amount in the
2583		-	state treasury to the credit of the state general fund.
2584		-	(g) Whenever the commissioner imposes any administrative
2585		-	penalty or denies, suspends, revokes or refuses renewal of any license
2586		-	pursuant to subsection (a), any costs incurred as a result of conducting
2587		-	an administrative hearing authorized under the provisions of this
2588		-	section shall be assessed against the person who is the subject of the
2589		-	hearing or any business entity represented by such person who is the
2590		-	party to the matters giving rise to the hearing. As used in this
2591		-	subsection, "costs" includes witness fees, mileage allowances, any
2592		-	costs associated with the reproduction of documents that become a part
2593		-	of the hearing record and the expense of making a record of the
2594		-	hearing.
2595		-	(h) No person whose license as a public adjuster had been
2596		-	suspended or revoked shall be employed by any insurance company
2597		-	doing business in this state either directly, indirectly, as an independent
2598		-	contractor or otherwise to negotiate or effect contracts of insurance,
2599		-	suretyship or indemnity or perform any act toward the solicitation or
2600		-	transaction of any business of insurance during the period of such
2601		-	suspension or revocation.
2602		-	(e)(i) The commissioner shall retain the authority to enforce the
2603		-	provisions of and impose any penalty or remedy authorized by this act
2604		-	against any individual who is under investigation for or charged with a
2605		-	violation of this act, even if the individual's license or registration has
2606		-	been surrendered or has lapsed by operation of law.
2607		-	(j) (1) An applicant to whom a license has been denied after a
2608		-	hearing shall not apply again for a license until after the expiration of
2609		-	a period of one year from the date of the commissioner's order.
2610		-	(2) A licensee whose license was revoked shall not apply again for
2611		-	a license until after the expiration of a period of two years from the
2612		-	date of the commissioner's order. HOUSE BILL No. 2334—page 42
2613		-	Sec. 32. K.S.A. 40-112, 40-202, 40-252, 40-2d01, 40-3302, 40-
2614		-	3305, 40-3306, 40-3307, 40-3308, 40-4304, 40-4312, 40-4314, 40-
2615		-	4602 and 40-5510 and K.S.A. 2024 Supp. 40-2,239, 40-2c01, 40-4302,
2616		-	40-4308 and 40-4909 are hereby repealed.
2617		-	Sec. 33. This act shall take effect and be in force from and after its
	1475	+	insurance company, and no other occupation tax or any other tax shall be
	1476	+	levied or collected from any captive insurance company by the state or
	1477	+	any political subdivision thereof.
	1478	+	Sec. 16. K.S.A. 40-4304, 40-4312 and 40-4314 and K.S.A. 2024
	1479	+	Supp. 40-4302 and 40-4308 are hereby repealed.
	1480	+	Sec. 17. This act shall take effect and be in force from and after its
2618	1481		publication in the statute book.
2619		-	I hereby certify that the above BILL originated in the
2620		-	HOUSE, and was adopted by that body
2621		-
2622		-	HOUSE adopted
2623		-	Conference Committee Report
2624		-
2625		-	Speaker of the House.
2626		-
2627		-	Chief Clerk of the House.
2628		-	Passed the SENATE
2629		-	as amended
2630		-	SENATE adopted
2631		-	Conference Committee Report
2632		-
2633		-	President of the Senate.
2634		-
2635		-	Secretary of the Senate.
2636		-	APPROVED
2637		-
2638		-
2639		-	Governor.
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