Kansas 2025-2026 Regular Session

Kansas Senate Bill SB121 Compare Versions

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Old	New	Differences
1	1	Session of 2025
2	2	SENATE BILL No. 121
3	3	By Committee on Financial Institutions and Insurance
4	4	1-30
5	5	AN ACT concerning insurance; relating to the regulation thereof;
6	6	authorizing the commissioner of insurance to select and announce the
7	7	version of certain instructions, calculations and documents in effect for
8	8	the upcoming calendar year and cause such announcement to be
9	9	published in the Kansas register; allowing certain life insurers to follow
10	10	health financial reports; adopting certain provisions from the national
11	11	association of insurance commissioners holding company system
12	12	regulatory act relating to group capital calculations and liquidity stress
13	13	testing; amending K.S.A. 40-2d01, 40-3302, 40-3305, 40-3306, 40-
14	14	3307 and 40-3308 and K.S.A. 2024 Supp. 40-2c01 and repealing the
15	15	existing sections; also repealing K.S.A. 40-249 and 40-2c29.
16	16	Be it enacted by the Legislature of the State of Kansas:
17	17	New Section 1. (a) The commissioner is hereby authorized to select
18	18	and announce the version of insurance calculations, instructions
19	19	promulgated by the NAIC or other documents required by the NAIC that
20	20	shall be in effect for the next calendar year. Not later than December 1 of
21	21	each year, the commissioner shall cause such announcement to be
22	22	published in the Kansas register.
23	23	(b) Calculations and instructions include, but are not limited to, risk-
24	24	based capital instructions, as used in K.S.A. 40-2c01, and amendments
25	25	thereto, risk-based capital managed care instructions, as used in K.S.A.
26	26	40-2d01, and amendments thereto, and group capital calculation
27	27	instructions, as used in K.S.A. 40-3302, and amendments thereto.
28	28	Sec. 2. K.S.A. 2024 Supp. 40-2c01 is hereby amended to read as
29	29	follows: 40-2c01. As used in this act:
30	30	(a) "Adjusted RBC report" means an RBC report that has been
31	31	adjusted by the commissioner in accordance with K.S.A. 40-2c04, and
32	32	amendments thereto.
33	33	(b) "Corrective order" means an order issued by the commissioner
34	34	specifying corrective actions that the commissioner has determined are
35	35	required to address an RBC level event.
36	36	(c) "Domestic insurer" means any insurance company or risk
37	37	retention group that is licensed and organized in this state.
38	38	(d) "Foreign insurer" means any insurance company or risk retention
39	39	group not domiciled in this state that is licensed or registered to do
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76	76	business in this state pursuant to article 41 of chapter 40 of the Kansas
77	77	Statutes Annotated, and amendments thereto, or K.S.A. 40-209, and
78	78	amendments thereto.
79	79	(e) "NAIC" means the national association of insurance
80	80	commissioners.
81	81	(f) "Life and health insurer" means any insurance company licensed
82	82	under article 4 or 5 of chapter 40 of the Kansas Statutes Annotated, and
83	83	amendments thereto, or a licensed property and casualty insurer writing
84	84	only accident and health insurance.
85	85	(g) "Property and casualty insurer" means any insurance company
86	86	licensed under articles 9, 10, 11, 12, 12a, 15 or 16 of chapter 40 of the
87	87	Kansas Statutes Annotated, and amendments thereto, but does not include
88	88	monoline mortgage guaranty insurers, financial guaranty insurers and title
89	89	insurers.
90	90	(h) "Negative trend" means, with respect to a life and health insurer, a
91	91	negative trend over a period of time, as determined in accordance with the
92	92	"trend test calculation" included in the RBC instructions defined in
93	93	subsection (j).
94	94	(i) "RBC" means risk-based capital.
95	95	(j) "RBC instructions" means the risk-based capital instructions
96	96	promulgated by the NAIC that are in effect on December 31, 2023, or any
97	97	later version promulgated by the NAIC as may be adopted by the as
98	98	announced and noticed by the commissioner under K.S.A. 40-2c29
99	99	pursuant to section 1, and amendments thereto.
100	100	(k) "RBC level" means an insurer's company action level RBC,
101	101	regulatory action level RBC, authorized control level RBC or mandatory
102	102	control level RBC where:
103	103	(1) "Company action level RBC" means, with respect to any insurer,
104	104	the product of 2.0 and its authorized control level RBC;
105	105	(2) "regulatory action level RBC" means the product of 1.5 and its
106	106	authorized control level RBC;
107	107	(3) "authorized control level RBC" means the number determined
108	108	under the risk-based capital formula in accordance with the RBC
109	109	instructions; and
110	110	(4) "mandatory control level RBC" means the product of 0.70 and the
111	111	authorized control level RBC.
112	112	(l) "RBC plan" means a comprehensive financial plan containing the
113	113	elements specified in K.S.A. 40-2c06, and amendments thereto. If the
114	114	commissioner rejects the RBC plan, and it is revised by the insurer, with or
115	115	without the commissioner's recommendation, the plan shall be called the
116	116	"revised RBC plan."
117	117	(m) "RBC report" means the report required by K.S.A. 40-2c02, and
118	118	amendments thereto.
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162	162	(n) "Total adjusted capital" means the sum of:
163	163	(1) An insurer's capital and surplus or surplus only if a mutual
164	164	insurer; and
165	165	(2) such other items, if any, as the RBC instructions may provide.
166	166	(o) "Commissioner" means the commissioner of insurance.
167	167	Sec. 3. K.S.A. 40-2d01 is hereby amended to read as follows: 40-
168	168	2d01. As used in K.S.A. 40-2d01 through 40-2d30, and amendments
169	169	thereto:
170	170	(a) "Adjusted RBC report" means an RBC report which that has been
171	171	adjusted by the commissioner in accordance with K.S.A. 40-2d04, and
172	172	amendments thereto.
173	173	(b) "Corrective order" means an order issued by the commissioner
174	174	specifying corrective actions which that the commissioner has determined
175	175	are required.
176	176	(c) "Domestic health organization" means any health organization
177	177	which that is licensed and organized in this state.
178	178	(d) "Foreign health organization" means any health organization not
179	179	domiciled in this state which that is licensed to do business in this state
180	180	pursuant to articles 19a, 19c or 32 of chapter 40 of the Kansas Statutes
181	181	Annotated, and amendments thereto.
182	182	(e) "NAIC" means the national association of insurance
183	183	commissioners.
184	184	(f) "Health organization" means a health maintenance organization,
185	185	limited health service organization, dental or vision plan, hospital, medical
186	186	and dental indemnity or service corporation or other managed care
187	187	organization licensed under articles 19a, 19c or 32 of chapter 40 of the
188	188	Kansas Statutes Annotated, and amendments thereto. This definition shall,
189	189	or an organization that is licensed as a life and health insurer under
190	190	article 4 of chapter 40 of the Kansas Statutes Annotated, and amendments
191	191	thereto, and has been determined by the commissioner to report
192	192	predominantly health lines of business in accordance with a health
193	193	statement test. "Health organization" does not include an organization that
194	194	is licensed as either a life and health insurer or a property and casualty
195	195	insurer under articles 4, 5, 9, 10, 11, 12, 12a, 15 or 16 of chapter 40 of the
196	196	Kansas Statutes Annotated, and amendments thereto, and that is otherwise
197	197	subject to either the life or property and casualty RBC requirements in
198	198	K.S.A. 40-2c01 et seq., and amendments thereto.
199	199	(g) "RBC" means risk-based capital.
200	200	(h) "RBC instructions" means the risk-based capital instructions for
201	201	managed care organizations promulgated by the NAIC which that are in
202	202	effect on December 31, 1999, or any later version as adopted by as
203	203	announced and noticed by the commissioner in rules and regulations
204	204	pursuant to section 1, and amendments thereto.
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248	248	(i) "RBC level" means a health organization's company action level
249	249	RBC, regulatory action level RBC, authorized control level RBC, or
250	250	mandatory control level RBC where:
251	251	(1) "Company action level RBC" means, with respect to any health
252	252	organization, the product of 2.0 and its authorized control level RBC;
253	253	(2) "regulatory action level RBC" means the product of 1.5 and its
254	254	authorized control level RBC;
255	255	(3) "authorized control level RBC" means the number determined
256	256	under the risk-based capital formula in accordance with the RBC
257	257	instructions; and
258	258	(4) "mandatory control level RBC" means the product of .70 and the
259	259	authorized control level RBC.
260	260	(j) "RBC plan" means a comprehensive financial plan containing the
261	261	elements specified in K.S.A. 40-2d05, and amendments thereto. If the
262	262	commissioner rejects the RBC plan, and it is revised by the health
263	263	organization, with or without the commissioner's recommendation, the
264	264	plan shall be called the "revised RBC plan."
265	265	(k) "RBC report" means the report required by K.S.A. 40-2d02, 40-
266	266	2d03 and 40-2d04, and amendments thereto.
267	267	(l) "Total adjusted capital" means the sum of:
268	268	(1) A health organization's capital and surplus as determined in
269	269	accordance with the annual financial statements required to be filed under
270	270	articles 19a, 19c or 32 of chapter 40 of the Kansas Statutes Annotated, and
271	271	amendments thereto; and
272	272	(2) such other items, if any, as the RBC instructions may provide.
273	273	(m) "Commissioner" means the commissioner of insurance.
274	274	Sec. 4. K.S.A. 40-3302 is hereby amended to read as follows: 40-
275	275	3302. As used in the insurance holding company act, unless the context
276	276	otherwise requires:
277	277	(a) "Affiliate" of, or person "affiliated" with, a specific person, means
278	278	a person that directly, or indirectly through one or more intermediaries,
279	279	controls, is controlled by, or is under common control with, the person
280	280	specified.
281	281	(b) "Commissioner of insurance" or "commissioner" means the
282	282	commissioner of insurance, the commissioner's deputies, or the insurance
283	283	department, as appropriate.
284	284	(c) "Control" including the terms "controlling," "controlled by" and
285	285	"under common control with," means the possession, direct or indirect, of
286	286	the power to direct or cause the direction of the management or policies of
287	287	a person, whether through the ownership of voting securities, by contract
288	288	other than a commercial contract for goods or nonmanagement services, or
289	289	otherwise, unless the power is the result of an official position with or
290	290	corporate office held by the person. Control shall be presumed to exist if
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334	334	any person, directly or indirectly, owns, controls, holds with the power to
335	335	vote, or holds proxies representing 10% or more of the voting securities of
336	336	any other person. This presumption may be rebutted by a showing made in
337	337	the manner provided by K.S.A. 40-3305(k), and amendments thereto, that
338	338	control does not exist in fact. The commissioner of insurance may
339	339	determine, after a hearing in accordance with the provisions of the Kansas
340	340	administrative procedure act, that control exists in fact, notwithstanding
341	341	the absence of a presumption to that effect.
342	342	(d) "Enterprise risk" means any activity, circumstance, event or series
343	343	of events involving one or more affiliates of an insurer that, if not
344	344	remedied promptly, is likely to have a material adverse effect upon the
345	345	financial condition or liquidity of the insurer or its insurance holding
346	346	company system as a whole, including, but not limited to, anything that
347	347	would cause the insurer's risk-based capital to fall into company action
348	348	level RBC, as such term is defined in either K.S.A. 40-2c01 et seq., and
349	349	amendments thereto, or K.S.A. 40-2d01 et seq., and amendments thereto,
350	350	as appropriate, or would cause the insurer to be in hazardous financial
351	351	condition as set forth in K.S.A. 40-222b, 40-222c and 40-222d, and
352	352	amendments thereto.
353	353	(e) "Financial analysis handbook" means the version of the NAIC
354	354	financial analysis handbook adopted by the NAIC and in effect that has
355	355	been selected and noticed by the commissioner pursuant to section 1, and
356	356	amendments thereto.
357	357	(f) "Group capital calculation instructions" means the group capital
358	358	calculation instructions selected and announced by the commissioner
359	359	pursuant to section 1, and amendments thereto.
360	360	(g) "Group-wide supervisor" means the regulatory official authorized
361	361	to engage in conducting and coordinating group-wide supervision
362	362	activities who is determined or acknowledged by the commissioner under
363	363	K.S.A. 40-3318, and amendments thereto, to have sufficient significant
364	364	contacts with the internationally active insurance group.
365	365	(f)(h) "Insurance holding company system" means two or more
366	366	affiliated persons, one or more of which is an insurer.
367	367	(g)(i) "Insurer" means any corporation, company, association, society,
368	368	fraternal benefit society, health maintenance organization, nonprofit
369	369	medical and hospital service corporation, nonprofit dental service
370	370	corporation, reciprocal exchange, person or partnership writing contracts
371	371	of insurance, indemnity or suretyship in this state upon any type of risk or
372	372	loss except lodges, societies, persons or associations transacting business
373	373	pursuant to the provisions of K.S.A. 40-202, and amendments thereto.
374	374	(h)(j) "Internationally active insurance group" means an insurance
375	375	holding company system that:
376	376	(1) Includes an insurer registered under K.S.A. 40-3305, and
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420	420	amendments thereto; and
421	421	(2) meets the following criteria:
422	422	(A) Has premiums written in at least three countries;
423	423	(B) the percentage of gross premiums written outside the United
424	424	States is at least 10% of the insurance holding company system's total
425	425	gross written premiums; and
426	426	(C) based on a three-year rolling average, the total assets of the
427	427	insurance holding company system are at least $50,000,000,000 or the
428	428	total gross written premiums of the insurance holding company system are
429	429	at least $10,000,000,000.
430	430	(i)(k) " NAIC" means the national association of insurance
431	431	commissioners.
432	432	(l) "NAIC liquidity stress test framework" means the separate NAIC
433	433	publication that includes the history of the NAIC's development of
434	434	regulatory liquidity stress testing, the scope criteria applicable for a
435	435	specific data year and the liquidity stress test instructions and reporting
436	436	templates for a specific data year and such scope criteria, instructions and
437	437	reporting templates as adopted by the NAIC and as amended by the NAIC
438	438	from time to time in accordance with the procedures adopted by the NAIC
439	439	and as selected and announced by the commissioner pursuant to section 1,
440	440	and amendments thereto.
441	441	(m) "Person" means an individual, corporation, a partnership, an
442	442	association, a joint stock company, a trust, an unincorporated organization,
443	443	any similar entity or any combination of the foregoing acting in concert.
444	444	(n) "Scope criteria," as detailed in the NAIC liquidity stress test
445	445	framework, are the designated exposure bases along with minimum
446	446	magnitudes thereof for the specified data year, used to establish a
447	447	preliminary list of insurers considered scoped into the NAIC liquidity
448	448	stress test framework for such specified data year.
449	449	(j)(o) "Securityholder" of a specified person means one who owns
450	450	any security of such person, including common stock, preferred stock, debt
451	451	obligations, and any other security convertible into or evidencing the right
452	452	to acquire any of the foregoing.
453	453	(k)(p) "Subsidiary" of a specified person means an affiliate controlled
454	454	by such person, directly, or indirectly, through one or more intermediaries.
455	455	(l)(q) "Voting security" means any security convertible into or
456	456	evidencing a right to acquire a voting security.
457	457	Sec. 5. K.S.A. 40-3305 is hereby amended to read as follows: 40-
458	458	3305. (a) Every insurer that is authorized to do business in this state and
459	459	that is a member of an insurance holding company system shall register
460	460	with the commissioner of insurance, except a foreign insurer subject to
461	461	registration requirements and standards adopted by statute or regulation in
462	462	the jurisdiction of its domicile that are substantially similar to those
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506	506	contained in this section. Any insurer that is subject to registration under
507	507	this section shall register within 15 days after it becomes subject to
508	508	registration, and annually thereafter by May 1 of each year unless for the
509	509	previous calendar year the commissioner of insurance for good cause
510	510	shown extends the time for registration, and then within such extended
511	511	time. The commissioner of insurance may require any authorized insurer
512	512	that is a member of an insurance holding company system and that is not
513	513	subject to registration under this section to furnish a copy of the
514	514	registration statement, the summary specified in subsection (c) or other
515	515	information filed by such insurance company with the insurance regulatory
516	516	authority of domiciliary jurisdiction.
517	517	(b) Pursuant to subsection (a), every insurer subject to registration
518	518	shall file a registration statement on a form provided by the commissioner
519	519	of insurance, that shall contain current information about regarding:
520	520	(1) The capital structure, general financial condition, ownership and
521	521	management of the insurer and any person controlling the insurer;
522	522	(2) the identity and relationship of every member of the insurance
523	523	holding company system;
524	524	(3) the following agreements in force and transactions currently
525	525	outstanding or that occurred during the last calendar year between such
526	526	insurer and its affiliates:
527	527	(A) Loans, other investments, or purchases, sales or exchanges of
528	528	securities of the affiliates by the insurer or of the insurer by its affiliates;
529	529	(B) purchases, sales or exchanges of assets;
530	530	(C) transactions not in the ordinary course of business;
531	531	(D) guarantees or undertakings for the benefit of an affiliate that
532	532	result in an actual contingent exposure of the insurer's assets to liability,
533	533	other than insurance contracts entered into in the ordinary course of the
534	534	insurer's business;
535	535	(E) all management agreements, service contracts and cost sharing
536	536	arrangements;
537	537	(F) reinsurance agreements;
538	538	(G) dividends and other distributions to shareholders; and
539	539	(H) consolidated tax allocation agreements;
540	540	(4) other matters concerning transactions between registered insurers
541	541	and any affiliates as may be included from time to time in any registration
542	542	forms adopted or approved by the commissioner of insurance;
543	543	(5) any pledge of the insurer's stock, including stock of any
544	544	subsidiary or controlling affiliate, for a loan made to any member of the
545	545	insurance holding company system;
546	546	(6) financial statements of or within an insurance holding company
547	547	system, including all affiliates, if requested by the commissioner of
548	548	insurance. Financial statements may include, but are not be limited to,
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592	592	annual audited financial statements filed with the U.S. securities and
593	593	exchange commission (, SEC), pursuant to the securities act of 1933, as
594	594	amended, or the securities exchange act of 1934, as amended. An insurer
595	595	required to file financial statements pursuant to this paragraph may satisfy
596	596	the request by providing the commissioner of insurance with the most
597	597	recently filed parent corporation financial statements that have been filed
598	598	with the SEC;
599	599	(7) statements that the insurer's board of directors and principal
600	600	officers oversee corporate governance and internal controls and that the
601	601	insurer's principal officers have approved, implemented and continue to
602	602	maintain and monitor corporate governance and internal control
603	603	procedures; and
604	604	(8) any other information required by the commissioner of insurance
605	605	by rules and regulations.
606	606	(c) All registration statements shall be accompanied by a summary
607	607	outlining all items in the current registration statement representing
608	608	changes from the prior registration statement.
609	609	(d) No information need be disclosed on the registration statement
610	610	filed pursuant to subsection (b) if such information is not material for the
611	611	purpose of this section. Unless the commissioner of insurance by rules and
612	612	regulations or order provides otherwise, sales, purchases, exchanges, loans
613	613	or extensions of credit, investments or guarantees, involving 0.5% or less
614	614	of an insurer's admitted assets as of the December 31 immediately next
615	615	preceding shall be deemed immaterial for purposes of this section.
616	616	(e) Each registered insurer shall keep current the information required
617	617	to be disclosed in such insurer's registration statement by reporting all
618	618	material changes or additions on amendment forms provided by the
619	619	commissioner of insurance within 15 days after the end of the month in
620	620	which it learns of each such change or addition, except that each registered
621	621	insurer shall report all dividends and other distributions to shareholders
622	622	within five business days following its declaration. Any such dividend or
623	623	distribution shall not be paid for at least 10 business days from the
624	624	commissioner's receipt of the notice of its declaration.
625	625	(f) Any person within an insurance holding company system subject
626	626	to registration shall provide complete and accurate information to an
627	627	insurer, where if such information is reasonably necessary to enable the
628	628	insurer to comply with the provisions of this act.
629	629	(g) The commissioner of insurance shall terminate the registration of
630	630	any insurer that demonstrates that such insurer is no longer is a member of
631	631	an insurance holding company system.
632	632	(h) The commissioner of insurance may require or allow two or more
633	633	affiliated insurers subject to registration hereunder to file a consolidated
634	634	registration statement.
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678	678	(i) The commissioner of insurance may allow an insurer that is
679	679	authorized to do business in this state and that is part of an insurance
680	680	holding company system to register on behalf of any affiliated insurer that
681	681	is required to register under subsection (a) and to file all information and
682	682	material required to be filed under this section.
683	683	(j) The provisions of this section shall not apply to any information or
684	684	transaction if and to the extent the commissioner of insurance by rule and
685	685	regulation or order exempts the same from the provisions of this section.
686	686	(k) Any person may file with the commissioner of insurance a
687	687	disclaimer of affiliation with any authorized insurer or such a disclaimer
688	688	may be filed by such insurer or any member of an insurance holding
689	689	company system. The disclaimer shall fully disclose all material
690	690	relationships and bases for affiliation between such person and such
691	691	insurer as well as the basis for disclaiming such affiliation. After a
692	692	disclaimer has been filed, the insurer shall be relieved of any duty to
693	693	register or report under this section which that may arise out of the
694	694	insurer's relationship with such person unless and until the commissioner
695	695	of insurance disallows such a disclaimer. The commissioner of insurance
696	696	shall disallow such a disclaimer only after furnishing all parties in interest
697	697	with notice and opportunity to be heard in accordance with the provisions
698	698	of the Kansas administrative procedure act.
699	699	(l) (1) Except as provided in paragraph (2), the ultimate controlling
700	700	person of every insurer subject to registration also shall file an annual
701	701	enterprise risk report. The report, to the best of the ultimate controlling
702	702	person's knowledge and belief, shall identify the material risks within the
703	703	insurance holding company system that could pose enterprise risk to the
704	704	insurer. The report shall be appropriate to the nature, scale and complexity
705	705	of the insurer. The report shall be filed with the lead state commissioner of
706	706	insurance of the insurance holding company system as determined by the
707	707	procedures within the financial analysis handbook adopted by the national
708	708	association of insurance commissioners NAIC. The first enterprise risk
709	709	report shall be filed no not later than May 1, 2015, and annually thereafter
710	710	by May 1 of each year unless the commissioner of insurance extends the
711	711	time for filing for good cause shown.
712	712	(2) The ultimate controlling person of a domestic insurer that is
713	713	authorized, admitted or eligible to engage in the business of insurance only
714	714	in this state with total direct and assumed annual premiums of less than
715	715	$300 million is not required to submit an enterprise risk report under
716	716	paragraph (1) unless the ultimate controlling person of the domestic
717	717	insurer also controls other insurers that do not meet the requirements of
718	718	this subsection. For the purposes of this subsection, an insurer is not
719	719	considered to be authorized, admitted or eligible to engage in the business
720	720	of insurance only in this state if the insurer directly or indirectly writes or
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764	764	assumes insurance in any other manner in another state(A) Except as
765	765	provided hereunder, the ultimate controlling person of every insurer
766	766	subject to registration shall concurrently file with the registration an
767	767	annual group capital calculation as directed by the lead state
768	768	commissioner. The report shall be completed in accordance with the NAIC
769	769	group capital calculation instructions, which may permit the lead state
770	770	commissioner to allow a controlling person that is not the ultimate
771	771	controlling person to file the group capital calculation. The report shall be
772	772	filed with the lead state commissioner of the insurance holding company
773	773	system as determined by the commissioner of insurance in accordance
774	774	with the procedures within the financial analysis handbook. An insurance
775	775	holding company system shall be exempt from filing the group capital
776	776	calculation if:
777	777	(i) It has only one insurer within its holding company structure, only
778	778	writes business is only licensed in its domestic state and assumes no
779	779	business from any other insurer;
780	780	(ii) it is required to perform a group capital calculation specified by
781	781	the board of governors of the federal reserve system. The lead state
782	782	commissioner shall request the calculation from the federal reserve board
783	783	under the terms of information sharing agreements in effect. If the federal
784	784	reserve board cannot share the calculation with the lead state
785	785	commissioner, the insurance holding company shall not be exempt from
786	786	the group capital calculation filing;
787	787	(iii) its non-United States group-wide supervisor is located within a
788	788	reciprocal jurisdiction, as defined in K.S.A. 40-221a, and amendments
789	789	thereto, that recognizes the United States regulatory approach to group
790	790	supervision and group capital; and
791	791	(iv) it is an insurance holding company system:
792	792	(a) That provides information to the lead state that meets the
793	793	requirements for accreditation under the NAIC financial standards and
794	794	accreditation program, either directly or indirectly through the group-wide
795	795	supervisor, who has determined that such information is satisfactory to
796	796	allow the lead state to comply with the NAIC group supervision approach,
797	797	as detailed in the NAIC financial analysis handbook; and
798	798	(b) whose non-United States group-wide supervisor who is not in a
799	799	reciprocal jurisdiction recognizes and accepts, as specified by the
800	800	commissioner in rules and regulations, the group capital calculation as
801	801	the worldwide group capital assessment for United States insurance
802	802	groups that operate in that jurisdiction.
803	803	(B) Notwithstanding the provisions of K.S.A. 40-3305, and
804	804	amendments thereto, a lead state commissioner shall require the group
805	805	capital calculation for the United States operations of any non-United
806	806	States based insurance holding company system if, after any necessary
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850	850	consultation with other supervisors or officials, it is deemed appropriate
851	851	by the lead state commissioner for prudential oversight and solvency
852	852	monitoring purposes or for ensuring the competitiveness of the insurance
853	853	marketplace.
854	854	(C) Notwithstanding the exemptions from filing the group capital
855	855	calculation stated in K.S.A. 40-3305, and amendments thereto, the lead
856	856	state commissioner has the discretion to exempt the ultimate controlling
857	857	person from filing the annual group capital calculation or to accept a
858	858	limited group capital filing or report in accordance with criteria specified
859	859	by the commissioner in regulation.
860	860	(D) If the lead state commissioner determines that an insurance
861	861	holding company system no longer meets one or more of the requirements
862	862	for an exemption from filing the group capital calculation under this
863	863	section, the insurance holding company system shall file the group capital
864	864	calculation at the next annual filing date unless given an extension by the
865	865	lead state commissioner based on reasonable grounds shown.
866	866	(E) The ultimate controlling person of every insurer subject to
867	867	registration and also scoped into the NAIC liquidity stress test framework
868	868	shall file the results of a specific year's liquidity stress test. The filing shall
869	869	be made to the lead state insurance commissioner of the insurance holding
870	870	company system as determined by the procedures within the financial
871	871	analysis handbook and that:
872	872	(i) The NAIC liquidity stress test framework includes scope criteria
873	873	applicable to a specific data year. These scope criteria are reviewed at
874	874	least annually by the financial stability task force or its successor. Any
875	875	change to the NAIC liquidity stress test framework or to the data year for
876	876	which the scope criteria are to be measured shall be effective on January
877	877	1 of the year following the calendar year in which such changes are
878	878	adopted. Insurers meeting at least one threshold of the scope criteria are
879	879	considered scoped into the NAIC liquidity stress test framework for the
880	880	specified data year, unless the lead state insurance commissioner, in
881	881	consultation with the NAIC financial stability task force or its successor,
882	882	determines that such insurer should not be scoped into the framework for
883	883	that data year. Similarly, insurers that do not trigger at least one threshold
884	884	of the scope criteria are considered scoped out of the NAIC liquidity stress
885	885	test framework for the specified data year, unless the lead state insurance
886	886	commissioner, in consultation with the NAIC financial stability task force
887	887	or its successor, determines that the insurer should be scoped into the
888	888	framework for that data year.
889	889	(ii) The lead state insurance commissioner, in consultation with the
890	890	financial stability task force or its successor, shall assess the concerns of
891	891	regulators that wish to avoid having insurers scoped in and out of the
892	892	NAIC liquidity stress test framework on a frequent basis as part of the
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936	936	determination for an insurer.
937	937	(F) The performance and filing of the results of a specific year's
938	938	liquidity stress test shall comply with the NAIC liquidity stress test
939	939	framework instructions and reporting templates for that year and any lead
940	940	state insurance commissioner determinations, in consultation with the
941	941	financial stability task force or its successor, provided within the
942	942	framework.
943	943	(m) The failure of an insurer or an ultimate controlling person of the
944	944	insurer to file a registration statement, any summary of the registration
945	945	statement or enterprise risk filing within the specified time for filing shall
946	946	be a violation by the insurer or by the ultimate controlling person of the
947	947	insurer, as applicable.
948	948	Sec. 6. K.S.A. 40-3306 is hereby amended to read as follows: 40-
949	949	3306. (a) Material Transactions by registered insurers with their affiliates
950	950	shall be subject to the following standards:
951	951	(1) The terms shall be fair and reasonable;
952	952	(2) agreements for cost-sharing services and management shall
953	953	include such provisions as required by rules and regulations adopted by the
954	954	commissioner of insurance;
955	955	(3) the charges or fees for services performed shall be reasonable;
956	956	(4) expenses incurred and payment received with respect to such
957	957	transactions shall be allocated to the insurer in conformity with the
958	958	requirements of K.S.A. 40-225, and amendments thereto;
959	959	(5) the books, accounts and records of each party to all such
960	960	transactions shall be so maintained as to clearly and accurately disclose the
961	961	nature and details of the transactions including such accounting
962	962	information necessary to support the reasonableness of the charges or fees
963	963	to the respective parties; and
964	964	(6) the insurer's surplus as regards policyholders following any
965	965	transactions, dividends or distributions to shareholder affiliates shall be
966	966	reasonable in relation to the insurer's outstanding liabilities and adequate
967	967	to its financial needs.
968	968	(b) (1) If an insurer subject to this act is deemed by the commissioner
969	969	of insurance to be in a hazardous financial condition as defined by K.S.A.
970	970	40-222d, and amendments thereto, or a condition that would be grounds
971	971	for supervision, conservation or a delinquency proceeding, then the
972	972	commissioner may require the insurer to secure and maintain either a
973	973	deposit, held by the commissioner, or a bond, as determined by the insurer
974	974	at the insurer's discretion, for the protection of the insurer for the duration
975	975	of the contract or agreement or the existence of the condition for which the
976	976	commissioner required the deposit or the bond.
977	977	(2) In determining whether a deposit or a bond is required, the
978	978	commissioner shall consider whether concerns exist with respect to the
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1022	1022	affiliated person's ability to fulfill the contract or agreement if the insurer
1023	1023	were to be put into liquidation. Once the insurer is deemed to be in a
1024	1024	hazardous financial condition or a condition that would be grounds for
1025	1025	supervision, conservation or a delinquency proceeding and a deposit or
1026	1026	bond is necessary, the commissioner shall have the discretion to
1027	1027	determine the amount of the deposit or bond, not to exceed the value of the
1028	1028	contract or agreement in any one year, and whether such deposit or bond
1029	1029	should be required for a single contract, multiple contracts or a contract
1030	1030	only with a specific person;
1031	1031	(c) All records and data of the insurer held by an affiliate are and
1032	1032	shall remain the property of the insurer, are subject to control of the
1033	1033	insurer, are identifiable and are segregated or readily capable of
1034	1034	segregation, at no additional cost to the insurer from all other persons'
1035	1035	records and data. All records and data that are otherwise the property of
1036	1036	the insurer, in whatever form maintained, including, but not limited to,
1037	1037	claims and claim files, policyholder lists, application files, litigation files,
1038	1038	premium records, rate books, underwriting manuals, personnel records,
1039	1039	financial records or similar records within the possession, custody or
1040	1040	control of the affiliate shall remain the property of the insurer. At the
1041	1041	request of the insurer, the affiliate shall provide that the receiver may
1042	1042	obtain a complete set of all records of any type that pertain to the insurer's
1043	1043	business, obtain access to the operating systems upon which the data is
1044	1044	maintained, obtain the software that runs those systems either through
1045	1045	assumption of licensing agreements or otherwise and restrict the use of the
1046	1046	data by the affiliate if it is not operating the insurer's business. The
1047	1047	affiliate shall provide a waiver of any landlord lien or other encumbrance
1048	1048	to provide the insurer with access to all records and data in the event of
1049	1049	the affiliate's default under a lease or other agreement; and
1050	1050	(d) Premiums or other funds belonging to the insurer that are
1051	1051	collected or held by an affiliate shall be deemed the exclusive property of
1052	1052	and subject to the control of such insurer. Any right of offset in the event
1053	1053	that an insurer is placed into receivership shall be subject to K.S.A. 40-
1054	1054	3605 et seq., and amendments thereto.
1055	1055	(b)(e) The following transactions involving a domestic insurer and
1056	1056	any person in such insurer's insurance holding company system, including
1057	1057	amendments or modifications of affiliate agreements previously filed
1058	1058	pursuant to this section, may not be entered into unless the insurer has
1059	1059	notified the commissioner of insurance in writing of such insurer's
1060	1060	intention to enter into such transaction at least 30 days prior thereto, or
1061	1061	such shorter period as the commissioner of insurance may permit, and the
1062	1062	commissioner of insurance has not disapproved such transaction within
1063	1063	such period.
1064	1064	(1) Sales, purchases, exchanges, loans or extensions of credit,
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1108	1108	guarantees or investments provided such transactions are equal to or
1109	1109	exceed:
1110	1110	(A) With respect to nonlife insurers, the lesser of 3% of the insurer's
1111	1111	admitted assets or 25% of surplus as regards policyholders; or
1112	1112	(B) with respect to life insurers, 3% of the insurer's admitted assets,
1113	1113	each as of December 31 immediately preceding.
1114	1114	(2) Loans or extensions of credit to any person who is not an affiliate,
1115	1115	where if the insurer makes such loans or extensions of credit with the
1116	1116	agreement or understanding that the proceeds of such transactions, in
1117	1117	whole or in substantial part, are to be used to make loans or extensions of
1118	1118	credit to, purchase assets of, or make investments in, any affiliate of the
1119	1119	insurer making such loans or extensions of credit provided if such
1120	1120	transactions are equal to or exceed:
1121	1121	(A) With respect to nonlife insurers, the lesser of 3% of the insurer's
1122	1122	admitted assets or 25% of surplus as regards policyholders;
1123	1123	(B) with respect to life insurers, 3% of the insurer's admitted assets,
1124	1124	each as of December 31 immediately preceding.
1125	1125	(3) Reinsurance agreements or modifications thereto, including:
1126	1126	(A) All reinsurance pooling agreements; and
1127	1127	(B) agreements in which the reinsurance premium or a change in the
1128	1128	insurer's liabilities, or the projected reinsurance premium or a projected
1129	1129	change in the insurer's liabilities in any of the next three consecutive years
1130	1130	equals or exceeds 5% of the insurer's surplus as regards policyholders, as
1131	1131	of December 31 immediately preceding, including those agreements which
1132	1132	that may require as consideration the transfer of assets from an insurer to a
1133	1133	nonaffiliate, if an agreement or understanding exists between the insurer
1134	1134	and nonaffiliate that any portion of such assets will be transferred to one or
1135	1135	more affiliates of the insurer;
1136	1136	(4) all management agreements, service contracts, tax allocation
1137	1137	agreements and all cost-sharing arrangements; and
1138	1138	(5) any material transactions, specified by rules and regulations,
1139	1139	which that the commissioner of insurance determines may adversely affect
1140	1140	the interests of an insurer's policyholders.
1141	1141	Nothing herein contained in this subsection shall be deemed to
1142	1142	authorize or permit any transactions which, that in the case of an insurer
1143	1143	not a member of the same insurance holding company system, would be
1144	1144	otherwise contrary to law.
1145	1145	(c)(f) A domestic insurer may shall not enter into transactions which
1146	1146	that are part of a plan or series of like transactions with persons within the
1147	1147	insurance holding company system if the purpose of those separate
1148	1148	transactions is to avoid the threshold amount required under this section
1149	1149	and thus avoid the review that would occur otherwise. If the commissioner
1150	1150	of insurance determines that such separate transactions were entered into
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1194	1194	over any 12-month period for such purpose, the commissioner of insurance
1195	1195	may exercise authority under K.S.A. 40-3311, and amendments thereto.
1196	1196	(d)(g) The commissioner of insurance, in reviewing transactions
1197	1197	pursuant to subsection (b)(e), shall consider whether the transactions
1198	1198	comply with the standards set forth in subsection (a), and whether such
1199	1199	transactions may adversely affect the interests of policyholders.
1200	1200	(e)(h) The commissioner of insurance shall be notified within 30 days
1201	1201	of any investment of the domestic insurer in any one corporation if the
1202	1202	total investment in such corporation by the insurance holding company
1203	1203	system exceeds 10% of such corporation's voting securities.
1204	1204	(f)(i) A transaction subject to approval by the commissioner of
1205	1205	insurance pursuant to K.S.A. 40-3304, and amendments thereto, shall not
1206	1206	be subject to the requirements of this section.
1207	1207	(g)(j) (1) No insurer subject to registration under K.S.A. 40-3305, and
1208	1208	amendments thereto, shall pay any extraordinary dividend or make any
1209	1209	other extraordinary distribution to such insurer's shareholders until:
1210	1210	(A) 30 days after the commissioner of insurance has received notice
1211	1211	of the declaration thereof and has not within such period disapproved such
1212	1212	payment; or
1213	1213	(B) the commissioner of insurance has approved such payment within
1214	1214	such 30-day period.
1215	1215	(2) (A) For purposes of this section, an extraordinary dividend or
1216	1216	distribution includes any dividend or distribution of cash or other property,
1217	1217	the fair market value of which, together with that of other dividends or
1218	1218	distributions made within the preceding 12 months, exceeds the greater of:
1219	1219	(i) 10% of such insurer's surplus as regards policyholders as of
1220	1220	December 31 immediately preceding; or
1221	1221	(ii) the net gain from operations of such insurer, if such insurer is a
1222	1222	life insurer, or the net income, if such insurer is not a life insurer, not
1223	1223	including realized capital gains for the 12-month period ending December
1224	1224	31 immediately next preceding, but shall not include pro rata distributions
1225	1225	of any class of the insurer's own securities.
1226	1226	(B) In determining whether a dividend or distribution is
1227	1227	extraordinary, an insurer, other than a life insurer, may carry forward net
1228	1228	income from the previous two calendar years that has not already been
1229	1229	paid out as dividends. This carry-forward carryforward shall be computed
1230	1230	by taking the net income from the second and third preceding calendar
1231	1231	years, not including realized capital gains, less dividends paid in the
1232	1232	second and immediately preceding calendar years.
1233	1233	(C) An extraordinary dividend or distribution shall also include any
1234	1234	dividend or distribution made or paid out of any funds other than earned
1235	1235	surplus arising from the insurer's business, as defined in K.S.A. 40-233,
1236	1236	and amendments thereto. The provisions of K.S.A. 40-233, and
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1280	1280	amendments thereto, shall not be construed so as to prohibit an insurer,
1281	1281	subject to registration under K.S.A. 40-3305, and amendments thereto,
1282	1282	from making or paying an extraordinary dividend or distribution in
1283	1283	accordance with this section.
1284	1284	(3) Notwithstanding any other provisions of law, an insurer may
1285	1285	declare an extraordinary dividend or distribution which that is conditional
1286	1286	upon the approval of the commissioner of insurance. No declaration shall
1287	1287	confer any rights upon shareholders until:
1288	1288	(A) The commissioner of insurance has approved the payment of
1289	1289	such dividend or distribution; or
1290	1290	(B) the commissioner of insurance has not disapproved such payment
1291	1291	within the 30-day period referred to above.
1292	1292	(h)(k) (1) Notwithstanding the control of a domestic insurer by any
1293	1293	person, the officers and directors of the insurer shall not thereby be
1294	1294	relieved of any obligation or liability to which they would otherwise be
1295	1295	subject by law, and the insurer shall be managed so as to assure its separate
1296	1296	operating identity consistent with this act.
1297	1297	(2) Nothing herein shall preclude a domestic insurer from having or
1298	1298	sharing a common management or cooperative or joint use of personnel,
1299	1299	property or services with one or more other persons under arrangements
1300	1300	meeting the standards of K.S.A. 40-3306, and amendments thereto.
1301	1301	(i) For purposes of this act, in determining whether an insurer's
1302	1302	surplus as regards policyholders is reasonable in relation to the insurer's
1303	1303	outstanding liabilities and adequate to such insurer's financial needs, the
1304	1304	following factors, among others, shall be considered:
1305	1305	(1) The size of the insurer as measured by such insurer's assets,
1306	1306	capital and surplus, reserves, premium writings, insurance in force and
1307	1307	other appropriate criteria;
1308	1308	(2) the extent to which the insurer's business is diversified among the
1309	1309	several lines of insurance;
1310	1310	(3) the number and size of risks insured in each line of business;
1311	1311	(4) the extent of the geographical dispersion of the insurer's insured
1312	1312	risks;
1313	1313	(5) the nature and extent of the insurer's reinsurance program;
1314	1314	(6) the quality, diversification and liquidity of the insurer's investment
1315	1315	portfolio;
1316	1316	(7) the recent past and projected future trend in the size and
1317	1317	performance of the insurer's surplus as regards policyholders;
1318	1318	(8) the surplus as regards policyholders maintained by other
1319	1319	comparable insurers;
1320	1320	(9) the adequacy of the insurer's reserves;
1321	1321	(10) the quality and liquidity of investments in affiliates. The
1322	1322	commissioner of insurance may treat any such investment as a disallowed
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1366	1366	asset for purposes of determining the adequacy of surplus as regards
1367	1367	policyholders whenever in the judgment of the commissioner of insurance
1368	1368	such investment so warrants; and
1369	1369	(11) the quality of the insurer's earnings and the extent to which the
1370	1370	reported earnings include extraordinary items.
1371	1371	Sec. 7. K.S.A. 40-3307 is hereby amended to read as follows: 40-
1372	1372	3307. (a) Subject to the limitation contained in this section and in addition
1373	1373	to the powers which that the commissioner of insurance has under K.S.A.
1374	1374	40-222 and K.S.A. 40-222a, and amendments thereto, relating to the
1375	1375	examination of insurers, the commissioner of insurance shall have the
1376	1376	power to examine any insurer registered under K.S.A. 40-3305, and
1377	1377	amendments thereto, and such insurer's affiliates to ascertain the financial
1378	1378	condition, including enterprise risk, of such insurer including the
1379	1379	enterprise risk to the insurer by the ultimate controlling party or by any
1380	1380	entity or combination of entities within the insurance holding company
1381	1381	system or by the insurance holding company system on a consolidated
1382	1382	basis.
1383	1383	(b) (1) The commissioner of insurance may order any insurer
1384	1384	registered under K.S.A. 40-3305, and amendments thereto, to produce
1385	1385	such records, books or other information in the possession of the insurer or
1386	1386	its affiliates as are reasonably necessary to determine compliance with this
1387	1387	act.
1388	1388	(2) To determine compliance with this act, the commissioner of
1389	1389	insurance may order any insurer registered under K.S.A. 40-3305, and
1390	1390	amendments thereto, to produce information not in the possession of the
1391	1391	insurer, if the insurer can obtain access to such information pursuant to
1392	1392	contractual relationships, statutory obligations or another method. In the
1393	1393	event that the insurer cannot obtain the information requested by the
1394	1394	commissioner of insurance, the insurer shall provide the commissioner of
1395	1395	insurance a detailed explanation of the reason that the insurer cannot
1396	1396	obtain the information and the identity of the holder of information.
1397	1397	Whenever it appears to the commissioner of insurance that the detailed
1398	1398	explanation is without merit, the commissioner of insurance may require,
1399	1399	after notice and hearing, the insurer to pay a penalty of not more than
1400	1400	$1,000 for each day's delay, or may suspend or revoke the license of the
1401	1401	insurer.
1402	1402	(c) The commissioner of insurance may retain at the registered
1403	1403	insurer's expense such attorneys, actuaries, accountants and other experts
1404	1404	not otherwise a part of the staff of the commissioner of insurance as the
1405	1405	commissioner of insurance shall determine to be reasonably necessary to
1406	1406	assist in the conduct of the examination under subsection (a). Any persons
1407	1407	so retained shall be under the direction and control of the commissioner of
1408	1408	insurance and shall act in a purely advisory capacity.
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1452	1452	(d) Each registered insurer producing examination records, books and
1453	1453	papers pursuant to subsection (a) shall be liable for and shall pay the
1454	1454	expense of such examination in accordance with K.S.A. 40-223 and
1455	1455	K.S.A. 40-253, and amendments thereto.
1456	1456	(e) The commissioner of insurance shall have the power to issue
1457	1457	subpoenas, administer oaths and examine under oath any person for
1458	1458	purposes of determining compliance with this section. Upon the failure or
1459	1459	refusal of any person to obey a subpoena, the commissioner of insurance
1460	1460	may petition a court of competent jurisdiction, and upon proper showing,
1461	1461	the court may enter an order compelling the witness to appear and testify
1462	1462	or produce documentary evidence. Failure to obey the court order shall be
1463	1463	punishable as contempt of court. Every person subpoenaed shall be
1464	1464	obliged to attend as a witness at the place specified in the subpoena, when
1465	1465	subpoenaed, anywhere within the state. Such subpoenaed person shall be
1466	1466	entitled to the same fees and mileage, if claimed, as a witness in K.S.A.
1467	1467	28-125, and amendments thereto. Fees, mileage and actual expense, if any,
1468	1468	necessarily incurred in securing the attendance and testimony of witnesses
1469	1469	shall be itemized, charged against and paid by the company being
1470	1470	examined.
1471	1471	Sec. 8. K.S.A. 40-3308 is hereby amended to read as follows: 40-
1472	1472	3308. (a) Documents, materials or other information obtained by or
1473	1473	disclosed to the commissioner of insurance or any other person in the
1474	1474	course of an examination or investigation made pursuant to K.S.A. 40-
1475	1475	3307, and amendments thereto, and all information reported pursuant to
1476	1476	K.S.A. 40-3304, 40-3305 and 40-3306, and amendments thereto, shall:
1477	1477	(1) Be confidential and privileged;
1478	1478	(2) not be subject to disclosure under the Kansas open records act,
1479	1479	K.S.A. 45-215 et seq., and amendments thereto;
1480	1480	(3) not be subject to subpoena; and
1481	1481	(4) not be subject to discovery or admissible in evidence in any
1482	1482	private civil action.
1483	1483	(b) (1) The commissioner of insurance shall not otherwise make the
1484	1484	documents, materials or other information public without the prior written
1485	1485	consent of the insurer to which it pertains unless the commissioner of
1486	1486	insurance, after giving the insurer and its affiliates who would be affected
1487	1487	thereby notice and opportunity to be heard in accordance with the
1488	1488	provisions of the Kansas administrative procedure act, determines that the
1489	1489	interests of policyholders, shareholders or the public would be served by
1490	1490	the publication thereof, in which event, the commissioner of insurance
1491	1491	may publish all or any part thereof in such a manner as the commissioner
1492	1492	of insurance may deem appropriate. In making such determination, the
1493	1493	commissioner of insurance also shall take into consideration any potential
1494	1494	adverse consequences of the disclosure thereof.
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1538	1538	(2) For purposes of the information reported and provided to the
1539	1539	commissioner pursuant to K.S.A. 40-3304 through 40-3307, and
1540	1540	amendments thereto, the commissioner shall maintain the confidentiality
1541	1541	of the:
1542	1542	(A) Group capital calculation and group capital ratio produced
1543	1543	within the calculation and any group capital information received from an
1544	1544	insurance holding company supervised by the federal reserve board or any
1545	1545	United States group-wide supervisor; and
1546	1546	(B) liquidity stress test results and supporting disclosures and any
1547	1547	liquidity stress test information received from an insurance holding
1548	1548	company supervised by the federal reserve board and non-United States
1549	1549	group-wide supervisors.
1550	1550	(c) Neither the commissioner of insurance nor any person who
1551	1551	received documents, materials or other information while acting under the
1552	1552	authority of the commissioner of insurance or with whom such documents,
1553	1553	materials or other information are shared pursuant to this section shall be
1554	1554	permitted or required to testify in any private civil action concerning any
1555	1555	confidential documents, materials or information subject to subsection (a).
1556	1556	(d) In order to assist in the performance of the commissioner of
1557	1557	insurance's duties, the commissioner of insurance:
1558	1558	(1) May share documents, materials or other information, including
1559	1559	the confidential and privileged documents, materials or information
1560	1560	subject to subsection (a), with other state, federal and international
1561	1561	regulatory agencies, with the national association of insurance
1562	1562	commissioners and its affiliates and subsidiaries, and with state, federal
1563	1563	and international law enforcement authorities, including members of any
1564	1564	supervisory college described in K.S.A. 40-3316, and amendments thereto,
1565	1565	provided that the recipient agrees in writing to maintain the confidentiality
1566	1566	and privileged status of the document, material or other information, and
1567	1567	has verified in writing the legal authority to maintain confidentiality;
1568	1568	(2) notwithstanding the provisions of paragraph (1) above, the
1569	1569	commissioner of insurance may only share confidential and privileged
1570	1570	documents, material or information reported pursuant to subsection (1) of
1571	1571	K.S.A. 40-3305, and amendments thereto, with the commissioner of
1572	1572	insurance or corresponding official of any state having statutes or
1573	1573	regulations substantially similar to subsections (a) and, (b) and (c), and
1574	1574	who has agreed in writing not to not disclose such information;
1575	1575	(3) may receive documents, materials or information, including
1576	1576	otherwise confidential and privileged documents, materials or information
1577	1577	from the national association of insurance commissioners, and its affiliates
1578	1578	and subsidiaries, and from regulatory and law enforcement officials of
1579	1579	other foreign or domestic jurisdictions, and shall maintain as confidential
1580	1580	or privileged any document, material or information received with notice
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1624	1624	or the understanding that it is confidential or privileged under the laws of
1625	1625	the jurisdiction that is the source of the document, material or information.
1626	1626	Documents received pursuant to this section shall not be subject to
1627	1627	disclosure pursuant to the open records act, K.S.A. 45-215 et seq., and
1628	1628	amendments thereto; and
1629	1629	(4) shall enter into written agreements with the national association of
1630	1630	insurance commissioners governing sharing and use of information
1631	1631	provided pursuant to this act consistent with this subsection that shall:
1632	1632	(i) Specify procedures and protocols regarding the confidentiality and
1633	1633	security of information shared with the national association of insurance
1634	1634	commissioners and its affiliates and subsidiaries pursuant to this act,
1635	1635	including procedures and protocols for sharing by the national association
1636	1636	of insurance commissioners with other state, federal or international
1637	1637	regulators;
1638	1638	(ii) specify that ownership of information shared with the national
1639	1639	association of insurance commissioners and its affiliates and subsidiaries
1640	1640	pursuant to this act remains with the commissioner of insurance, and that
1641	1641	the national association of insurance commissioners' NAIC's use of the
1642	1642	information is subject to the direction of the commissioner of insurance;
1643	1643	(iii) exclude documents, material or information reported pursuant to
1644	1644	K.S.A. 40-3305, and amendments thereto, and prohibit the NAIC and its
1645	1645	affiliates and subsidiaries from storing the information shared pursuant to
1646	1646	the insurance holding company act in a permanent database after the
1647	1647	underlying analysis is completed;
1648	1648	(iv) require prompt notice to be given to an insurer and its affiliates
1649	1649	whose confidential information in the possession of the national
1650	1650	association of insurance commissioners NAIC, pursuant to this act, is
1651	1651	subject to a request or subpoena to the national association of insurance
1652	1652	commissioners NAIC for disclosure or production; and
1653	1653	(iv)(v) require the national association of insurance commissioners
1654	1654	NAIC and its affiliates and subsidiaries to consent to intervention by an
1655	1655	insurer in any judicial or administrative action in which the national
1656	1656	association of insurance commissioners NAIC and its affiliates and
1657	1657	subsidiaries may be required to disclose confidential information about the
1658	1658	insurer and its affiliates that are shared with the national association of
1659	1659	insurance commissioners NAIC and its affiliates and subsidiaries pursuant
1660	1660	to this the insurance holding company act; and
1661	1661	(vi) for documents, material or information reporting pursuant to
1662	1662	K.S.A. 40-3305, and amendments thereto, in the case of an agreement
1663	1663	involving a third-party consultant, provide for notification of the identity
1664	1664	of the consultant to the applicable insurers.
1665	1665	(e) The sharing of information by the commissioner of insurance,
1666	1666	pursuant to this act, shall not constitute a delegation of regulatory authority
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1710	1710	or rule-making rulemaking authority, and the commissioner of insurance is
1711	1711	solely responsible for the administration, execution and enforcement of the
1712	1712	provisions of this act.
1713	1713	(f) No waiver of any applicable privilege or claim of confidentiality
1714	1714	in the documents, materials or information shall occur as a result of
1715	1715	disclosure to the commissioner of insurance under this act or as a result of
1716	1716	sharing as authorized in subsection (d).
1717	1717	(g) Documents, materials or other information in the possession or
1718	1718	control of the national association of insurance commissioners shall be
1719	1719	confidential by law and privileged, shall not be subject to the open records
1720	1720	act, K.S.A. 45-215 et seq., and amendments thereto, shall not be subject to
1721	1721	subpoena, and shall not be subject to discovery or admissible in evidence
1722	1722	in any private civil action.
1723	1723	(h) (1) The group capital calculation and resulting group capital
1724	1724	ratio required under K.S.A. 40-3305, and amendments thereto, and the
1725	1725	liquidity stress test along with its results and supporting disclosures
1726	1726	required under K.S.A. 40-3305, and amendments thereto, shall be deemed
1727	1727	regulatory tools for assessing group risks and capital adequacy and group
1728	1728	liquidity risks, respectively, and shall not be construed as a means to rank
1729	1729	insurers or insurance holding company systems.
1730	1730	(2) Except as otherwise may be required under the provisions of the
1731	1731	insurance holding company act, the making, publishing, disseminating,
1732	1732	circulating, placing before the public or causing directly or indirectly to
1733	1733	be made, published, disseminated, circulated or placed before the public
1734	1734	in a newspaper, magazine or other publication, in the form of a notice,
1735	1735	circular, pamphlet, letter or poster, broadcast by any radio or television
1736	1736	station or by any electronic means of communication available to the
1737	1737	public, or in any other way as an advertisement, announcement or
1738	1738	statement containing a representation or statement with regard to the
1739	1739	group capital calculation, group capital ratio, the liquidity stress test
1740	1740	results, or supporting disclosures for the liquidity stress test of any insurer
1741	1741	or any insurer group, or of any component derived in the calculation by
1742	1742	any insurer, broker, or other person engaged in any manner in the
1743	1743	insurance business could be misleading and is therefore prohibited.
1744	1744	(3) If any materially false statement with respect to the group capital
1745	1745	calculation, resulting group capital ratio, an inappropriate comparison of
1746	1746	any amount to an insurer's or insurance group's group capital calculation
1747	1747	or resulting group capital ratio, liquidity stress test result, supporting
1748	1748	disclosures for the liquidity stress test or an inappropriate comparison of
1749	1749	any amount to an insurer's or insurance group's liquidity stress test result
1750	1750	or supporting disclosures is published in any written publication and the
1751	1751	insurer is able to demonstrate to the commissioner with substantial proof
1752	1752	the falsity or inappropriateness of such statement, then the insurer may
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1796	1796	publish announcements in a written publication if the sole purpose of the
1797	1797	announcement is to rebut the materially false statement.
1798	1798	(i) The provisions of this section shall not be subject to the provisions
1799	1799	of K.S.A. 45-229, and amendments thereto.
1800	1800	Sec. 9. K.S.A. 40-249, 40-2c29, 40-2d01, 40-3302, 40-3305, 40-
1801	1801	3306, 40-3307 and 40-3308 and K.S.A. 2024 Supp. 40-2c01 are hereby
1802	1802	repealed.
1803	1803	Sec. 10. This act shall take effect and be in force from and after its
1804	1804	publication in the statute book.
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