Kansas 2025-2026 Regular Session

Kansas Senate Bill SB22 Compare Versions

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1	1	Session of 2025
2	2	SENATE BILL No. 22
3	3	By Committee on Financial Institutions and Insurance
4	4	1-16
5	5	AN ACT concerning insurance; relating to title insurance; requiring title
6	6	agents to make their audit reports available for inspection upon request
7	7	of the commissioner of insurance instead of submitting such reports
8	8	annually; requiring the amount of surety bonds filed with the
9	9	commissioner to be $100,000; eliminating the controlled business
10	10	exemption in certain counties; amending K.S.A. 40-1139 and K.S.A.
11	11	2024 Supp. 40-1137 and 40-2404 and repealing the existing sections.
12	12	Be it enacted by the Legislature of the State of Kansas:
13	13	Section 1. K.S.A. 2024 Supp. 40-1137 is hereby amended to read as
14	14	follows: 40-1137. A title insurance agent may operate as an escrow,
15	15	settlement or closing agent, provided that:
16	16	(a) All funds deposited with the title insurance agent in connection
17	17	with an escrow, settlement or closing shall be submitted for collection to,
18	18	invested in or deposited in a separate fiduciary trust account or accounts in
19	19	a qualified financial institution no later than the close of the next business
20	20	day, in accordance with the following requirements:
21	21	(1) The funds shall be the property of the person or persons entitled to
22	22	them under the provisions of the escrow, settlement or closing agreement
23	23	and shall be segregated for each depository by escrow, settlement or
24	24	closing in the records of the title insurance agent in a manner that permits
25	25	the funds to be identified on an individual basis;
26	26	(2) the funds shall be applied only in accordance with the terms of the
27	27	individual instructions or agreements under which the funds were
28	28	accepted; and
29	29	(3) an agent shall not retain any interest on any money held in an
30	30	interest-bearing account without the written consent of all parties to the
31	31	transaction.
32	32	(b) Funds held in an escrow account shall be disbursed only:
33	33	(1) Pursuant to written authorization of buyer and seller;
34	34	(2) pursuant to a court order; or
35	35	(3) when a transaction is closed according to the agreement of the
36	36	parties.
37	37	(c) A title insurance agent shall not commingle the agent's personal
38	38	funds or other moneys with escrow funds. In addition, the agent shall not
39	39	use escrow funds to pay or to indemnify against the debts of the agent or
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76	76	of any other party. The escrow funds shall be used only to fulfill the terms
77	77	of the individual escrow and none of the funds shall be utilized until the
78	78	necessary conditions of the escrow have been met. All funds deposited for
79	79	real estate closings, including closings involving refinances of existing
80	80	mortgage loans, which exceed $2,500 shall be in one of the following
81	81	forms:
82	82	(1) Lawful money of the United States;
83	83	(2) wire transfers such that the funds are unconditionally received by
84	84	the title insurance agent or the agent's depository;
85	85	(3) cashier's checks, certified checks, teller's checks or bank money
86	86	orders issued by a federally insured financial institution and
87	87	unconditionally held by the title insurance agent;
88	88	(4) funds received from governmental entities, federally chartered
89	89	instrumentalities of the United States or drawn on an escrow account of a
90	90	real estate broker licensed in the state or drawn on an escrow account of a
91	91	title insurer or title insurance agent licensed to do business in the state;
92	92	(5) other negotiable instruments that have been on deposit in the
93	93	escrow account at least 10 days; or
94	94	(6) a real-time or instant payment through the FedNow service
95	95	operated by the federal reserve banks or the clearing house payment
96	96	company's real-time payments (RTP) system.
97	97	(d) Each title insurance agent shall have an annual audit made of its
98	98	escrow, settlement and closing deposit accounts, conducted by a certified
99	99	public accountant or by a title insurer for which the title insurance agent
100	100	has a licensing agreement. The title insurance agent shall provide a copy of
101	101	the audit report to the commissioner within 30 days after the close of the
102	102	calendar year for which an audit is required upon request. Title insurance
103	103	agents who are attorneys and who issue title insurance policies as part of
104	104	their legal representation of clients are exempt from the requirements of
105	105	this subsection. However, the title insurer, at its expense, may conduct or
106	106	cause to be conducted an annual audit of the escrow, settlement and
107	107	closing accounts of the attorney. Attorneys who are exclusively in the
108	108	business of title insurance are not exempt from the requirements of this
109	109	subsection.
110	110	(e) The commissioner may promulgate rules and regulations setting
111	111	forth the standards of the audit and the form of audit report required.
112	112	(f) If the title insurance agent is appointed by two or more title
113	113	insurers and maintains fiduciary trust accounts in connection with
114	114	providing escrow and closing settlement services, the title insurance agent
115	115	shall allow each title insurer reasonable access to the accounts and any or
116	116	all of the supporting account information in order to ascertain the safety
117	117	and security of the funds held by the title insurance agent.
118	118	(g) Nothing in this section is intended to amend, alter or supersede
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162	162	other laws of this state or the United States, regarding an escrow holder's
163	163	duties and obligations.
164	164	Sec. 2. K.S.A. 40-1139 is hereby amended to read as follows: 40-
165	165	1139. (a) The A title insurance agent who that handles escrow, settlement
166	166	or closing accounts shall file with the commissioner a $100,000 surety
167	167	bond or irrevocable letter of credit in a form acceptable to the
168	168	commissioner,. Such surety bond or irrevocable letter of credit shall be
169	169	issued by an insurance company or financial institution that is authorized
170	170	to conduct business in this state, securing the applicant's or the title
171	171	insurance agent's faithful performance of all duties and obligations set out
172	172	in K.S.A. 40-1135 through 40-1141, and amendments thereto.
173	173	(b) The terms of the bond or irrevocable letter of credit shall be:
174	174	(1) The surety bond shall provide that such bond may not be
175	175	terminated without 30 days prior written notice to the commissioner.
176	176	(2) An(c) The irrevocable letter of credit shall:
177	177	(1) Be issued by a bank which that is insured by the federal deposit
178	178	insurance corporation or its successor if such letter of credit is ; and
179	179	(2) initially be issued for a term of at least one year and by its terms is
180	180	automatically renewed at each expiration date for at least an additional
181	181	one-year term unless at least 30 days prior written notice of intention not
182	182	to renew is given provided to the commissioner of insurance.
183	183	(c) The amount of the surety bond or irrevocable letter of credit for
184	184	those agents servicing real estate transactions on property located in
185	185	counties having a certain population shall be required as follows:
186	186	(1) $100,000 surety bond or irrevocable letter of credit in counties
187	187	having a population of 40,001 and over;
188	188	(2) $50,000 surety bond or irrevocable letter of credit in counties
189	189	having a population of 20,001 to 40,000; and
190	190	(3) $25,000 surety bond or irrevocable letter of credit in counties
191	191	having a population of 20,000 or under.
192	192	(d) The surety bond or irrevocable letter of credit shall be for the
193	193	benefit of any person suffering a loss if the title insurance agent converts
194	194	or misappropriates money received or held in escrow, deposit or trust
195	195	accounts while acting as a title insurance agent providing any escrow or
196	196	settlement services.
197	197	Sec. 3. K.S.A. 2024 Supp. 40-2404 is hereby amended to read as
198	198	follows: 40-2404. The following are hereby defined as unfair methods of
199	199	competition and unfair or deceptive acts or practices in the business of
200	200	insurance:
201	201	(1) Misrepresentations and false advertising of insurance policies.
202	202	Making, issuing, circulating or causing to be made, issued or circulated,
203	203	any estimate, illustration, circular, statement, sales presentation, omission
204	204	or comparison that:
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248	248	(a) Misrepresents the benefits, advantages, conditions or terms of any
249	249	insurance policy;
250	250	(b) misrepresents the dividends or share of the surplus to be received
251	251	on any insurance policy;
252	252	(c) makes any false or misleading statements as to the dividends or
253	253	share of surplus previously paid on any insurance policy;
254	254	(d) is misleading or is a misrepresentation as to the financial
255	255	condition of any person, or as to the legal reserve system upon which any
256	256	life insurer operates;
257	257	(e) uses any name or title of any insurance policy or class of
258	258	insurance policies misrepresenting the true nature thereof;
259	259	(f) is a misrepresentation for the purpose of inducing or tending to
260	260	induce the lapse, forfeiture, exchange, conversion or surrender of any
261	261	insurance policy;
262	262	(g) is a misrepresentation for the purpose of effecting a pledge or
263	263	assignment of or effecting a loan against any insurance policy; or
264	264	(h) misrepresents any insurance policy as being shares of stock.
265	265	(2) False information and advertising generally. Making, publishing,
266	266	disseminating, circulating or placing before the public, or causing, directly
267	267	or indirectly, to be made, published, disseminated, circulated or placed
268	268	before the public, in a newspaper, magazine or other publication, or in the
269	269	form of a notice, circular, pamphlet, letter or poster, or over any radio or
270	270	television station, or in any other way, an advertisement, announcement or
271	271	statement containing any assertion, misrepresentation or statement with
272	272	respect to the business of insurance or with respect to any person in the
273	273	conduct of such person's insurance business, that is untrue, deceptive or
274	274	misleading.
275	275	(3) Defamation. Making, publishing, disseminating or circulating,
276	276	directly or indirectly, or aiding, abetting or encouraging the making,
277	277	publishing, disseminating or circulating of any oral or written statement or
278	278	any pamphlet, circular, article or literature that is false, or maliciously
279	279	critical of or derogatory to the financial condition of any person, and that
280	280	is calculated to injure such person.
281	281	(4) Boycott, coercion and intimidation. Entering into any agreement
282	282	to commit, or by any concerted action committing, any act of boycott,
283	283	coercion or intimidation resulting in or tending to result in unreasonable
284	284	restraint of the business of insurance, or by any act of boycott, coercion or
285	285	intimidation monopolizing or attempting to monopolize any part of the
286	286	business of insurance.
287	287	(5) False statements and entries. (a) Knowingly filing with any
288	288	supervisory or other public official, or knowingly making, publishing,
289	289	disseminating, circulating or delivering to any person, or placing before
290	290	the public, or knowingly causing directly or indirectly, to be made,
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334	334	published, disseminated, circulated, delivered to any person, or placed
335	335	before the public, any false material statement of fact as to the financial
336	336	condition of a person.
337	337	(b) Knowingly making any false entry of a material fact in any book,
338	338	report or statement of any person or knowingly omitting to make a true
339	339	entry of any material fact pertaining to the business of such person in any
340	340	book, report or statement of such person.
341	341	(6) Stock operations and advisory board contracts. Issuing or
342	342	delivering or permitting agents, officers or employees to issue or deliver,
343	343	agency company stock or other capital stock, or benefit certificates or
344	344	shares in any common-law corporation, or securities or any special or
345	345	advisory board contracts or other contracts of any kind promising returns
346	346	and profits as an inducement to insurance. Nothing herein shall prohibit
347	347	the acts permitted by K.S.A. 40-232, and amendments thereto.
348	348	(7) Unfair discrimination. (a) Making or permitting any unfair
349	349	discrimination between individuals of the same class and equal expectation
350	350	of life in the rates charged for any contract of life insurance or life annuity
351	351	or in the dividends or other benefits payable thereon, or in any other of the
352	352	terms and conditions of such contract.
353	353	(b) Making or permitting any unfair discrimination between
354	354	individuals of the same class and of essentially the same hazard in the
355	355	amount of premium, policy fees or rates charged for any policy or contract
356	356	of accident or health insurance or in the benefits payable thereunder, or in
357	357	any of the terms or conditions of such contract, or in any other manner
358	358	whatever.
359	359	(c) Refusing to insure, or refusing to continue to insure, or limiting
360	360	the amount, extent or kind of coverage available to an individual, or
361	361	charging an individual a different rate for the same coverage solely
362	362	because of blindness or partial blindness. With respect to all other
363	363	conditions, including the underlying cause of the blindness or partial
364	364	blindness, persons who are blind or partially blind shall be subject to the
365	365	same standards of sound actuarial principles or actual or reasonably
366	366	anticipated experience as are sighted persons. Refusal to insure includes
367	367	denial by an insurer of disability insurance coverage on the grounds that
368	368	the policy defines "disability" as being presumed in the event that the
369	369	insured loses such person's eyesight. However, an insurer may exclude
370	370	from coverage disabilities consisting solely of blindness or partial
371	371	blindness when such condition existed at the time the policy was issued.
372	372	(d) Refusing to insure, or refusing to continue to insure, or limiting
373	373	the amount, extent or kind of coverage available for accident and health
374	374	and life insurance to an applicant who is the proposed insured or charge,
375	375	charging a different rate for the same coverage or, excluding or limiting
376	376	coverage for losses or denying a claim incurred by an insured as a result of
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420	420	abuse based on the fact that the applicant who, is the proposed insured, is,
421	421	has been, or may be the subject of domestic abuse, except as provided in
422	422	subsection (7)(d)(v). "Abuse" As used in this paragraph, "abuse" means
423	423	one or more acts defined in K.S.A. 60-3102, and amendments thereto,
424	424	between family members, current or former household members, or
425	425	current or former intimate partners.
426	426	(i) An insurer may shall not ask an applicant for life or accident and
427	427	health insurance who is the proposed insured if the individual is, has been
428	428	or may be the subject of domestic abuse, or seeks, has sought or had
429	429	reason to seek medical or psychological treatment or counseling
430	430	specifically for abuse, protection from abuse or shelter from abuse.
431	431	(ii) Nothing in this section shall be construed to prohibit a person
432	432	from declining to issue an insurance policy insuring the life of an
433	433	individual who is, has been or has the potential to be the subject of abuse if
434	434	the perpetrator of the abuse is the applicant or would be the owner of the
435	435	insurance policy.
436	436	(iii) No insurer that issues a life or accident and health policy to an
437	437	individual who is, has been or may be the subject of domestic abuse shall
438	438	be subject to civil or criminal liability for the death or any injuries suffered
439	439	by that individual as a result of domestic abuse.
440	440	(iv) No person shall refuse to insure, refuse to continue to insure,
441	441	limit the amount, extent or kind of coverage available to an individual or
442	442	charge a different rate for the same coverage solely because of physical or
443	443	mental condition, except where the refusal, limitation or rate differential is
444	444	based on sound actuarial principles.
445	445	(v) Nothing in this section shall be construed to prohibit a person
446	446	from underwriting or rating a risk on the basis of a preexisting physical or
447	447	mental condition, even if such condition has been caused by abuse,
448	448	provided that:
449	449	(A) The person routinely underwrites or rates such condition in the
450	450	same manner with respect to an insured or an applicant who is not a victim
451	451	of abuse;
452	452	(B) the fact that an individual is, has been or may be the subject of
453	453	abuse may not be considered a physical or mental condition; and
454	454	(C) such underwriting or rating is not used to evade the intent of this
455	455	section or any other provision of the Kansas insurance code.
456	456	(vi) Any person who underwrites or rates a risk on the basis of
457	457	preexisting physical or mental condition as set forth in subsection (7)(d)
458	458	(v), shall treat such underwriting or rating as an adverse underwriting
459	459	decision pursuant to K.S.A. 40-2,112, and amendments thereto.
460	460	(vii) The provisions of this paragraph shall apply to all policies of life
461	461	and accident and health insurance issued in this state after the effective
462	462	date of this act and all existing contracts that are renewed on or after the
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506	506	effective date of this act.
507	507	(e) Refusing to insure, or refusing to continue to insure, or limiting
508	508	the amount, extent or kind of coverage available for life insurance to an
509	509	individual, or charging an individual a different rate for the same coverage,
510	510	solely because of such individual's status as a living organ donor. With
511	511	respect to all other conditions, persons who are living organ donors shall
512	512	be subject to the same standards of sound actuarial principles or actual or
513	513	reasonably anticipated experience as are persons who are not organ
514	514	donors.
515	515	(8) Rebates. (a) Except as otherwise expressly provided by law,
516	516	knowingly permitting, offering to make or making any contract of life
517	517	insurance, life annuity or accident and health insurance, or agreement as to
518	518	such contract other than as plainly expressed in the insurance contract
519	519	issued thereon; paying, allowing, giving or offering to pay, allow or give,
520	520	directly or indirectly, as inducement to such insurance, or annuity, any
521	521	rebate of premiums payable on the contract, any special favor or advantage
522	522	in the dividends or other benefits thereon, or any valuable consideration or
523	523	inducement whatever not specified in the contract; or giving, selling,
524	524	purchasing or offering to give, sell or purchase as inducement to such
525	525	insurance contract or annuity or in connection therewith, any stocks, bonds
526	526	or other securities of any insurance company or other corporation,
527	527	association or partnership, or any dividends or profits accrued thereon, or
528	528	anything of value whatsoever not specified in the contract.
529	529	(b) Nothing in subsection (7)(a) or (8)(a) shall be construed as
530	530	including within the definition of discrimination or rebates any of the
531	531	following practices:
532	532	(i) In the case of any contract of life insurance or life annuity, paying
533	533	bonuses to policyholders or otherwise abating their premiums in whole or
534	534	in part out of surplus accumulated from nonparticipating insurance. Any
535	535	such bonuses or abatement of premiums shall be fair and equitable to
536	536	policyholders and for the best interests of the company and its
537	537	policyholders;
538	538	(ii) in the case of life insurance policies issued on the industrial debit
539	539	plan, making allowance to policyholders who have continuously for a
540	540	specified period made premium payments directly to an office of the
541	541	insurer in an amount that fairly represents the saving in collection
542	542	expenses;
543	543	(iii) readjustment of the rate of premium for a group insurance policy
544	544	based on the loss or expense experience thereunder, at the end of the first
545	545	or any subsequent policy year of insurance thereunder, which may be
546	546	made retroactive only for such policy year;
547	547	(iv) engaging in an arrangement that would not violate section 106 of
548	548	the bank holding company act amendments of 1972, as interpreted by the
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592	592	board of governors of the federal reserve system or section 5(q) of the
593	593	home owners' loan act;
594	594	(v) the offer or provision by insurers or producers, by or through
595	595	employees, affiliates or third-party representatives, of value-added
596	596	products or services at no or reduced cost when such products or services
597	597	are not specified in the policy of insurance if the product or service:
598	598	(A) Relates to the insurance coverage; and
599	599	(B) is primarily designed to satisfy one or more of the following:
600	600	(1) Provide loss mitigation or loss control;
601	601	(2) reduce claim costs or claim settlement costs;
602	602	(3) provide education about liability risks or risk of loss to persons or
603	603	property;
604	604	(4) monitor or assess risk, identify sources of risk or develop
605	605	strategies for eliminating or reducing risk;
606	606	(5) enhance health;
607	607	(6) enhance financial wellness through items such as education or
608	608	financial planning services;
609	609	(7) provide post-loss services;
610	610	(8) (a) incentivize behavioral changes to improve the health or reduce
611	611	the risk of death or disability of a customer;
612	612	(b) as used in this section, "customer" means a policyholder, potential
613	613	policyholder, certificate holder, potential certificate holder, insured,
614	614	potential insured or applicant; or
615	615	(9) assist in the administration of the employee or retiree benefit
616	616	insurance coverage.
617	617	(C) The cost to the insurer or producer offering the product or service
618	618	to any given customer shall be reasonable in comparison to such
619	619	customer's premiums or insurance coverage for the policy class.
620	620	(D) If the insurer or producer is providing the product or service
621	621	offered, the insurer or producer shall ensure that the customer is provided
622	622	with contact information, upon request, to assist the customer with
623	623	questions regarding the product or service.
624	624	(E) The commissioner may adopt rules and regulations when
625	625	implementing the permitted practices set forth in this section to ensure
626	626	consumer protection. Such rules and regulations, consistent with
627	627	applicable law, may address, among other issues, consumer data
628	628	protections and privacy, consumer disclosure and unfair discrimination.
629	629	(F) The availability of the value-added product or service shall be
630	630	based on documented objective criteria and offered in a manner that is not
631	631	unfairly discriminatory. The documented criteria shall be maintained by
632	632	the insurer or producer and produced upon request by the commissioner.
633	633	(G) If an insurer or producer does not have sufficient evidence but
634	634	has a good-faith belief that the product or service meets the criteria in
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678	678	subsection (8)(b)(v)(B), the insurer or producer may provide the product or
679	679	service in a manner that is not unfairly discriminatory as part of a pilot or
680	680	testing program for not more than one year. An insurer or producer shall
681	681	notify the commissioner of such a pilot or testing program offered to
682	682	consumers in this state prior to launching and may proceed with the
683	683	program unless the commissioner objects within 21 days of notice.
684	684	(vi) An insurer or a producer may:
685	685	(A) Offer or give non-cash gifts, items or services, including meals to
686	686	or charitable donations on behalf of a customer, in connection with the
687	687	marketing, sale, purchase or retention of contracts of insurance, as long as
688	688	the cost does not exceed an amount determined to be reasonable by the
689	689	commissioner per policy year per term. The offer shall be made in a
690	690	manner that is not unfairly discriminatory. The customer shall not be
691	691	required to purchase, continue to purchase or renew a policy in exchange
692	692	for the gift, item or service.
693	693	(B) Conduct raffles or drawings to the extent permitted by state law,
694	694	as long as there is no financial cost to entrants to participate, the drawing
695	695	or raffle does not obligate participants to purchase insurance, the prizes are
696	696	not valued in excess of a reasonable amount determined by the
697	697	commissioner and the drawing or raffle is open to the public. The raffle or
698	698	drawing shall be offered in a manner that is not unfairly discriminatory.
699	699	The customer shall not be required to purchase, continue to purchase or
700	700	renew a policy in exchange for the gift, item or service.
701	701	(c) An insurer, producer or representative of an insurer or producer
702	702	shall not offer or provide insurance as an inducement to the purchase of
703	703	another policy.
704	704	(9) Unfair claim settlement practices. It is an unfair claim settlement
705	705	practice if any of the following or any rules and regulations pertaining
706	706	thereto are either committed flagrantly and in conscious disregard of such
707	707	provisions, or committed with such frequency as to indicate a general
708	708	business practice:
709	709	(a) Misrepresenting pertinent facts or insurance policy provisions
710	710	relating to coverages at issue;
711	711	(b) failing to acknowledge and act reasonably promptly upon
712	712	communications with respect to claims arising under insurance policies;
713	713	(c) failing to adopt and implement reasonable standards for the
714	714	prompt investigation of claims arising under insurance policies;
715	715	(d) refusing to pay claims without conducting a reasonable
716	716	investigation based upon all available information;
717	717	(e) failing to affirm or deny coverage of claims within a reasonable
718	718	time after proof of loss statements have been completed;
719	719	(f) not attempting in good faith to effectuate prompt, fair and
720	720	equitable settlements of claims in which liability has become reasonably
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764	764	clear;
765	765	(g) compelling insureds to institute litigation to recover amounts due
766	766	under an insurance policy by offering substantially less than the amounts
767	767	ultimately recovered in actions brought by such insureds;
768	768	(h) attempting to settle a claim for less than the amount to which a
769	769	reasonable person would have believed that such person was entitled by
770	770	reference to written or printed advertising material accompanying or made
771	771	part of an application;
772	772	(i) attempting to settle claims on the basis of an application that was
773	773	altered without notice to, or knowledge or consent of the insured;
774	774	(j) making claims payments to insureds or beneficiaries not
775	775	accompanied by a statement setting forth the coverage under which
776	776	payments are being made;
777	777	(k) making known to insureds or claimants a policy of appealing from
778	778	arbitration awards in favor of insureds or claimants for the purpose of
779	779	compelling them to accept settlements or compromises less than the
780	780	amount awarded in arbitration;
781	781	(l) delaying the investigation or payment of claims by requiring an
782	782	insured, claimant or the physician of either to submit a preliminary claim
783	783	report and then requiring the subsequent submission of formal proof of
784	784	loss forms, both of which submissions contain substantially the same
785	785	information;
786	786	(m) failing to promptly settle claims, where liability has become
787	787	reasonably clear, under one portion of the insurance policy coverage in
788	788	order to influence settlements under other portions of the insurance policy
789	789	coverage; or
790	790	(n) failing to promptly provide a reasonable explanation of the basis
791	791	in the insurance policy in relation to the facts or applicable law for denial
792	792	of a claim or for the offer of a compromise settlement.
793	793	(10) Failure to maintain complaint handling procedures. Failure of
794	794	any person, who is an insurer on an insurance policy, to maintain a
795	795	complete record of all the complaints that it has received since the date of
796	796	its last examination under K.S.A. 40-222, and amendments thereto; but no
797	797	such records shall be required for complaints received prior to the effective
798	798	date of this act. The record shall indicate the total number of complaints,
799	799	their classification by line of insurance, the nature of each complaint, the
800	800	disposition of the complaints, the date each complaint was originally
801	801	received by the insurer and the date of final disposition of each complaint.
802	802	For purposes of this subsection, "complaint" means any written
803	803	communication primarily expressing a grievance related to the acts and
804	804	practices set out in this section.
805	805	(11) Misrepresentation in insurance applications. Making false or
806	806	fraudulent statements or representations on or relative to an application for
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849	849	43 SB 22 11
850	850	an insurance policy, for the purpose of obtaining a fee, commission,
851	851	money or other benefit from any insurer, agent, broker or individual.
852	852	(12) Statutory violations. Any violation of any of the provisions of
853	853	K.S.A. 40-216, 40-276a, 40-2,155 or 40-1515, and amendments thereto.
854	854	(13) Disclosure of information relating to adverse underwriting
855	855	decisions and refund of premiums. Failing to comply with the provisions of
856	856	K.S.A. 40-2,112, and amendments thereto, within the time prescribed in
857	857	such section.
858	858	(14) Rebates and other inducements in title insurance. (a) No title
859	859	insurance company or title insurance agent, or any officer, employee,
860	860	attorney, agent or solicitor thereof, may pay, allow or give, or offer to pay,
861	861	allow or give, directly or indirectly, as an inducement to obtaining any title
862	862	insurance business, any rebate, reduction or abatement of any rate or
863	863	charge made incident to the issuance of such insurance, any special favor
864	864	or advantage not generally available to others of the same classification, or
865	865	any money, thing of value or other consideration or material inducement.
866	866	The words "charge made incident to the issuance of such insurance"
867	867	includes, without limitations, escrow, settlement and closing charges.
868	868	(b) No insured named in a title insurance policy or contract nor any
869	869	other person directly or indirectly connected with the transaction involving
870	870	the issuance of the policy or contract, including, but not limited to,
871	871	mortgage lender, real estate broker, builder, attorney or any officer,
872	872	employee, agent representative or solicitor thereof, or any other person
873	873	may knowingly receive or accept, directly or indirectly, any rebate,
874	874	reduction or abatement of any charge, or any special favor or advantage or
875	875	any monetary consideration or inducement referred to in subsection (14)
876	876	(a).
877	877	(c) Nothing in this section shall be construed as prohibiting:
878	878	(i) The payment of reasonable fees for services actually rendered to a
879	879	title insurance agent in connection with a title insurance transaction;
880	880	(ii) the payment of an earned commission to a duly appointed title
881	881	insurance agent for services actually performed in the issuance of the
882	882	policy of title insurance; or
883	883	(iii) the payment of reasonable entertainment and advertising
884	884	expenses.
885	885	(d) Nothing in this section prohibits the division of rates and charges
886	886	between or among a title insurance company and its agent, or one or more
887	887	title insurance companies and one or more title insurance agents, if such
888	888	division of rates and charges does not constitute an unlawful rebate under
889	889	the provisions of this section and is not in payment of a forwarding fee or a
890	890	finder's fee.
891	891	(e) As used in subsections (14)(e) through (14)(i), unless the context
892	892	otherwise requires:
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935	935	43 SB 22 12
936	936	(i) "Associate" means any firm, association, organization, partnership,
937	937	business trust, corporation or other legal entity organized for profit in
938	938	which a producer of title business is a director, officer or partner thereof,
939	939	or owner of a financial interest; the spouse or any relative within the
940	940	second degree by blood or marriage of a producer of title business who is a
941	941	natural person; any director, officer or employee of a producer of title
942	942	business or associate; any legal entity that controls, is controlled by, or is
943	943	under common control with a producer of title business or associate; and
944	944	any natural person or legal entity with whom a producer of title business or
945	945	associate has any agreement, arrangement or understanding or pursues any
946	946	course of conduct, the purpose or effect of which is to evade the provisions
947	947	of this section.
948	948	(ii) "Financial interest" means any direct or indirect interest, legal or
949	949	beneficial, where the holder thereof is or will be entitled to 1% or more of
950	950	the net profits or net worth of the entity in which such interest is held.
951	951	Notwithstanding the foregoing, an interest of less than 1% or any other
952	952	type of interest shall constitute a "financial interest" if the primary purpose
953	953	of the acquisition or retention of that interest is the financial benefit to be
954	954	obtained as a consequence of that interest from the referral of title
955	955	business.
956	956	(iii) "Person" means any natural person, partnership, association,
957	957	cooperative, corporation, trust or other legal entity.
958	958	(iv) "Producer of title business" or "producer" means any person,
959	959	including any officer, director or owner of 5% or more of the equity or
960	960	capital or both of any person, engaged in this state in the trade, business,
961	961	occupation or profession of:
962	962	(A) Buying or selling interests in real property;
963	963	(B) making loans secured by interests in real property; or
964	964	(C) acting as broker, agent, representative or attorney for a person
965	965	who buys or sells any interest in real property or who lends or borrows
966	966	money with such interest as security.
967	967	(v) "Refer" means to direct or cause to be directed or to exercise any
968	968	power or influence over the direction of title insurance business, whether
969	969	or not the consent or approval of any other person is sought or obtained
970	970	with respect to the referral.
971	971	(f) No title insurer or title agent may accept any order for, issue a title
972	972	insurance policy to, or provide services to, an applicant if it knows or has
973	973	reason to believe that the applicant was referred to it by any producer of
974	974	title business or by any associate of such producer, where the producer, the
975	975	associate, or both, have a financial interest in the title insurer or title agent
976	976	to which business is referred unless the producer has disclosed to the
977	977	buyer, seller and lender the financial interest of the producer of title
978	978	business or associate referring the title insurance business.
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1021	1021	43 SB 22 13
1022	1022	(g) No title insurer or title agent may accept an order for title
1023	1023	insurance business, issue a title insurance policy, or receive or retain any
1024	1024	premium, or charge in connection with any transaction if: (i) The title
1025	1025	insurer or title agent knows or has reason to believe that the transaction
1026	1026	will constitute controlled business for that title insurer or title agent; and
1027	1027	(ii) 70% or more of the closed title orders of that title insurer or title agent
1028	1028	during the 12 full calendar months immediately preceding the month in
1029	1029	which the transaction takes place is derived from controlled business. The
1030	1030	prohibitions contained in this paragraph shall not apply to transactions
1031	1031	involving real estate located in a county that has a population, as shown by
1032	1032	the last preceding decennial census, of 10,000 or less.
1033	1033	(h) Within 90 days following the end of each business year, as
1034	1034	established by the title insurer or title agent, each title insurer or title agent
1035	1035	shall file with the department of insurance and any title insurer with which
1036	1036	the title agent maintains an underwriting agreement, a report executed by
1037	1037	the title insurer's or title agent's chief executive officer or designee, under
1038	1038	penalty of perjury, stating the percent of closed title orders originating
1039	1039	from controlled business. The failure of a title insurer or title agent to
1040	1040	comply with the requirements of this section, at the discretion of the
1041	1041	commissioner, shall be grounds for the suspension or revocation of a
1042	1042	license or other disciplinary action, with the commissioner able to mitigate
1043	1043	any such disciplinary action if the title insurer or title agent is found to be
1044	1044	in substantial compliance with competitive behavior as defined by federal
1045	1045	housing and urban development statement of policy 1996-2.
1046	1046	(i) (1) No title insurer or title agent may accept any title insurance
1047	1047	order or issue a title insurance policy to any person if it knows or has
1048	1048	reason to believe that such person was referred to it by any producer of
1049	1049	title business or by any associate of such producer, where the producer, the
1050	1050	associate, or both, have a financial interest in the title insurer or title agent
1051	1051	to which business is referred unless the producer has disclosed in writing
1052	1052	to the person so referred the fact that such producer or associate has a
1053	1053	financial interest in the title insurer or title agent, the nature of the
1054	1054	financial interest and a written estimate of the charge or range of charges
1055	1055	generally made by the title insurer or agent for the title services. Such
1056	1056	disclosure shall include language stating that the consumer is not obligated
1057	1057	to use the title insurer or agent in which the referring producer or associate
1058	1058	has a financial interest and shall include the names and telephone numbers
1059	1059	of not less than three other title insurers or agents that operate in the
1060	1060	county in which the property is located. If fewer than three insurers or
1061	1061	agents operate in that county, the disclosure shall include all title insurers
1062	1062	or agents operating in that county. Such written disclosure shall be signed
1063	1063	by the person so referred and must have occurred prior to any commitment
1064	1064	having been made to such title insurer or agent.
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1107	1107	43 SB 22 14
1108	1108	(2) No producer of title business or associate of such producer shall
1109	1109	require, directly or indirectly, as a condition to selling or furnishing any
1110	1110	other person any loan or extension thereof, credit, sale, property, contract,
1111	1111	lease or service, that such other person shall purchase title insurance of any
1112	1112	kind through any title agent or title insurer if such producer has a financial
1113	1113	interest in such title agent or title insurer.
1114	1114	(3) No title insurer or title agent may accept any title insurance order
1115	1115	or issue a title insurance policy to any person it knows or has reason to
1116	1116	believe that the name of the title company was pre-printed in the sales
1117	1117	contract, prior to the buyer or seller selecting that title company.
1118	1118	(4) Nothing in this paragraph shall prohibit any producer of title
1119	1119	business or associate of such producer from referring title business to any
1120	1120	title insurer or title agent of such producer's or associate's choice, and, if
1121	1121	such producer or associate of such producer has any financial interest in
1122	1122	the title insurer, from receiving income, profits or dividends produced or
1123	1123	realized from such financial interest, so long as:
1124	1124	(a) Such financial interest is disclosed to the purchaser of the title
1125	1125	insurance in accordance with paragraphs (i)(1) through (i)(4);
1126	1126	(b) the payment of income, profits or dividends is not in exchange for
1127	1127	the referral of business; and
1128	1128	(c) the receipt of income, profits or dividends constitutes only a return
1129	1129	on the investment of the producer or associate.
1130	1130	(5) Any producer of title business or associate of such producer who
1131	1131	violates the provisions of paragraphs (i)(2) through (i)(4), or any title
1132	1132	insurer or title agent who accepts an order for title insurance knowing that
1133	1133	it is in violation of paragraphs (i)(2) through (i)(4), in addition to any other
1134	1134	action that may be taken by the commissioner of insurance, shall be
1135	1135	subject to a fine by the commissioner in an amount equal to five times the
1136	1136	premium for the title insurance and, if licensed pursuant to K.S.A. 58-3034
1137	1137	et seq., and amendments thereto, shall be deemed to have committed a
1138	1138	prohibited act pursuant to K.S.A. 58-3602, and amendments thereto, and
1139	1139	shall be liable to the purchaser of such title insurance in an amount equal
1140	1140	to the premium for the title insurance.
1141	1141	(6) Any title insurer or title agent that is a competitor of any title
1142	1142	insurer or title agent that, subsequent to the effective date of this act, has
1143	1143	violated or is violating the provisions of this paragraph, shall have a cause
1144	1144	of action against such title insurer or title agent and, upon establishing the
1145	1145	existence of a violation of any such provision, shall be entitled, in addition
1146	1146	to any other damages or remedies provided by law, to such equitable or
1147	1147	injunctive relief as the court deems proper. In any such action under this
1148	1148	subsection, the court may award to the successful party the court costs of
1149	1149	the action together with reasonable attorney fees.
1150	1150	(7) The commissioner shall also require each title agent to provide
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1193	1193	43 SB 22 15
1194	1194	core title services as required by the real estate settlement procedures act.
1195	1195	(j) The commissioner shall adopt any rules and regulations necessary
1196	1196	to carry out the provisions of this act.
1197	1197	(15) Disclosure of nonpublic personal information. (a) No person
1198	1198	shall disclose any nonpublic personal information contrary to the
1199	1199	provisions of title V of the Gramm-Leach-Bliley act of 1999 (public law
1200	1200	106-102). The commissioner may adopt rules and regulations necessary to
1201	1201	carry out this subsection. Such rules and regulations shall be consistent
1202	1202	with and not more restrictive than the model regulation adopted on
1203	1203	September 26, 2000, by the national association of insurance
1204	1204	commissioners entitled "Privacy of consumer financial and health
1205	1205	information regulation".
1206	1206	(b) Nothing in this subsection shall be deemed or construed to
1207	1207	authorize the promulgation or adoption of any regulation that preempts,
1208	1208	supersedes or is inconsistent with any provision of Kansas law concerning
1209	1209	requirements for notification of, or obtaining consent from, a parent,
1210	1210	guardian or other legal custodian of a minor relating to any matter
1211	1211	pertaining to the health and medical treatment for such minor.
1212	1212	Sec. 4. K.S.A. 40-1139 and K.S.A. 2024 Supp. 40-1137 and 40-2404
1213	1213	are hereby repealed.
1214	1214	Sec. 5. This act shall take effect and be in force from and after its
1215	1215	publication in the statute book.
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