40-1027. Mutual fire and tornado companies; paid-up capital and surplus requirements.
40-1027
40-1027. Mutual fire and tornado companies; paid-up capital andsurplus requirements.(a) Any insurance company organized and existing as a mutual fire andtornado insurance company of the state of Kansas, and having a bona fidenet surplus of $450,000, and havingdeposited with the commissioner of insurance lawful securities for theprotection of its policyholders or creditors, or both inthe amount of $150,000, shall have the authority and rightto make and issue contracts of insurance or to cede or acceptreinsurance on any portion of any risk for the following kinds ofinsurance, namely:
(1) To make insurance upon property or any valuable interest thereinagainst loss or damage caused by fire, lightning or other electricaldisturbances, earthquake, windstorm, cyclone, tornado, tempest, hail,frost, snow, ice, sleet, weather or climatic condition, including excessor deficiency of moisture, flood, rain, or drought; a rising of thewaters of the ocean or its tributaries, bombardment, invasion,insurrection, riot, civil war or commotion, military or usurped power,explosion, other than the explosion of steam boilers, or the breaking offlywheels, against loss or damage from any cause to trees, crops andfarm products.
(2) To make insurance against loss or damage to property and againstthe liability of the insured for loss or damage to the property ofothers caused by water entering through leaks or openings in buildingsor from the breakage or leakage of sprinklers, pumps, water pipes,plumbing and all tanks, apparatus, conduits and containers designated tobring water into buildings or for its storage or utilization therein; orcaused by the falling of a tank, tank platform or supports, and againstloss or damage from any cause to such sprinklers, pumps, water pipes,plumbing, tanks, apparatus, conduits or containers.
(3) And against consequential loss or damage arising from any of thecauses above enumerated. And generally to do and perform all othermatters and things proper to promote these objects. Itshall be requisite to so acting, for its board of directors to authorizethe same by the affirmative vote of at least 2/3 of itsmembership. Any company having taken actionas herein provided shall certify such action to the commissioner ofinsurance, together with a statement showing its financial status and anet surplus sufficient to warrant such action. Any company operating hereundershall maintain unearned premium reservesequal to a pro rata amount of the premiums received on all unexpiredrisks and such unearned premium reserves shall be held and regarded as anabsolute liability ofthe company. For the purpose of this section the unearned premiumreserve for policies written on the note plan shall be determined by theamount of cash collected on said notes in excess of the percentageearned on policies written for a cash premium. Until May 1, 1989, suchcompanies which wereauthorized to transact business in Kansas onJanuary 1, 1984, shall be required to have surplus and deposit equal tothat which was required by this section prior to the passage of this act.
(b) Any insurance company organized and existing as a mutual fireand tornado insurance company of the state of Kansas shall have theauthority and right to make and issue contracts of insurance in additionto those specified in subsection (a) of this section, which include suchamount and kind of insurance against legal liability for injury, damageor loss to the person or property of others, and for medical, hospital,and surgical expense related to such injury, as the commissioner ofinsurance deems to be reasonably incidental to insurance of real or personalproperty against fire or other perils under policies coveringresidential properties involving not more than two families with orwithout incidental office, professional, private school or studiooccupancy by an insured, whether or not the premium or rate charged forcertain perils so covered is specified in the policy. Any provision ofK.S.A. 40-1016, and amendments thereto, to the contrarynotwithstanding: (i) No insurer having abona fide net surplus of at least $600,000 but less than $1,500,000authorized asto property insurance only shall, pursuant to this subsection,retain risk as to any one subject of insurance as to hazards other thanproperty insurance hazards in an amount exceeding 3% ofits surplus to policyholders; and (ii) no insurer having a bona fide netsurplus of less than $600,000 authorizedas to property insurance only shall, pursuant to this subsection, retainany risk other than property insurance hazards, and all such companiesshall reinsure all such risks as to hazards other than propertyinsurance hazards. Until May 1, 1989, companies which wereauthorized to transactbusiness in Kansas on January 1, 1984, shall be required to have surplusand deposit equal to that which was required by this section prior tothe passage of this act.After May1, 1989, such companies shall comply with thesurplus and deposit requirements provided by this act.
Until May 1, 1989, companies doing business in this state on January 1,1969, shall be required to have a surplus anddeposit equal to that required of such companies prior to the passage ofthis act. On and after May 1, 1989, companies doing business in this stateon January 1, 1969, shall be required to have asurplus and deposit equal to that required of all other companies to whomthis section applies immediately prior to the passage of this act.
On and after May 1, 1994, companies doing business in this state onJanuary 1, 1969, shall comply with the surplus and depositrequirements provided by this act.
History: L. 1931, ch. 206, § 4; L. 1937, ch. 253, § 1; L.1961, ch. 236, § 1; L. 1965, ch. 300, § 9; L. 1969, ch. 237, §5; L. 1979, ch. 142, § 1; L. 1984, ch. 169, § 4; July 1.