40-2109. Apportionment or assignment of risk of certain workers compensation and employer's liability insurance; filing of plan; requirements; governing board of plan; membership, meetings, term o
40-2109
40-2109. Apportionment or assignment of risk of certain workerscompensation and employer's liability insurance; filing of plan;requirements; governing board of plan; membership, meetings, term of officeand duties; review of plan; approval; disapproval; procedure; amendment;preparation of plan by commissioner; unreasonable or unfair activities byinsurer or rating organization.Every insurer undertaking to transact in this state the business ofeither workers compensation or employer's liability insuranceor both,and every rating organization which files rates for such insurance shallcooperate in the preparation and submission to the commissioner ofinsurance of a plan or plans, for the equitable apportionment amonginsurers of applicants for insurance who are in good faith, entitled to butwho are unable to procure through ordinary methods, such insurance. Suchplan or plans shall provide:
(a) Reasonable rules governing the equitable distribution of risks bydirect insurance, reinsurance or otherwise and their assignment toinsurers;
(b) rates and rate modifications applicable to such risks which shall bereasonable, adequate and not unfairly discriminatory;
(c) a method whereby applicants for insurance, insured and insurers mayhave a hearing on grievances and the right of appeal to the commissioner;
(d) for every such plan or plans, there shall be a governing board to beappointed by the commissioner of insurance which shall meet at leastannually to review and prescribe operating rules, and which shall consistof the following members:
(1) Seven members who shall be appointed as follows: Three ofsuch members shall be representatives of foreign insurance companies, twomembers shall be representatives of domestic insurance companies andtwo members shall be licensed independent insurance agents. Suchmembers shall be appointed for a term of three years, except that theinitial appointment shall include two members appointed for a two-yearterm and two members appointed for a one-year term, as designated bythe commissioner; and
(2) Two members representative of the general public interest with suchmembers to be appointed for a term of two years.
The commissioner shall review the plan as soon as reasonably possibleafter filing in order to determine whether it meets the requirements setforth in subsections (a) and (c) above. As soon as reasonably possible afterthe planhas been filed the commissioner shall in writing approve or disapprove thesame, except that any plan shall be deemed approved unlessdisapproved within 45 days. Subsequent to the waiting periodthe commissioner may disapprove any plan on the ground that it does notmeet the requirements set forth in subsections (a), (b) and (c) above,but only after ahearing held upon not less than 10 days' written notice to everyinsurer and rating organization affected specifying the matter to beconsidered at such hearing, and only by an order specifying in what respect thecommissioner finds that such plan fails to meet suchrequirements and stating whenwithin a reasonable period thereafter such plan shall be deemed no longereffective. Such order shall not affect any assignment made or policy issuedor made prior to the expiration of the period set forth in such order.Amendments to such plan or plans shall be prepared, and filed and reviewedin the same manner as herein provided with respect to the original plan orplans.
If no plan meeting the standards set forth in subsections (a), (b) and (c) issubmitted to the commissioner within the period stated in any order,disapproving an existing plan the commissioner shall, ifnecessary to carry out thepurpose of this section after hearing, prepare and promulgate a planmeeting such requirements. When such plan or plans or amendments theretohave been approved or promulgated, no insurer shall thereafter issue apolicy of workers compensation or employer's liabilityinsurance orundertake to transact such business in this state unless such insurer shallparticipate in such an approved or promulgated plan. If, after a hearingconducted in accordance with the provisions of the Kansas administrativeprocedure act, the commissioner finds that any activity or practice of anyinsurer orrating organization in connection with the operation of such plan or plansis unfair or unreasonable or otherwise inconsistent with the provisions ofthis section the commissioner may issue a written orderspecifying in what respects suchactivity or practice is unfair or unreasonable or otherwise inconsistentwith the provisions of this section and requiring discontinuance of suchactivity or practice.
(e) The commissioner shall approve rates and rate modifications for eachplan that provides workers compensation insurance pursuant to this sectionwhich, over a period of time, but no later than January 1, 1997, will reduce theassessments levied by the plan to less than 10%. If thecommissioner finds that the percentage of the total Kansas workers compensationpremium volume written by the plan has not decreased below 20% of the totalamount of such premium volume by December 31, 1998, the provisionsof this subsection shall no longer apply and the commissioner may cause thegoverning board of theplan to file new rates and rate modifications pursuant to this section.Notwithstanding the foregoing provisions of this subsection, the commissionershall not approve rates or rating plans which produce rates or premiums forrisks with less than $2,250 annual premium that are higher than those whichwould be applied to such risks in the voluntary market, except that thisprovision shall not prohibit the application of surcharges, experiencemodifications or other rating variables based on the claims experience ofindividual risks.
History: L. 1961, ch. 239, § 2; L. 1969, ch. 238, § 8;L. 1988, ch. 356, § 105;L. 1993, ch. 286, § 23; July 1.