40-3009. Assessment of member insurers to provide funds for administration of association; classes of assessment; limitations; refunds to insurers; certificates of contribution.
40-3009
40-3009. Assessment of member insurers to provide funds foradministration of association; classes of assessment; limitations;refunds to insurers; certificates of contribution.(a) For the purpose of providing the funds necessary to carry out thepowers and duties of the association, the board of directors shallassess the member insurers, separately for each account, at suchtime and for such amounts as the board finds necessary.Assessments shall be due not less than 30 days after prior written noticeto the member insurers and shall accrue interest at 15% per annum on andafter the due date.
(b) There shall be two classes of assessments, as follows:(1) Class A assessments shall be made for the purpose of meetingadministrative and legal costs and other expensesand examinations conducted under the authority of subsection (e) ofK.S.A. 40-3012 and amendments thereto. Class Aassessments may be made whether or not related to a particular impaired orinsolvent insurer.
(2) Class B assessments shall be made to the extent necessary tocarry out the powers and duties of the association under K.S.A. 40-3008and amendments thereto with regard to an impaired or aninsolvent insurer.
(c) (1) The amount of any class A assessment shallbe determined by the board and may be made on a pro rata or non-pro ratabasis.If pro rata, the board may provide that it be credited against futureclass B assessments. A non-pro rata assessment shall not exceed $150 permember insurer in any one calendar year. The amount of any class Bassessment shall be allocated for assessment purposes among the accountspursuant to an allocation formula which may be based on the premiums orreserves of the impaired or insolvent insurer or any other standard deemedby the board in its sole discretion as being fair and reasonable under thecircumstances.
(2) Class B assessments against member insurers for each account shall be inthe proportion that the premiums received on business in this state by eachassessed member insurer on policies or contracts covered by eachaccount for the three most recent calendar years for which information isavailable preceding the year in which the insurer became impaired orinsolvent, as the case may be, bears to such premiums received on businessin this state for such calendar years by all assessed member insurers.
(3) Assessments for funds to meet the requirements of theassociation with respect to an impaired or insolvent insurer shall not be made untilnecessary to implement the purposes of this act. Classification ofassessments under subsection (b) and computation of assessments underthis subsection shall be made with a reasonable degree of accuracy,recognizing that exact determinations may not always be possible.
(d) The association may abate or defer, in whole or in part, theassessment of a member insurer if, in the opinion of the board, paymentof the assessment would endanger the ability of the member insurer tofulfill its contractual obligations.In the event an assessment against a member insurer is abated, ordeferred in whole or in part, the amount by which such assessment is abatedor deferred may be assessed against the other member insurers in a mannerconsistent with the basis for assessments set forth in this section.
(e) The total of all assessments upon amember insurer for each account shall not in any one calendar yearexceed 2% of such insurer's average premiumsreceived in this state on thepolicies and contracts covered by the account during the threecalendar years preceding the years in which the insurer became an impairedor insolvent insurer.
If the maximum assessment, together with the other assets ofthe association in any account does not provide in any one year ineither account an amount sufficient to carry out the responsibilities ofthe association, the necessary additional funds shall be assessed assoon thereafter as permitted by this act.
The board may provide in the plan of operation a method of allocatingfunds among claims, whether relating to one or more impaired or insolventinsurers, when the maximum assessment will be insufficient to cover anticipated claims.
(f) The board, by an equitable method as established in the planof operation, may refund to member insurers, in proportion to thecontribution of each insurer to that account, the amount by which theassets of the account exceed the amount the board finds is necessary tocarry out during the coming year the obligations of the association withregard to that account, including assets accruing fromassignment, subrogation, net realized gainsand income from investments. A reasonable amount may be retained in anyaccount to provide funds for the continuing expenses of the associationand for future losses.
(g) It shall be proper for any member insurer, in determining itspremium rates and policyowner dividends as to any kind of insurance withinthe scope of this act, to consider the amount reasonably necessary to meetits assessment obligations under this act.
(h) The association shall issue to each insurer paying an assessmentunder this act, other than a class A assessment, a certificate ofcontribution, in a form prescribed bythe commissioner, for the amount of the assessment paid. Alloutstanding certificatesshall be of equal dignity and priority without reference to amounts ordates of issue. A certificate of contribution may be shown by theinsurer in its financial statement as an asset in such form and for suchamount, if any, and period of time as the commissioner may approve.
History: L. 1972, ch. 190, § 9;L. 1986, ch. 180, § 7; July 1.