40-3413. Apportionment of risk among insurers; preparation of plan; contents; approval or disapproval; amendment; preparation by commissioner of insurance, when; order to discontinue unfair or unreaso
40-3413
40-3413. Apportionment of risk among insurers; preparation ofplan; contents; approval or disapproval; amendment; preparation bycommissioner of insurance, when; order to discontinue unfair orunreasonable activities or activities inconsistent with act; governingboard, membership; commissions on insurance written under plan.(a) Every insurer and every rating organization shall cooperate in thepreparation of a plan or plans for the equitable apportionment amongsuch insurers of applicants for professional liability insurance andsuch other liability insurance as may be included in or added to theplan, who are in good faith entitled to such insurance but are unable toprocure the same through ordinary methods. Such plan or plans shall beprepared and filed with the commissioner and the board of governors withina reasonable time but not exceeding 60 calendar days from the effective date ofthis act. Such plan or plans shall provide:
(1) Reasonable rules governing the equitable distribution of risksby direct insurance, reinsurance or otherwise including the authority tomake assessments against the insurers participating in the plan orplans;
(2) rates and rate modifications applicable to such risks whichshall be reasonable, adequate and not unfairly discriminatory;
(3) a method whereby periodically the plan shall comparethe premiumsearned to the losses and expenses sustained by the plan. If there is anysurplus of premiums over lossesand expenses received for that year such surplus shall be transferred tothe fund. If there is any excess of losses and expenses over premiumsearned such losses shall be transferred from the fund, however such transfersshall not occur more often than once each three months;
(4) the limits of liability which the plan shall be required toprovide, but in no event shall such limits be less than those limitsprovided for in subsection (a) of K.S.A. 40-3402 and amendments thereto;
(5) a method whereby applicants for insurance, insureds and insurersmay have a hearing on grievances and the right of appeal to thecommissioner.
(b) The commissioner and board of governors shall review the plan assoon as reasonablypossible after filing in order to determine whether it meets therequirements set forth in subsection (a). As soon asreasonably possible after the plan has been filed the commissioner,consistent with the recommendations of the board of governors, shallin writing approve or disapprove the plan. Any plan shall be deemedapproved unless disapproved within 30 days. Subsequent to thewaiting period the commissioner may disapprove any plan on the groundthat it does not meet the requirements set forth in subsection (a), butonly after a hearing held upon not less than 10days' written notice to every insurer and rating organization affectedspecifying in what respect the commissionerfinds that such plan failsto meet such requirements, and stating when within a reasonable periodthereafter such plan shall be deemed no longer effective. Such ordershall not affect any assignment made or policy issued or made prior tothe expiration of the period set forth in the order. Amendments tosuch plan or plans shall be prepared, and filed and reviewed in the samemanner as herein provided with respect to the original plan or plans.
(c) If no plan meeting the standards set forth in subsection (a) issubmitted to the commissioner and board of governors within 60 calendardays from theeffective date of this act or within the period stated in any orderdisapproving an existing plan, the commissioner with the assistance of theboard of governors shall after a hearing, ifnecessary to carry out the purpose of this act, prepare and promulgate aplan meeting such requirements.
(d) If, after a hearing conducted in accordance with the provisions ofthe Kansas administrative procedure act, the commissioner and board ofgovernorsfind that any activity orpractice of any insurer or rating organization in connection with theoperation of such plan or plans is unfair or unreasonable or otherwiseinconsistent with the provisions of this act, the commissioner and board of governors mayissuea written order specifying in what respects such activity or practice isunfair or unreasonable or otherwise inconsistent with the provisions ofthis act and requiring discontinuance of such activity or practice.
(e) For every such plan or plans, there shall be a governing boardwhich shall meet at least annually to review and prescribe operatingrules. Such board shall consist of nine members to be appointed bythe commissioner as follows: Three members shall be representativesof foreign insurers, two members shall be representatives ofdomestic insurers, two members shall be representatives of thegeneral public, one member shall be a licensed insurance agentactively engaged in the solicitation of casualty insurance and onemember shall be a health care provider. The members shall be appointedfor a term of two years.
(f) An insurer participating in the plan approved by thecommissioner may pay a commission with respect to insurance writtenunder the plan to an insurance agent licensed for any other insurerparticipating in the plan or to any insurer participating in the plan.Such commission shall be reasonably equivalent to the usual customarycommission paid on similar types of policies issued in the voluntarymarket.
History: L. 1976, ch. 231, § 13; L. 1977, ch. 166, § 1; L. 1980,ch. 144, § 1; L. 1982, ch. 208, § 1; L. 1984, ch. 178, § 2;L. 1987, ch. 179, § 1;L. 1988, ch. 356, § 124; L. 1989, ch. 144, § 1;L. 1992, ch. 23, § 2;L. 1995, ch. 145, § 5; July 1.