40-3613. Same; supervision of insurer by commissioner, grounds for, determination and order of commissioner; appointment of supervisor; conditions imposed upon insurer; service of notice of hearings a
40-3613
40-3613. Same; supervision of insurer by commissioner, grounds for,determination and order of commissioner; appointment of supervisor; conditionsimposed upon insurer; service of notice of hearings and orders; civil penaltiesfor violation of supervision order; enforcement of orders by court; personalliability of persons violating orders resulting in loss.(a) Whenever the commissioner has reasonable cause tobelieve,and has determined after a hearing held under subsection (f), that any domesticinsurer has committed or engaged in, or is about to commit or engage in, anyact, practice or transaction that would subject it to delinquency proceedingsunder this act, the commissioner may make and serve upon the insurer and anyother persons involved, such orders as are reasonably necessary to correct,eliminate or remedy such conduct, condition or ground. Such orders may be madeconfidential by the commissioner and may not be subject to release under theKansas open records act.
(b) If upon examination or at any other time the commissioner has reasonablecause to believe that any domestic insurer is in such condition as to renderthe continuance of such domestic insurer's business hazardous to the public orto holders of itspolicies or certificates of insurance, or if such domestic insurer gives itsconsent, then the commissioner shall upon such determination:
(1) Notify the insurer of such determination; and
(2) furnish to the insurer a written list of the commissioner's requirementsto abate the determination.
(c) If the commissioner makes a determination to supervise an insurersubject to an order under subsections (a) or (b), the commissioner shall notifythe insurer that such insurer is under the supervision of the commissioner. During theperiod of supervision, the commissioner may appoint a supervisor to supervisesuch insurer. The order appointing a supervisor shall direct the supervisor toenforce orders issued under subsections (a) and (b) and may also require thatthe insurer may not do any of the following things during the period ofsupervision, without the prior approval of the commissioner or the supervisor:
(1) Dispose of, convey or encumber any of its assets or its business inforce;
(2) withdraw from any of its bank accounts;
(3) lend any of its funds;
(4) invest any of its funds;
(5) transfer any of its property;
(6) incur any debt, obligation or liability;
(7) merge or consolidate with another company; or
(8) enter into any new reinsurance contract or treaty.
(d) No provision of subsection (c) shall restrict the commissioner'sauthority to issue an order under K.S.A. 40-222 or 40-222b and amendmentsthereto.
(e) Any insurer subject to an order under this section shall comply with thelawful requirements of the commissioner and, if placed under supervision, shallhave 60 days from the date the supervision order is served within which tocomply with the requirements of the commissioner. In the event of suchinsurer's failure to comply with in such time, the commissioner may instituteproceedings under K.S.A. 40-3615 or 40-3620 to have a rehabilitatoror liquidatorappointed, or extend the period of supervision.
(f) The notice of hearing under subsection (a) and any order issued pursuantto such subsection shall be served upon the insurer pursuant to the Kansasadministrative procedure act.
(g) During the period of supervision the insurer may request thecommissioner to review an action taken or proposed to be taken by thesupervisor, specifying wherein the action complained of is believed not to bein the best interest of the insurer.
(h) Any person who has violated any supervision order issued under thissection, which as to such person was still in effect, shall be liable to pay acivil penalty imposed by the district court of Shawnee county not to exceed$10,000.
(i) The commissioner may apply for, and any court of general jurisdictionmay grant, such restraining orders, preliminary and permanent injunctions, andother orders as may be necessary and proper to enforce a supervision order.
(j) In the event that any person, subject to the provisions of this act,including those persons described in K.S.A. 40-3610(a), shallknowingly violate anyvalid order of the commissioner issued under the provisions of this sectionand, as a result of such violation, the net worth of the insurer shall bereduced or the insurer shall suffer loss it would not otherwise have suffered,such person shall become personally liable to the insurer for the amount of anysuch reduction or loss. The commissioner or supervisor is authorized to bringan action on behalf of the insurer in the district court of Shawnee county torecover the amount of the reduction or loss together with any costs.
History: L. 1991, ch. 125, § 9; July 1.