40-5007a. Same; examinations; record keeping requirements; powers of commissioner.
40-5007a
40-5007a. Same; examinations; record keepingrequirements; powers of commissioner.(a) (1) The commissioner may conduct an examination underthis act of a licensee as often as the commissioner in such commissioner's solediscretion deems appropriate.
(2) For purposes of completing an examination of a licensee under this act,the commissioner may examine or investigate any person, or the business of anyperson, insofar as the examination or investigation, in the sole discretionof the commissioner, is necessary or material to the examination of thelicensee.
(3) In lieu of an examination under this act of any foreign or alien licenseelicensed in this state, the commissioner, at the commissioner's discretion, mayaccept an examination report on the licensee as prepared by the commissionerfor the licensee's state of domicile or port-of-entry state.
(b) (1) Any person required to be licensed by this act shall for five yearsretain copies of all:
(A) Proposed, offered or executed contracts, underwriting documents, policyforms, and applications from the date of the proposal, offer or execution ofthe contract, whichever is later;
(B) all checks, drafts or other evidence and documentation related to thepayment, transfer, deposit or release of funds from the date of thetransaction; and
(C) all other records and documents related to the requirements of this act.
(2) This section shall not relieve any person licensed under this act of theobligation to produce these documents and provide copies thereof to thecommissioner after the retention period has expired if the person has retainedsuch documents.
(3) Records required to be retained by this section must be legible andcomplete and may be retained in paper, photograph, microprocess, magnetic,mechanical, electronic media or by any process that accurately reproduces orforms a durable medium for the reproduction of a record.
(c) (1) Upon determining that an examination should be conducted, thecommissioner shall issue an examination warrant appointing one or moreexaminers to perform the examination and instructing them as to the scope ofthe examination. The commissioner may also employ such other guidelines orprocedures as the commissioner may deem appropriate.
(2) Every licensee or person from whom information is sought, its officers,directors and agents shall provide to the examiners timely, convenient and freeaccess at all reasonable hours at its offices to all books, records, accounts,papers, documents, assets and computer or other recordings relating to theproperty, assets, business and affairs of the licensee being examined. Theofficers, directors, employees and agents of the licensee or person shallfacilitate the examination and aid in the examination so far as it is in theirpower to do so. The refusal of a licensee, by its officers, directors,employees or agents, to submit to examination or to comply with any reasonablewritten request of the commissioner shall be grounds for suspension or refusalof, or nonrenewal of any license or authority held by the licensee to engage inthe viatical settlement business or other business subject to thecommissioner's jurisdiction. Any proceedings for suspension, revocation orrefusal of any license or authority shall be conducted pursuant to the Kansasadministrative procedure act.
(3) The commissioner shall have the power to issue subpoenas, to administeroaths and to examine under oath any person as to any matter pertinent to theexamination. Upon the failure or refusal of a person to obey a subpoena, thecommissioner may petition a court of competent jurisdiction, and upon propershowing, the court may enter an order compelling the witness to appear andtestify or produce documentary evidence. Failure to obey the court order shallbe punishable as contempt of court.
(4) When making an examination under this act, the commissioner may retainattorneys, appraisers, independent actuaries, independent certified publicaccountants or other professionals and specialists as examiners, the reasonablecost of which shall be borne by the licensee that is the subject of theexamination.
(5) Nothing contained in this act shall be construed to limit thecommissioner's authority to terminate or suspend an examination in order topursue other legal or regulatory action pursuant to the insurance laws of thisstate. Findings of fact and conclusions made pursuant to any examination shallbe prima facie evidence in any legal or regulatory action.
(6) Nothing contained in this act shall be construed to limit thecommissioner's authority to use and, if appropriate, to make public any finalor preliminary examination report, any examiner or licensee work papers orother documents, or any other information discovered or developed during thecourse of any examination in the furtherance of any legal or regulatory actionwhich the commissioner, in such commissioner's sole discretion, may deemappropriate.
(d) (1) Examination reports shall be comprised of only facts appearing uponthe books, records or other documents of the licensee, its agents or otherpersons examined, or as ascertained from the testimony of its officers oragents or other persons examined concerning its affairs, and such conclusionsand recommendations as the examiners find reasonably warranted from the facts.
(2) Not later than 60 days following completion of the examination, theexaminer in charge shall file with the commissioner a verified written reportof examination under oath. Upon receipt of the verified report, thecommissioner shall transmit the report to the licensee examined, together witha notice that shall afford the licensee examined a reasonable opportunity ofnot more than 30 days to make a written submission or rebuttal with respect toany matters contained in the examination report.
(3) In the event the commissioner determines that regulatory action isappropriate as a result of an examination, the commissioner may initiate anyproceedings or actions provided by law.
(e) (1) Names and individual identification data for all viators shall beconsidered private and confidential information and shall not be disclosed bythe commissioner, unless required by law.
(2) Except as otherwise provided in this act, all examination reports,working papers, recorded information, documents and copies thereof produced by,obtained by or disclosed to the commissioner or any other person in the courseof an examination made under this act, or in the course of analysis orinvestigation by the commissioner of the financial condition or market conductof a licensee shall be confidential by law and privileged, shall not be subjectto the provisions of the Kansas open records act, K.S.A. 45-215 etseq., and amendments thereto, shall not be subject to subpoena, and shallnot be subject to discovery or admissible in evidence in any private civilaction. The commissioner is authorized to use the documents, materials or otherinformation in the furtherance of any regulatory or legal action brought aspart of the commissioner's official duties.
(3) Documents, materials or other information, including, but not limited to,all working papers, and copies thereof, in the possession or control of theNAIC and its affiliates and subsidiaries shall be confidential by law andprivileged, shall not be subject to subpoena, and shall not be subject todiscovery or admissible in evidence in any private civil action if they are:
(A) Created, produced or obtained by or disclosed to the NAIC and itsaffiliates and subsidiaries in the course of assisting an examination madeunder this act, or assisting a commissioner in the analysis or investigation ofthe financial condition or market conduct of a licensee; or
(B) disclosed to the NAIC and its affiliates and subsidiaries under paragraph(4) of subsection (e) by the commissioner.
For the purposes of paragraph (2) of subsection (e), the term "act" includesthe law of another state or jurisdiction that is substantially similar to thisact.
(4) Neither the commissioner nor any person that received the documents,material or other information while acting under the authority of thecommissioner, including the NAIC and its affiliates and subsidiaries, shall bepermitted to testify in any private civil action concerning any confidentialdocuments, materials or information subject to paragraph (1) of subsection (e).
(5) In order to assist in the performance of the commissioner's duties, thecommissioner may:
(A) Share documents, materials or other information, including theconfidential and privileged documents, materials or information subject toparagraph (1) of subsection (e), with other state, federal and internationalregulatory agencies, with the NAIC and its affiliates and subsidiaries, andwith state, federal and international law enforcement authorities, providedthat the recipient agrees to maintain the confidentiality and privileged statusof the document, material, communication or other information;
(B) receive documents, materials, communications or information, includingotherwise confidential and privileged documents, materials or information, fromthe NAIC and its affiliates and subsidiaries, and from regulatory and lawenforcement officials of other foreign or domestic jurisdictions, and shallmaintain as confidential or privileged any document, material or informationreceived with notice or the understanding that it is confidential or privilegedunder the laws of the jurisdiction that is the source of the document, materialor information; and
(C) enter into agreements governing sharing and use of information consistentwith this subsection.
(6) No waiver of any applicable privilege or claim of confidentiality in thedocuments, materials or information shall occur as a result of disclosure tothe commissioner under this section or as a result of sharing as authorized inparagraph (4) of subsection (e).
(7) A privilege established under the law of any state or jurisdiction thatis substantially similar to the privilege established under this subsectionshall be available and enforced in any proceeding in, and in any court of, thisstate.
(8) Nothing contained in this act shall prevent or be construed asprohibiting the commissioner from disclosing the content of an examinationreport, preliminary examination report or results, or any matter relatingthereto, to the commissioner of any other state or country, or to lawenforcement officials of this or any other state or agency of the federalgovernment at any time or to the NAIC, so long as such agency or officereceiving the report or matters relating thereto agrees in writing to hold itconfidential and in a manner consistent with this act.
(9) The provisions of this subsection shall expire July 1, 2013, unless thelegislature acts to reenact such provisions. The provisions of this sectionshall be reviewed by the legislature prior to July 1, 2013.
(f) (1) An examiner may not be appointed by the commissioner if theexaminer, either directly or indirectly, has a conflict of interest or isaffiliated with the management of or owns a pecuniary interest in any personsubject to examination under this act. This section shall not be construed toautomatically preclude an examiner from being:
(A) A viator;
(B) an insured in a viaticated insurance policy; or
(C) a beneficiary in an insurance policy that is proposed to be viaticated.
(2) Notwithstanding the requirements of this clause, the commissioner mayretain from time to time, on an individual basis, qualified actuaries,certified public accountants or other similar individuals who are independentlypracticing their professions, even though these persons may from time to timebe similarly employed or retained by persons subject to examination under thisact.
(g) Unless provided otherwise, all fees and procedures for examinations underthis act shall be in accordance with K.S.A. 40-223, and amendments thereto.
(h) (1) No cause of action shall arise nor shall any liability be imposedagainst the commissioner, the commissioner's authorized representatives or anyexaminer appointed by the commissioner for any statements made or conductperformed in good faith while carrying out the provisions of this act.
(2) No cause of action shall arise, nor shall any liability be imposedagainst any person for the act of communicating or delivering information ordata to the commissioner or the commissioner's authorized representative orexaminer pursuant to an examination made under this act, if the act ofcommunication or delivery was performed in good faith and without fraudulentintent or the intent to deceive. This paragraph does not abrogate or modify inany way any common law or statutory privilege or immunity heretofore enjoyed byany person identified in paragraph (1).
(3) A person identified in paragraph (1) or (2) shall be entitled to an awardof attorney fees and costs if such person is the prevailing party in a civilcause of action for libel, slander or any other relevant tort arising out ofactivities in carrying out the provisions of this act and the party bringingthe action was not substantially justified in doing so. For purposes of thissection a proceeding is "substantially justified" if it had a reasonable basisin law or fact at the time that it was initiated.
(i) The commissioner may investigate suspected fraudulent viatical settlementacts and persons engaged in the business of viatical settlements.
History: L. 2008, ch. 96, § 1; July 1.