(a) "Adjusted RBC report" means an RBC report which has been adjusted by the commissioner in accordance with K.S.A. 40-2c04, and amendments thereto.
(b) "Corrective order" means an order issued by the commissioner specifying corrective actions which the commissioner has determined are required to address a RBC level event.
(c) "Domestic insurer" means any insurance company or risk retention group which is licensed and organized in this state.
(d) "Foreign insurer" means any insurance company or risk retention group not domiciled in this state which is licensed or registered to do business in this state pursuant to article 41 of chapter 40 of the Kansas Statutes Annotated or K.S.A. 40-209, and amendments thereto.
(e) "NAIC" means the national association of insurance commissioners.
(f) "Life and health insurer" means any insurance company licensed under article 4 or 5 of chapter 40 of the Kansas Statutes Annotated or a licensed property and casualty insurer writing only accident and health insurance.
(g) "Property and casualty insurer" means any insurance company licensed under articles 9, 10, 11, 12, 12a, 15 or 16 of chapter 40 of the Kansas Statutes Annotated, but shall not include monoline mortgage guaranty insurers, financial guaranty insurers and title insurers.
(h) "Negative trend" means, with respect to a life and health insurer, a negative trend over a period of time, as determined in accordance with the "trend test calculation" included in the RBC instructions defined in subsection (j).
(i) "RBC" means risk-based capital.
(j) "RBC instructions" mean the risk-based capital instructions promulgated by the NAIC, which are in effect on December 31, 2006.
(k) "RBC level" means an insurer's company action level RBC, regulatory action level RBC, authorized control level RBC, or mandatory control level RBC where:
(1) "Company action level RBC" means, with respect to any insurer, the product of 2.0 and its authorized control level RBC;
(2) "regulatory action level RBC" means the product of 1.5 and its authorized control level RBC;
(3) "authorized control level RBC" means the number determined under the risk-based capital formula in accordance with the RBC instructions; and
(4) "mandatory control level RBC" means the product of .70 and the authorized control level RBC.
(l) "RBC plan" means a comprehensive financial plan containing the elements specified in K.S.A. 40-2c06, and amendments thereto. If the commissioner rejects the RBC plan, and it is revised by the insurer, with or without the commissioner's recommendation, the plan shall be called the "revised RBC plan."
(m) "RBC report" means the report required by K.S.A. 40-2c02, and amendments thereto.
(n) "Total adjusted capital" means the sum of:
(1) An insurer's capital and surplus or surplus only if a mutual insurer; and
(2) such other items, if any, as the RBC instructions may provide.
(o) "Commissioner" means the commissioner of insurance.
History: L. 1994, ch. 138, § 1; L. 1996, ch. 134, § 1; L. 1997, ch. 53, § 1; L. 1998, ch. 15, § 1; L. 1999, ch. 31, § 1; L. 2000, ch. 170, § 8; L. 2001, ch. 61, § 1; L. 2002, ch. 158, § 22; L. 2003, ch. 21, § 1; L. 2004, ch. 159, § 7; L. 2005, ch. 28, § 1; L. 2006, ch. 122, § 1; L. 2007, ch. 40, § 1; July 1.
(a) With the NAIC in accordance with the RBC instructions; and
(b) with the insurance commissioner in any state in which the insurer is authorized to do business, if such insurance commissioner has notified the insurer of its request in writing, in which case the insurer shall file its RBC report not later than the later of:
(1) Fifteen days from the receipt of notice to file its RBC report with that state; or
(2) the filing date otherwise specified in this subsection.
History: L. 1994, ch. 138, § 2; July 1.
(1) The risk with respect to the insurer's assets;
(2) the risk of adverse insurance experience with respect to the insurer's liabilities and obligations;
(3) the interest rate risk with respect to the insurer's business; and
(4) all other business risks and such other relevant risks as are set forth in the RBC instructions;
determined in each case by applying the factors in the manner set forth in the RBC instructions.
(b) A property and casualty insurer's RBC shall be determined in accordance with the formula set forth in the RBC instructions. The formula shall take into account and may adjust for the covariance between:
(1) Asset risk;
(2) credit risk;
(3) underwriting risk; and
(4) all other business risks and such other relevant risks as are set forth in the RBC instructions;
determined in each case by applying the factors in the manner set forth in the RBC instructions.
(c) An excess of capital over the amount produced by the risk-based capital requirements contained in this act and the formulas, schedules and instructions referenced in this act is desirable in the business of insurance. Accordingly, insurers should seek to maintain capital above the RBC levels required by this act. Additional capital is used and useful in the insurance business and helps to secure an insurer against various risks inherent in, or affecting, the business of insurance and not accounted for or only partially measured by the risk-based capital requirements contained in this act.
History: L. 1994, ch. 138, § 3; L. 1996, ch. 134, § 2; July 1.
History: L. 1994, ch. 138, § 4; July 1.
(a) The filing of an RBC report by an insurer which indicates that:
(1) The insurer's total adjusted capital is greater than or equal to its regulatory action level RBC but less than its company action level RBC; or
(2) if a life and health insurer has total adjusted capital which is greater than or equal to its company action level RBC but less than the product of its authorized control level RBC and 2.5 and also has a negative trend.
(b) The notification by the commissioner to the insurer of an adjusted RBC report that indicates the event described in subsection (a)(1) or (2), unless the insurer challenges the adjusted RBC report pursuant to K.S.A. 1999 Supp. 40-2c19, and amendments thereto, and such challenge has not been rejected by the commissioner.
History: L. 1994, ch. 138, § 5; L. 1996, ch. 134, § 3; July 1.
(a) Identify the conditions in the insurer's operation which contribute to the company action level event;
(b) contain proposals of corrective actions which the insurer intends to take that would be expected to result in the elimination of the company action level event;
(c) provide projections of the insurer's financial results in the current year and at least the four succeeding years, both in the absence of the proposed corrective actions and giving effect to the proposed corrective actions, including projections of statutory operating income, net income, capital and surplus or surplus only with respect to a mutual insurer. The projections for both new and renewal business may include separate projections for each major line of business and separately identify each significant income, expense and benefit component;
(d) identify the key assumptions impacting the insurer's projections and the sensitivity of the projections to the assumptions; and
(e) identify the quality of, and problems associated with, the insurer's business, including, but not limited to, its assets, anticipated business growth and associated surplus strain, extraordinary exposure to risk, mix of business and use of reinsurance in each case, if any.
History: L. 1994, ch. 138, § 6; July 1.
(a) Within 45 days of the company action level event; or
(b) within 45 days after notification to the insurer that the commissioner has rejected the insurer's challenge to an adjusted RBC report pursuant to K.S.A. 40-2c19.
History: L. 1994, ch. 138, § 7; July 1.
(a) Within 45 days after the notification from the commissioner; or
(b) within 45 days after a notification to the insurer that the commissioner has, pursuant to K.S.A. 40-2c19, rejected the insurer's challenge to the commissioner's original findings as authorized by this section.
History: L. 1994, ch. 138, § 8; July 1.
History: L. 1994, ch. 138, § 9; July 1.
(a) Such state has an RBC provision substantially similar to K.S.A. 40-2c20; and
(b) the insurance commissioner of that state has notified the insurer of such insurance commissioner's request for the filing in writing, in which case the insurer shall file a copy of the RBC plan or revised RBC plan in that state no later than the later of:
(1) Fifteen days after the receipt of notice to file a copy of its RBC plan or revised RBC plan with the state; or
(2) the date on which the final RBC plan or revised RBC plan is filed under K.S.A. 40-2c07 and 40-2c08.
History: L. 1994, ch. 138, § 10; July 1.
(a) The filing of an RBC report by the insurer which indicates that the insurer's total adjusted capital is greater than or equal to its authorized control level RBC but less than its regulatory action level RBC;
(b) the notification by the commissioner to an insurer of an adjusted RBC report that indicates the result described in subsection (a) if the insurer does not challenge the adjusted RBC report pursuant to K.S.A. 40-2c19, and amendments thereto;
(c) the filing of an adjusted RBC report that indicates the result described in subsection (a) if the commissioner has rejected the insurer's challenge after a hearing held pursuant to K.S.A. 40-2c19, and amendments thereto;
(d) the failure of the insurer to file an RBC report by the filing date, unless the insurer has provided an explanation for such failure which is satisfactory to the commissioner and has cured the failure within 10 days after the filing date;
(e) the failure of the insurer to submit an RBC plan to the commissioner within the time period set forth in K.S.A. 40-2c07, and amendments thereto;
(f) notification by the commissioner to the insurer that:
(1) The RBC plan or revised RBC plan submitted by the insurer is, in the judgment of the commissioner, unsatisfactory; and
(2) (A) the insurer has not challenged the determination pursuant to K.S.A. 40-2c19, and amendments thereto; or
(B) the commissioner has rejected such challenge.
(g) Notification by the commissioner to the insurer that the insurer has failed to adhere to its RBC plan or revised RBC plan, but only if such failure has a substantial adverse effect on the ability of the insurer to eliminate the company action level event in accordance with its RBC plan or revised RBC plan and the commissioner has so stated in the notification, if:
(1) The insurer has not challenged such determination pursuant to K.S.A. 40-2c19, and amendments thereto; or
(2) the commissioner has rejected such challenge.
History: L. 1994, ch. 138, § 11; L. 1996, ch. 134, § 4; July 1.
(a) Require the insurer to prepare and submit an RBC plan or, if applicable, a revised RBC plan;
(b) perform such examination or analysis as the commissioner deems necessary of the assets, liabilities and operations of the insurer including a review of its RBC plan or revised RBC plan; and
(c) subsequent to the examination or analysis, issue a corrective order specifying such actions as the commissioner determines are required.
History: L. 1994, ch. 138, § 12; July 1.
(a) Within 45 days after the occurrence of the regulatory action level event;
(b) within 45 days after the notification to the insurer that the commissioner has rejected the insurer's challenge to an adjusted RBC report pursuant to K.S.A. 40-2c19, and amendments thereto; or
(c) within 45 days after notification to the insurer that the commissioner has rejected the insurer's challenge to a revised RBC plan pursuant to K.S.A. 40-2c19, and amendments thereto.
History: L. 1994, ch. 138, § 13; L. 1996, ch. 134, § 5; July 1.
History: L. 1994, ch. 138, § 14; July 1.
(a) The filing of an RBC report by the insurer which indicates that the insurer's total adjusted capital is greater than or equal to its mandatory control level RBC but less than its authorized control level RBC;
(b) the notification by the commissioner to the insurer of an adjusted RBC report that indicates the event described in subsection (a) if:
(1) The insurer does not challenge the adjusted RBC report pursuant to K.S.A. 40-2c19, and amendments thereto; or
(2) the commissioner has rejected such challenge;
(c) the failure of the insurer to respond, in a manner satisfactory to the commissioner, to a corrective order if the insurer has not challenged the corrective order under K.S.A. 40-2c19, and amendments thereto; or
(d) if the commissioner has rejected the challenge to the corrective order or modified the corrective order pursuant to K.S.A. 40-2c19, and amendments thereto, the failure of the insurer to respond, in a manner satisfactory to the commissioner, to the corrective order subsequent to rejection or modification by the commissioner.
History: L. 1994, ch. 138, § 15; L. 1996, ch. 134, § 6; July 1.
(a) Take such actions as are required under K.S.A. 40-2c11 through 40-2c14 regarding an insurer with respect to which a regulatory action level event has occurred; or
(b) if the commissioner deems it to be in the best interests of the policyholders and creditors of the insurer and of the public, take such actions as are necessary to cause the insurer to be placed under regulatory control pursuant to K.S.A. 40-3605 et seq. and amendments thereto. In the event the commissioner takes such actions, the authorized control level event shall be deemed sufficient grounds for the commissioner to take action under K.S.A. 40-3605 et seq. and amendments thereto, and the commissioner shall have the rights, powers and duties with respect to the insurer as are set forth in K.S.A. 40-3605 et seq. and amendments thereto. In the event the commissioner takes actions under this subsection pursuant to an adjusted RBC report, the insurer shall be entitled to such protections as are afforded to insurers under the provisions of K.S.A. 77-601 et seq. and amendments thereto pertaining to summary proceedings.
History: L. 1994, ch. 138, § 16; July 1.
(a) The filing of an RBC report which indicates that the insurer's total adjusted capital is less than its mandatory control level RBC;
(b) notification by the commissioner to the insurer of an adjusted RBC report that indicates the event described in subsection (a) if:
(1) The insurer does not challenge the adjusted RBC report pursuant to K.S.A. 40-2c19; or
(2) the commissioner has rejected such challenge.
History: L. 1994, ch. 138, § 17; July 1.
(b) A property and casualty insurer, the commissioner shall take such actions as are necessary to place the insurer under regulatory control under K.S.A. 40-3605 et seq. and amendments thereto, or, in the case of an insurer which is writing no business and which is running-off its existing business, may allow the insurer to continue its run-off under the supervision of the commissioner. In either event, the mandatory control level event shall be deemed sufficient grounds for the commissioner to take action under K.S.A. 40-3605 et seq. and amendments thereto and the commissioner shall have the rights, powers and duties with respect to the insurer as are set forth in K.S.A. 40-3605 et seq. and amendments thereto. If the commissioner takes actions pursuant to an adjusted RBC report, the insurer shall be entitled to such protections as are afforded to insurers under the provisions of K.S.A. 77-601 et seq., and amendments thereto, pertaining to summary proceedings. Notwithstanding any of the foregoing, the commissioner may forego action for up to 90 days after the mandatory control level event if there is a reasonable expectation that the mandatory control level event may be eliminated with the 90-day period.
History: L. 1994, ch. 138, § 18; L. 1996, ch. 134, § 7; July 1.
(b) upon notification to an insurer by the commissioner that:
(1) The insurer's RBC plan or revised RBC plan is unsatisfactory; and
(2) such notification constitutes a regulatory action level event with respect to such insurer; or
(c) upon notification to any insurer by the commissioner that the insurer has failed to adhere to its RBC plan or revised RBC plan and that such failure has a substantial adverse effect on the ability of the insurer to eliminate the company action level event with respect to the insurer in accordance with its RBC plan or revised RBC plan; or
(d) upon notification to an insurer by the commissioner of a corrective order with respect to the insurer,
the insurer shall have the right to a hearing under the Kansas administrative procedure act, at which the insurer may challenge any determination or action by the commissioner. The insurer shall notify the commissioner of its request for a hearing within five days after the notification by the commissioner under subsections (a), (b), (c) or (d). Upon receipt of the insurer's request for a hearing, the commissioner shall set a date for the hearing, which date shall be no less than 10 nor more than 30 days after receipt of the insurer's request. Such hearing shall be governed by K.S.A. 77-513 through 77-532 and amendments thereto.
History: L. 1994, ch. 138, § 19; July 1.
(b) RBC instructions, RBC reports, adjusted RBC reports, RBC plans and revised RBC plans are intended solely for use by the commissioner in monitoring the solvency of insurers and the need for possible corrective action with respect to insurers and shall not be used by the commissioner for ratemaking nor considered or introduced as evidence in any rate proceeding nor used by the commissioner to calculate or derive any elements of an appropriate premium level or rate of return for any line of insurance which an insurer or any affiliate is authorized to write.
History: L. 1994, ch. 138, § 20; L. 1996, ch. 134, § 8; July 1.
History: L. 1994, ch. 138, § 21; July 1.
History: L. 1994, ch. 138, § 22; July 1.
(a) The date an RBC report would be required to be filed by a domestic insurer under this act; or
(b) fifteen days after the request is received by the foreign insurer.
Any foreign insurer, at the written request of the commissioner, shall submit promptly to the commissioner a copy of any RBC plan that is filed with the insurance commissioner of any other state.
History: L. 1994, ch. 138, § 23; July 1.
History: L. 1994, ch. 138, § 24; L. 1996, ch. 134, § 9; July 1.
History: L. 1994, ch. 138, § 25; July 1.
History: L. 1994, ch. 138, § 26; July 1.
History: L. 1994, ch. 138, § 27; July 1.
(a) Writes direct business only in this state;
(b) writes direct annual premiums of $2,000,000 or less; and
(c) assumes no reinsurance in excess of 5% of direct premiums written.
History: L. 1996, ch. 134, § 10; July 1.