(a) "Commissioner" means the insurance commissioner of this state or the commissioner, director or superintendent of insurance in any other state.
(b) "Completed operations liability" means liability arising out of the installation, maintenance or repair of any product at a site which is not owned or controlled by any person who: (1) Performs that work; or (2) hires an independent contractor to perform that work; but shall include liability for activities which are completed or abandoned before the date of the occurrence giving rise to the liability.
(c) "Domicile", for purposes of determining the state in which a purchasing group is domiciled, means: (1) For a corporation, the state in which the purchasing group is incorporated; and (2) for an unincorporated entity, the state of its principal place of business.
(d) "Hazardous financial condition" means that, based on its present or reasonably anticipated financial condition, a risk retention group, although not yet financially impaired or insolvent, is unlikely to be able to: (1) Meet obligations to policyholders with respect to known claims and reasonably anticipated claims; or (2) pay other obligations in the normal course of business.
(e) "Insurance" means primary insurance, excess insurance, reinsurance, surplus lines insurance, and any other arrangement for shifting and distributing risk which is determined to be insurance under the laws of this state.
(f) "Liability" means legal liability for damages (including costs of defense, legal costs and fees, and other claims expenses) because of injuries to other persons, damage to their property, or other damage or loss to such other persons resulting from or arising out of: (1) Any business (whether profit or nonprofit), trade, product, services (including professional services), premises or operations; or (2) any activity of any state or local government, or any agency or political subdivision thereof; and (3) does not include personal risk liability and an employer's liability with respect to its employees other than legal liability under the federal employers' liability act.
(g) "Personal risk liability" means liability for damages because of injury to any person, damage to property, or other loss or damage resulting from any personal, familial, or household responsibilities or activities, rather than from responsibilities or activities referred to in subsection (f).
(h) "Plan of operation or a feasibility study" means an analysis which presents the expected activities and results of a risk retention group including, at a minimum: (1) The coverages, deductibles, coverage limits, rates and rating classification systems for each line of insurance the group intends to offer;
(2) historical and expected loss experience of the proposed members and national experience of similar exposures;
(3) pro forma financial statements and projections;
(4) appropriate opinions by a qualified, independent casualty actuary, including a determination of minimum premium or participation levels required to commence operations and to prevent a hazardous financial condition;
(5) identification of management, underwriting procedures, managerial oversight methods, investment policies; and
(6) such other matters as may be prescribed by the commissioner for liability insurance companies authorized by the insurance laws of the state.
(i) "Product liability" means liability for damages because of any personal injury, death, emotional harm, consequential economic damage, or property damage (including damages resulting from the loss of use of property) arising out of the manufacture, design, importation, distribution, packaging, labeling, lease or sale of a product, but does not include the liability of any person for those damages if the product involved was in the possession of such a person when the incident giving rise to the claim occurred.
(j) "Purchasing group" means any group which:
(1) Has as one of its purposes the purchase of liability insurance on a group basis;
(2) purchases such insurance only for its group members and only to cover their similar or related liability exposure, as described in subparagraph (3);
(3) is composed of members whose businesses or activities are similar or related with respect to the liability to which members are exposed by virtue of any related, similar, or common business, trade, product, services, premises, or operations; and
(4) is domiciled in any state.
(k) "Risk retention group" means any corporation or other limited liability association formed under the laws of any state, Bermuda, or the Cayman Islands:
(1) Whose primary activity consists of assuming and spreading all, or any portion, of the liability exposure of its group's members;
(2) which is organized for the primary purpose of conducting the activity described in subparagraph (1);
(3) which is chartered and licensed as a liability insurance company and authorized to engage in the business of insurance under the laws of any state; or before January 1, 1985 was chartered or licensed and authorized to engage in the business of insurance under the laws of Bermuda or the Cayman Islands and, before such date, had certified to the insurance commissioner of at least one state that it satisfied the capitalization requirements of such state, except that any such group shall be considered to be a risk retention group only if it has been engaged in business continuously since such date and only for the operations liability (as such terms were defined in the product liability risk retention act of 1981 before the date of the enactment of the risk retention act of 1986);
(4) which does not exclude any person from membership in the group solely to provide for members of such a group a competitive advantage over such a person;
(5) which has as its members only persons who have an ownership interest in the group and which has as its owners only persons who are members who are provided insurance by the risk retention group; or has as its sole member and sole owner an organization which is owned by persons who are provided insurance by the risk retention group;
(6) whose members are engaged in businesses or activities similar or related with respect to the liability of which such members are exposed by virtue of any related, similar, or common business trade, product, services, premises, or operations;
(7) whose activities do not include the provision of insurance other than liability insurance for assuming and spreading all or any portion of the liability of its group members; and reinsurance with respect to the liability of any other risk retention group (or any members of such other group) which is engaged in businesses or activities so that such group or member meets the requirement described in subparagraph (6) from membership in the risk retention group which provides such reinsurance; and
(8) the name of which includes the phrase "risk retention group".
(l) "State" means any state of the United States and the District of Columbia.
History: L. 1986, ch. 166, § 1; L. 1987, ch. 172, § 1; April 30.
History: L. 1986, ch. 166, § 2; L. 1987, ch. 172, § 2; April 30.
(a) Notice of operations and designation of commissioner as agent. Before offering insurance in this state, a risk retention group shall submit to the commissioner:
(1) A statement identifying the state or states in which the risk retention group is chartered and licensed as a liability insurance company, date of chartering, its principal place of business and such other information including information on its membership, as the commissioner of this state may require to verify that the risk retention group is qualified under subsection (k) of K.S.A. 40-4101 and amendments thereto;
(2) a copy of its plan of operations or a feasibility study and revisions of such plan or study submitted to its state of domicile; but the provision relating to the submission of a plan of operation or a feasibility study shall not apply with respect to any line or classification of liability insurance which:
(A) Was defined in the product liability risk retention act of 1981 before October 27, 1986; and
(B) was offered before such date by any risk retention group which had been chartered and operating for not less than three years before such date;
(3) a statement of registration which designates the commissioner as its agent for the purpose of receiving service of legal documents or process; and
(4) a notification fee in the amount of $250.
(b) Financial condition. Any risk retention group doing business in this state shall submit to the commissioner:
(1) A copy of the group's financial statement submitted to its state of domicile, which shall be certified by an independent public accountant and contain a statement of opinion on loss and loss adjustment expense reserves made by a member of the American academy of actuaries or a qualified loss reserve specialist (under criteria established by the national association of insurance commissioners);
(2) a copy of each examination of the risk retention group as certified by the commissioner or public official conducting the examination;
(3) upon request by the commissioner, a copy of any audit performed with respect to the risk retention group; and
(4) such information as may be required to verify its continuing qualification as a risk retention group under subsection (k) of K.S.A. 40-4101 and amendments thereto.
(c) Taxation. (1) All premiums paid for coverages within this state to risk retention groups chartered outside this state shall be subject to taxation at the same rate and subject to the same interest, fines and penalties for nonpayment as that provided by K.S.A. 40-246c and amendments thereto. Risk retention groups chartered or licensed in this state shall be taxed in accordance with K.S.A. 40-252, and amendments thereto.
(2) To the extent agents or brokers are utilized, they shall report and pay the taxes for the premiums for risks which they have placed with or on behalf of a risk retention group not chartered in this state.
(3) To the extent agents or brokers are not utilized or fail to pay the tax, each risk retention group shall pay the tax for risks insured within the state. Further, each risk retention group shall report all premiums paid to it for risks insured within the state.
(d) Compliance with unfair claims settlement practices law. Any risk retention group, its agents and representatives, shall comply with subsection (9) of K.S.A. 40-2404 and amendments thereto.
(e) Deceptive, false or fraudulent practices. Any risk retention group shall comply with the laws of this state regarding deceptive, false or fraudulent acts or practices. However, if the commissioner seeks an injunction regarding such conduct, the injunction shall be obtained from a court of competent jurisdiction.
(f) Examination regarding financial condition. Any risk retention group shall submit to an examination in accordance with K.S.A. 40-222 and 40-223, and amendments thereto, by the commissioner to determine its financial condition if the commissioner of the jurisdiction in which the group is chartered has not initiated an examination or does not initiate an examination within 60 days after a request by the commissioner of this state.
(g) Notice to purchasers. Any policy issued by a risk retention
group
shall contain in 10 point type on the front page and the declaration page,
the following notice:
This policy is issued by your risk retention group. Your risk retention group may not be subject to all of the insurance laws and regulations of your state. State insurance insolvency guaranty funds are not available for your risk retention group.
(h) Prohibited acts regarding solicitation or sale. The following acts by a risk retention group are hereby prohibited:
(1) The solicitation or sale of insurance by a risk retention group to any person who is not eligible for membership in such group; and
(2) the solicitation or sale of insurance by, or operation of, a risk retention group that is in a hazardous financial condition or is financially impaired.
(i) Prohibition on ownership by an insurance company. No risk retention group shall be allowed to do business in this state if an insurance company is directly or indirectly a retention group all of whose members are insurance companies.
(j) Prohibited coverage. No risk retention group may offer insurance policy coverage prohibited by the laws of this state or declared unlawful by the supreme court of the state of Kansas.
(k) Delinquency proceedings. A risk retention group not chartered in this state and doing business in this state must comply with a lawful order issued in a voluntary dissolution proceeding or in a delinquency proceeding commenced by a state insurance commissioner if there has been a finding of financial impairment after an examination under subsection (f) of this section.
History: L. 1986, ch. 166, § 3; L. 1987, ch. 172, § 3; L. 1992, ch. 154, § 5; July 1.
History: L. 1986, ch. 166, §§ 4 to 7; Repealed, L. 1987, ch. 172, § 15; April 30.
History: L. 1986, ch. 166, § 8; L. 1987, ch. 172, § 4; April 30.
History: L. 1986, ch. 166, § 9; L. 1987, ch. 172, § 5; April 30.
History: L. 1986, ch. 166, §§ 10 to 12; Repealed, L. 1987, ch. 172, § 15; April 30.
History: L. 1986, ch. 166, § 13; L. 1987, ch. 172, § 10; Repealed, L. 1997, ch. 24, § 7; July 1.
History: L. 1986, ch. 166, § 14; L. 1987, ch. 172, § 13; April 30.
History: L. 1987, ch. 172, § 6; April 30.
(1) Identify the state in which the group is domiciled;
(2) specify the lines and classifications of liability insurance which the purchasing group intends to purchase;
(3) identify the insurance company from which the group intends to purchase its insurance and the domicile of such company;
(4) identify the principal place of business of the group; and
(5) provide such other information as may be required by the commissioner to verify that the purchasing group is qualified under subsection (j) of K.S.A. 40-4101 and amendments thereto.
The notice submitted to the commissioner shall be accompanied by a notification fee of $250.
(b) The purchasing group shall file with the insurance department its written consent, irrevocable, that any action or garnishment proceeding may be commenced against such group in the proper court of any county in this state in which the cause of action shall arise or in which the plaintiff may reside by the service of process on the commissioner of insurance of this state and stipulating and agreeing that such service shall be taken and held in all courts to be as valid and binding as if due service had been made upon the president or chief officer of such corporation. Such consent shall be executed by the president of the company and shall be accompanied by a certified copy of the order or resolution of the board of directors, trustees or managers authorizing the president to execute the same. The summons, accompanied by a fee of $25 shall be directed to the commissioner of insurance and shall require the defendant to answer not less than 40 days from its date. Such summons, and a certified copy of the petition shall be forthwith forwarded by the clerk of the court to the commissioner of insurance, who shall immediately forward a copy of the summons and the certified copy of the petition, to the president of the group sued and thereupon the commissioner of insurance shall make return of the summons to the court from which it issued, showing the date of the receipt by the commissioner, the date of forwarding of such copies and the name and address of the person to whom the commissioner forwarded the copy. Such return shall be made under the commissioner's hand and seal of office, and shall have the same force and effect as a due and sufficient return made by the sheriff on process directed to the sheriff. The foregoing shall not apply in the case of a purchasing group which:
(1) (A) Was domiciled before April 2, 1986; and
(B) is domiciled on and after October 27, 1986 in any state of the United States;
(2) (A) before October 27, 1986 purchased insurance from an insurance carrier licensed in any state; and
(B) since October 27, 1986 purchased its insurance from an insurance carrier licensed in any state;
(3) was a purchasing group under the requirements of the product liability retention act of 1981 before October 27, 1986; and
(4) does not purchase insurance that was not authorized for purposes of an exemption under that act, as in effect before October 27, 1986.
History: L. 1987, ch. 172, § 7; L. 1992, ch. 154, § 6; July 1.
History: L. 1987, ch. 172, § 8; April 30.
History: L. 1987, ch. 172, § 9; April 30.
History: L. 1987, ch. 172, § 11; April 30.
History: L. 1987, ch. 172, § 12; April 30.