(a) "Affiliated company" means any company in the same corporate system as a parent, an industrial insured, or a member organization by virtue of common ownership, control, operation or management.
(b) "Aircraft captive insurance company" means any pure captive insurance company which is formed under the provisions of this act by a corporation or an affiliated company of a corporation engaged in the manufacture of aircraft and having its principal place of business within the state of Kansas and which insures only risks in the same corporate system.
(c) "Captive insurance company" means any pure captive insurance company or industrial insured captive insurance company formed under the provisions of this act.
(d) "Commissioner" means the commissioner of insurance.
(e) "Industrial insured" means an insured:
(1) Who procures the insurance of any risk or risks by use of the services of a full-time employee acting as an insurance manager or buyer;
(2) whose aggregate annual premiums for the kinds of insurance total at least $50,000;
(3) who has at least 25 full-time employees;
(4) whose principal activity consists of the manufacture of a product or products; and
(5) who contributes not less than $10,000 to the capital or surplus of the industrial insured captive insurance company that insures its risks. Such contribution shall be in the form of cash which may be returned at such time as the risks of the industrial insured cease to be insured by the captive insurance company.
(f) "Industrial insured captive insurance company" means any company that insures risks of the industrial insureds that comprise the industrial insured group, and their affiliated companies.
(g) "Industrial insured group" means any group of not more than 10 industrial insureds in the same or similar line of business that:
(1) Collectively owns, controls or holds with power to vote all of the outstanding voting securities of an industrial insured captive insurance company incorporated as a stock insurer; or
(2) collectively has complete voting control over an industrial insured captive insurance company incorporated as a mutual insurer; or
(3) is created under the product liability risk retention act of 1981 (U.S. Public Law 97-45), as amended by the risk retention act of 1986, as a corporation or other limited liability association taxable as a stock insurance company or a mutual insurer under the laws of the state of Kansas:
(A) Whose primary activity consists of assuming and spreading all, or any portion, of the product liability or completed operations liability risk exposure of its group members;
(B) which is organized for the primary purpose of conducting the activity described in subdivision (g)(3)(A) of this section;
(C) which does not exclude any person from membership in the group solely to provide for members of such group a competitive advantage over such a person; and
(D) which is composed of members each of whose principal activity consists of the manufacture, design, importation, distribution, packaging, labeling, lease or sale of a product or products.
(h) "Parent" means a corporation, partnership or individual that directly or indirectly owns, controls or holds with power to vote more than 50% of the outstanding voting securities of a pure captive insurance company.
(i) "Pure captive insurance company" means any company that insures risks of its parent and affiliated companies.
History: L. 1988, ch. 156, § 1; L. 1990, ch. 177, § 1; April 5.
(1) No pure captive insurance company may insure any risks other than those of its parent and affiliated companies;
(2) no industrial insured captive insurance company may insure any risks other than those of the industrial insureds that comprise the industrial insured group, and their affiliated companies;
(3) no captive insurance company may provide homeowner's, workers' compensation or employers' liability insurance coverage, or any component thereof; and
(4) no captive insurance company may accept or cede reinsurance except as provided in K.S.A. 40-4311.
Any captive insurance company that provides motor vehicle liability insurance coverage on motor vehicles of its industrial insureds or parent or affiliated companies shall be required to insure all of the motor vehicles of such industrial insureds or parent or affiliated companies, and when such insurance coverage is provided by the captive insurance company, no motor vehicle of an industrial insured or parent or affiliated company shall be eligible for insurance coverage under any automobile insurance plan provided for in K.S.A. 40-2101 and 40-2102, and amendments thereto.
(b) No captive insurance company organized under the laws of this state shall do any insurance business in this state unless:
(1) It first obtains from the commissioner a certificate of authority authorizing it to do insurance business in this state;
(2) its board of directors holds at least one meeting each year in this state;
(3) it maintains its principal place of business in this state; and
(4) it authorizes the commissioner to accept service of process on its behalf in accordance with K.S.A. 40-218, and amendments thereto.
(c) (1) Before receiving a certificate of authority, a captive insurance company shall file with the commissioner a certified copy of its articles of incorporation and bylaws, a statement under oath of its president and secretary showing its financial condition, and any other statements or documents required by the commissioner.
(2) In addition to the information required by subdivision (1) of this subsection (c), each applicant captive insurance company shall file with the commissioner evidence of the following:
(A) The amount and liquidity of its assets relative to the risks to be assumed;
(B) the adequacy of the expertise, experience and character of the person or persons who will manage it;
(C) the overall soundness of its plan of operation;
(D) the adequacy of the loss prevention programs of its parent or industrial insureds as applicable; and
(E) such other factors deemed relevant by the commissioner in ascertaining whether the proposed captive insurance company will be able to meet its policy obligations.
(d) Each captive insurance company shall pay to the commissioner a nonrefundable fee of $500 for examining, investigating and processing its application for a certificate of authority. In addition, it shall pay a fee for the year of registration and a renewal fee for each year thereafter of $110.
(e) If the commissioner is satisfied that the documents and statements that such captive insurance company has filed comply with the provisions of this act, the commissioner may grant a certificate of authority authorizing it to do insurance business in this state until April 1 thereafter, which certificate of authority may be renewed.
History: L. 1988, ch. 156, § 2; July 1.
History: L. 1988, ch. 156, § 3; L. 1990, ch. 177, § 2; April 5.
(1) In the case of a pure captive insurance company, not less than $100,000; and
(2) in the case of an industrial insured captive insurance company incorporated as a stock insurer, not less than $200,000.
(b) Such capital may be in the form of cash or an irrevocable letter of credit issued by a bank chartered by the state of Kansas or the United States comptroller of currency, domiciled in Kansas, and approved by the commissioner.
History: L. 1988, ch. 156, § 4; July 1.
(1) In the case of a pure captive insurance company, not less than $150,000;
(2) in the case of an industrial insured captive insurance company incorporated as a stock insurer, not less than $300,000; and
(3) in the case of an industrial insured captive insurance company incorporated as a mutual insurer, not less than $500,000.
(b) Such surplus may be in the form of cash or an irrevocable letter of credit issued by a bank chartered by the state of Kansas or the United States comptroller of currency, domiciled in Kansas, and approved by the commissioner.
History: L. 1988, ch. 156, § 5; July 1.
(b) An industrial insured captive insurance company may be incorporated:
(1) As a stock insurer with its capital divided into shares and held by the stockholders; or
(2) as a mutual insurer without capital stock.
(c) A captive insurance company shall have not less than three incorporators of whom not less than two shall be residents of this state.
(d) Before the articles of incorporation are transmitted to the secretary of state, the incorporators shall petition the commissioner to issue a certificate setting forth such commissioner's finding that the establishment and maintenance of the proposed corporation will promote the general good of the state. In arriving at such finding the commissioner shall consider:
(1) The character, reputation, financial standing and purposes of the incorporators;
(2) the character, reputation, financial responsibility, insurance experience and business qualifications of the officers and directors; and
(3) such other aspects as the commissioner shall deem advisable.
(e) The articles of incorporation, such certificate and the organization fee shall be transmitted to the secretary of state, who shall thereupon record both the articles of incorporation and the certificate.
(f) The capital stock of a captive insurance company incorporated as a stock insurer shall be issued at not less than par value.
(g) At least one of the members of the board of directors of a captive insurance company incorporated in this state shall be a resident of this state.
(h) Captive insurance companies formed under the provisions of this chapter shall have the privileges and be subject to the provisions of the general corporation code as well as the applicable provisions contained in this act. In the event of conflict between the provisions of the general corporation code and the provisions of this act, the latter shall control.
History: L. 1988, ch. 156, § 6; July 1.
History: L. 1988, ch. 156, § 7; July 1.
History: L. 1988, ch. 156, § 8; July 1.
(1) Insolvency or impairment of capital or surplus;
(2) failure to meet the requirements of K.S.A. 40-4304 or 40-4305;
(3) refusal or failure to submit the report, required by K.S.A. 40-4307, or any other report or statement required by law or by lawful order of the commissioner;
(4) failure to comply with the provisions of its own articles of incorporation or bylaws;
(5) failure to submit to examination or any legal obligation relative thereto, as required by K.S.A 40-4308;
(6) refusal or failure to pay the cost of examination as required by K.S.A. 40-4308;
(7) use of methods that, although not otherwise specifically prohibited by law, nevertheless render its operation detrimental or its condition unsound with respect to the public or to its policyholders;
(8) failure otherwise to comply with the laws of this state.
(b) If the commissioner finds, upon examination, hearing or other evidence, that any captive insurance company has committed any of the acts specified in subsection (a), such commissioner may suspend or revoke such license if such commissioner deems it in the best interest of the public and the policyholders of such captive insurance company, notwithstanding any other provision of this act.
History: L. 1988, ch. 156, § 9; July 1.
History: L. 1988, ch. 156, § 10; July 1.
(b) Any risks or portions of risks of any captive insurance company that is reinsured shall be ceded to an insurance company that is authorized to transact business in this state or that has been approved by the commissioner. A captive insurance company may take credit for reserves on risks or portions of risks ceded. The commissioner may require any other documents, financial information or other evidence that such a reinsurer will be able to provide adequate security for its financial obligations. The commissioner may deny authorization or impose any limitations on the activities of a reinsurer that, in such commissioner's judgment, are necessary and proper to provide adequate security for the ceding captive insurance company and for the protection and consequent benefit of the public at large.
(c) Any aircraft captive insurance company may provide reinsurance, comprised in articles 9 and 11 of chapter 40 of the Kansas Statutes Annotated as limited by subsection (a) (3) of K.S.A. 40-4302, and amendments thereto, on risks ceded by an insurance company which is an affiliated company and is authorized to transact business in the state of Kansas, if the requirements of either paragraph (1) or (2) of subsection (b) of K.S.A. 40-221a, and amendments thereto, are met by the ceding insurer with respect to the reinsurance provided by the aircraft captive.
History: L. 1988, ch. 156, § 11; L. 1990, ch. 177, § 3; April 5.
History: L. 1988, ch. 156, § 12; July 1.
History: L. 1988, ch. 156, § 13; July 1.
The tax provided for in this section shall constitute all taxes collectible under the laws of this state from any captive insurance company, and no other occupation tax or other taxes shall be levied or collected from any captive insurance company by the state or any county, city or municipality within this state, except ad valorem taxes on real and personal property used in the production of income.
History: L. 1988, ch. 156, § 14; July 1.
History: L. 1988, ch. 156, § 15; July 1.
History: L. 1988, ch. 156, § 16; July 1.
History: L. 1988, ch. 156, § 17; July 1.
(b) The provisions of K.S.A. 40-2209 and 40-2215 and amendments thereto shall apply to captive insurance companies and to all contracts issued under the act of which this section is a part.
History: L. 1988, ch. 156, § 18; L. 1991, ch. 134, § 12; July 1.