Session Law

Identifying Information:L. 2002 ch. 058
Other Identifying Information:2002 House Bill 2879
Tax Type:Vehicles
Brief Description:An Act concerning insurance; relating to cancellation of automobile insurance policies; amending K.S.A. 40-276a and repealing the existing section.
Keywords:


Body:

CHAPTER 58

HOUSE BILL No. 2879

An Act concerning insurance; relating to cancellation of automobile insurance

policies; amending K.S.A. 40-276a and repealing the existing section.


Be it enacted by the Legislature of the State of Kansas:

Section 1. K.S.A. 40-276a is hereby amended to read as follows: 40-

276a. (a) Any insurance company that denies renewal of an automobile

liability insurance policy in this state shall give at least thirty (30) 30 days

written notice to the named insured, at his last known address, or cause

such notice to be given by a licensed agent of its intention not to renew

such policy: Provided, however, That. No insurance company shall deny

the renewal of an automobile liability insurance policy except in one or

more of the following circumstances or as permitted in subsection (b):

(a) (1) When such insurance company is required or has been per-

mitted by the commissioner of insurance, in writing, to reduce its pre-

mium volume in order to preserve the financial integrity of such insurer;

(b) (2) when such insurance company ceases to transact such business

in this state;

(c) (3) when such insurance company is able to show competent med-

ical evidence that the insured has a physical or mental disablement that

impairs his ability to drive in a safe and reasonable manner;

(d) (4) when unfavorable underwriting factors, pertinent to the risk,

are existent, and of a substantial nature, which could not have reasonably

been ascertained by the company at the initial issuance of the policy or

the last renewal thereof;

(e) (5) when the policy has been continuously in effect for a period

of five (5) years: Provided, That such five-year period shall begin at the

first policy anniversary date following the effective date of this act: Pro-

vided further, That. Such five-year period shall begin at the first policy

anniversary date following the effective date of the policy, except that if

such policy is renewed or continued in force after the expiration of such

period or any subsequent five-year period, the provisions of this subsec-

tion shall apply in any such subsequent period; or

(f) (6) when any of the reasons specified as reasons for cancellation

in K.S.A. 40-277 are existent: Provided, That (1), except that (A) when

failure to renew is based upon termination of agency contract, obligation

to renew will be satisfied if the insurer has manifested its willingness to

renew, and (2) (B) obligation to renew is terminated on the effective date

of any other automobile liability insurance procured by the named insured

with respect to any automobile designated in both policies: Provided fur-

ther, That.

Renewal of a policy shall not constitute a waiver or estoppel with re-

spect to grounds for cancellation which existed before the effective date

of such renewal: Provided further, That. Nothing in this section shall

require an insurance company to renew an automobile liability insurance

policy if such renewal would be contrary to restrictions of membership

in the company which are contained in the articles of incorporation or

the bylaws of such company.

(b) (1) No insurance company shall refuse to renew a policy until

after June 30, 2002, based on an insured's failure to maintain membership

in a bona fide association, until both the insurance company and bona

fide association have complied with the requirements of this subsection.

No insurance company shall refuse to renew any coverage continuously

in effect before July 1, 2002, unless:

(A) The application for insurance and the insurance policy shall

clearly disclose that both the payment of dues and current membership

in the bona fide association are prerequisites to obtaining or renewing the

insurance;

(B) the bona fide association has filed a certification with the com-

missioner of insurance verifying the eligibility of the insurance company

to refuse to renew an insurance policy based on the membership in the

bona fide association; and

(C) any money paid to the bona fide association as a membership fee:

(i) Shall not be used by the insurance company directly or indirectly

to defray any costs or expenses in connection with the sale or purchase of

the insurance; and

(ii) shall be set independently of any factor used by the insurance

company to make any judgment or determination about the eligibility of

any individual to purchase or renew such insurance. For the purposes of

this provision, the individual may be a member of the bona fide organi-

zation or an employee or dependent of such a member.

(2) (A) Upon request the bona fide association shall file a statement

with the commissioner of insurance verifying that the bona fide associa-

tion meets the requirements of this paragraph.

(B) For the purposes of this subsection, ``bona fide association'' means

an association which:

(i) Has been in active existence for at least five consecutive years im-

mediately preceding the date the statement is filed;

(ii) has been formed and maintained in good faith for purposes other

than obtaining or providing insurance and does not condition member-

ship in the association on the purchase of insurance;

(iii) has articles of incorporation and bylaws or other similar govern-

ing documents;

(iv) has a relationship with one or more specific insurance companies

and identifies each such insurance company; and

(v) and does not condition membership in the association or set mem-

bership fees on the eligibility of any individual to purchase or renew the

insurance or on any factor that the insurance company could not lawfully

consider when setting rates. For the purposes of this provision, the indi-

vidual may be a member of the bona fide organization or an employee or

dependent of such a member.

(3) Membership fees collected by the bona fide association shall not

be deemed to be premiums of the insurance company that issued the

coverage unless the bona fide association:

(A) Uses any portion of such membership fees directly or indirectly

to defray any costs or expenses in connection with the sale or purchase of

the insurance; or

(B) sets or adjusts membership fees for any member of the bona fide

association based on any factor used by the insurance company that issues

the insurance to make any judgment or determination about the eligibility

of any individual to purchase or renew the insurance. For the purposes

of this provision, the individual may be a member of the bona fide organ-

ization or an employee or dependent of such a member.

(4) If the membership fees are determined to constitute premiums

pursuant to paragraph (3) of this subsection, the insurance company shall

not refuse to renew a policy as otherwise permitted by this subsection.

Sec. 2. K.S.A. 40-276a is hereby repealed.

Sec. 3. This act shall take effect and be in force from and after its

publication in the statute book.

Approved April 9, 2002.


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Date Composed: 10/10/2002 Date Modified: 10/10/2002